As the lines between profit and purpose continue to blur, charities face some tough questions about how they should respond to the rise of purpose-driven business. This blog explores some of the challenges charities face in adopting a new mindset to meet this response, and how commercial approaches don’t have to come at the expense of their ability to do good.
Changing Mindsets: The Rising Tide
Deloitte’s most recent Human Capital Report indicates that we have reached a tipping point towards organisations serving both profit and purpose, heralding the ‘Rise of the Social Enterprise’. Nesta’s Kate Adams recently wrote a great piece asking the question of how charities might react to the rising tide of purpose-led business. She argues that the biggest opportunity for charities is to create genuine partnerships with the private sector, sharing skills such as campaigning, empathy, and advocacy. In turn, charities can learn from the private sector, building capacity in long-term planning, financial sustainability, and gaining much-needed resources to enable the delivery of their services.
Changing Mindsets: Overcoming sector stereotypes, understanding context and building empathy
But the concept of cross-sector collaboration is nothing new. And in order for organisations to take full advantage of this opportunity, all sides may need to change their mindset in order to allow a new way of thinking in. With regards to the charity sector, there has long been a stereotype that the sector is inefficient, risk-averse and resistant to change. And whilst that view may be sometimes true, it does not always empathise with the external context in which charities exist, with reductions in public funding, increased fundraising complexity, greater stress on developing outcome-based approaches, and a need to undergo a sector-wide digital transformation acting as just some of the challenges and motivations for change.
“Senior leaders across the charity sector may welcome learning from the Private sector, especially engaging with new ways to diversify income streams by adopting a commercial mindset.”
Senior leaders across the charity sector may welcome learning from the Private sector, especially engaging with new ways to diversify income streams by adopting a commercial mindset. And there has been some real headway made in the social investment, enterprise, and CSR space to move beyond the hype towards creating real social change. However, there are many closer to the frontline who still think that business concepts such as ‘revenue’, ‘markets’ and ‘competition’ are dirty words that don’t belong in the world of ‘doing good’. The machine of the Private Sector is currently undergoing somewhat of a Turing test, and the jury is still out to determine just how ‘human’ the Sector has become.
And whilst there has long been a need for charities to adopt a commercial mindset and improve overall financial sustainability, there is a real risk that adopting a ‘cookie-cutter’ commercial approach to improve performance can stifle what they do best. In fact, a recent report by Sheila McKechnie Foundation argues that commercial models and performance management can often hinder charities in creating positive social change, reducing their ability to respond to those in need.
So how do you develop a commercial approach for charitable organisations without having to sacrifice their ability to help those in need?
Changing Mindsets: Putting theory into practice
Here at Shift, we have worked with a broad range of charities who are living and breathing some of these challenges to do just that. And whilst we don’t claim to have all the answers, here are some of things that we have found helpful throughout our journey so far:
Create a shared language
At Shift, we work closely with every level of our partners to provide clear definitions and context of how commercial models should aim to enable and enhance charitable activities rather than shape or hinder them. We bring in teams right from the Executive Board to the frontline to understand how new commercial models could impact their work. We aim to remove the jargon behind technical or alien terms, and ensure that we don’t take decisions without multiple points of feedback that will help shape new commercial opportunities.
Understand the charitable purpose
Before we look at commercial opportunities, it is important to understand how a charitable organisation truly works; how the theory of change underpins their services, how their services reflect the needs of their beneficiaries, and how the charity builds and measures impact. Read about how we did this for Historypin’s Storybox, or explore an example of a Theory of Change we created for the UK’s largest charity for parents, NCT. Shift CEO Nick Stanhope’s blog on 5 Principles of Continuously Improving Social Impact is also worth a read. Not only does this help create a long- term plan of where the charity should focus its activities, it also builds mutual understanding and trust around what really matters.
Map the existing service landscape.
Often charities create new activities by listening to those in need, but often fail to review existing provision to see how they are best placed to meet that need. We take time to truly understand what outcomes are trying to be met by the charity and then look externally at who else is trying to achieve the same thing. We include service provision across all sectors, and where there is overlap, we identify best-in-class, and what the major opportunities are to share resources and collaborate.
Understand points of differentiation.
For charities to survive, they need to be able to invest, communicate, and champion what they do best. We take a view of understanding how a charity is unique, and how their core competencies, skills, and assets of the organisation can maximise their full potential. For some, this process is both validating and surprising, and when done well, it can serve both the head and the heart of why the organisation truly exists.
Once we know where a charity really excels, it is much easier to match the organisation to external opportunities. This can range between identifying new areas of need for their services (like we did for NSPCC), innovating existing services (for example our Guided Reflection toolkits for NCS), or matching them to the most appropriate grant, commissioning, or fundraising opportunities. We work hard to understand the needs of these actors across the entire ecosystem, and align the charities operating models to meet their expectations. As part of this work, there will be major opportunities to partner and collaborate with other charities and the Public or Private Sector, but with a much greater understanding of how these partnerships support and enable their charitable purpose.
Changing Mindsets: A seat at the table
“Whilst a change in mindset might still be a work-in-progress for charities, there seems to be a real willingness to absorb new ideas and approaches to continuously improve.”
Whilst a change in mindset might still be a work-in-progress for charities, there seems to be a real willingness to absorb new ideas and approaches to continuously improve. From our experience, real collaboration requires breaking down long-held stereotypes, creating common understanding and empathy across the service ecosystem to appreciate what each actor has to bring to the table. As Tony Benn once said, ‘We are not just here to manage capitalism but to change society and to define its finer value’’. These finer values should not just be determined by purpose-led business, and charities have more right than most to have a seat at the table. Only then, with everyone working together, might we find out what capitalism’s finer value really looks like.