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Business isn’t a swear word

As a newly appointed chief executive in the third sector, I am struck by the frequency with which I am having the discussion about the reluctance of charities to identify themselves as businesses and adopt more businesslike attitudes to service delivery. In some areas the very mention of the word ‘business’ is tantamount to swearing.

Do charities really believe that their – in many cases long – history of doing good works will protect them from funding cuts, shifts in commissioning intentions, and the competitive market place? Will some charities really continue to hide behind a lack of data and inefficient resource management, shored up by good intentions and a mountain of thank-you cards in the hope that commissioners will continue to fund them? I’m pleased to say I have also spoken to many who aren’t. Charities are special because they value and advocate for the individual or group and those close to them. This is our strength, and it is the polar opposite to the statutory sector which say it values the individual but then swamp that intention with bureaucracy and process. However, if we directly provide services to the public, as many charities do, we cannot afford to merely pay lip service to the paperwork, have flaky systems and expect commissioners and funders to accept that we provide a good service just because we say we do. The skill is in striking the balance between the two, having a charity heart and a business head.

Basic business practices are a must: agreed vision and mission statements, sound financial planning and management, robust human resource management, health and safety, risk management, and audit processes. “We do all that,” I hear you say. But what about defining your services – stating clearly what you do and do not do; demonstrating measurable outcomes; understanding the real costs of your services (how much does that home visit cost?); being able to make a business case for funds; being able to respond to a tender situation; deciding who your potential partners and competitors are and having a strategy to address these?

If you are still saying “we do that”, then I hate to say it but you are running a business. Well done you, for proving that running a charity does not mean you cannot run a business.

Doing this does not mean you devalue the excellent work done by the charity, its history, the incredibly dedicated staff, the band of volunteers, and the stalwart fundraisers. Actually, by taking a more business-like approach you are protecting the charity, ensuring it is fit for purpose and will survive in the rapidly changing world in which we find ourselves delivering health and social care, which in many areas is care not provided by statutory agencies, and can ill afford to be lost.

Third sector does not mean third class, and as charities we should not inadvertently add weight to any belief that we are somehow less serious about providing a service by having anti-business attitudes to what we provide and how we provide it. There is competition for all of us, even hospices with 125 years under their belts, and the ‘vultures’ of statutory and private business (and dare I say your friendly charity around the corner) are circling. If you are not ready to meet the emerging and potentially competitive environment head on you run the risk of seeing your charity reduce or fall.

To keep the charity heart and develop the business head takes leadership of the highest standard, and an organisational culture which allows everyone in the charity to understand and hopefully sign up to striking the balance.

Dallas Pounds is chief executive of Trinity Hospice

  • Joe Lynch

    Well said Dallas. Good business sense and good business behaviours deliver security, stability and a better surplus. Once you have these you then have more chances to behave like a charity in it’s traditional sense. @joelynchyha

  • Elizabeth Balgobin

    Successful charities have always recognised that they are businesses. The business is not for private profit but it is and always has been a business. We don’t have to adopt all of the practices of private for profit business. Competition is not new but it has become more clearly expressed as open competition recently. I hope this leads to some honesty between groups about what they are willing to share and what is out of bounds.

    Enjoy your new role, Ms Pounds.

  • IAS2011

    I totally agree with you on the subject of Charities ‘talking business’ and running their socially-motivated organisations like a business in order to nurture the ‘right’ attitudes and ‘policies’ in their organisations.

    Politicians have been guilty of exacerbating this situation by scaremongering the public about the NHS having ‘privatised’ tendencies within it – a word that many would associate with ‘business’ focused attitudes.. One would have thought – given the challenges that the NHS continues to fight – ‘privatised-business’ mentality would be a good home for the NHS. Wouldn’t you think?

    There is also a tendency to believe that one who is passionate about starting a social enterprise – need not have any ‘business’ skills. As someone who stems from private sector management and who transferred these skills into the public/third sectors, I have seen first-hand the differences in attitudes between the two sectors. Thus, I am left with the conclusion that Charities (and social enterprises) will not only learn a achieve much more from adopting a ‘business’ attitude and allowing such skills to flow through the veins of the organisation, but also nurture individuals and teams to enhance their balance between performance and customer care.

    Finally, as someone who previously struggled to achieve employment in the Charity sector, I am left with no doubt that if one comes across too Driven and too Business focused that this will frighten the life out of many Charity interviewers and employers. I acknowledge, the fact is that Charities need to ‘harness’ individuals like me if they are to enhance their skills and output… and most importantly – if they are to GROW towards maximising funding potential.

  • Martin Williams

    Hi Dallas, I have long believed that there is a strong case for “investment rather than funding” – a great opportunity for the private business sector to collaborate with the social sector beyond conventional CSR. I’ve even created a business to promote what I believe is a neglected area http://www.socialideation.com
    Many of the charities I speak with are looking to ‘commercialise’ activities as funding becomes more difficult – there is no doubt that the future lies with hybrid business models that fully utilise the resources of the private sector.