Fiona Jeffery OBE, founder and chairman of water aid charity Just a Drop, says while businesses and charities differ they could benefit each other by working together
It’s sad what has happened to high profile charity Kids Company.
But the bottom line is, charities are businesses, and must be properly managed. Equally there isn’t enough recognition or appreciation in the business world of the massive challenges faced by the third sector and, most importantly, how both can support and add value to each other.
Having sat on both sides of the fence I would like to demystify some preconceptions. The charity sector has been criticised over the years for not being “professional”.
There is some truth in this; however like all industry sectors it has changed. Today many people choose a career with a ‘not-for-profit’ over the financially more lucrative ‘private’ sector.
Some of the large charities (which can be criticised for this) are major national and multinational operations, large businesses in their own right. To operate effectively it is right that this involves the recruitment of quality people paid a fair wage for a fair level of responsibility.
You cannot expect any organisation to be professionally run without professional people. However the not-for-profit sector is generally regarded as less important than the private sector, carrying less esteem or respect and therefore expected to command lower salaries.
Why should this be when the stakes, as evidenced by Kids Company, are so enormously high?
The failure rate in business last year was 212,081. The number of charities removed out of a total of 164,097 registered with the Charity Commission last year was 4,303.
The fall out when anything shuts down is catastrophic for management, staff, customers and suppliers. But a major distinguishing feature in the not-for-profit sector is the impact failure has on the most vulnerable in society.
Lifelines are cruelly severed and this sets the people the charity once helped adrift. This also threatens the security of the society we live and work in, so we all have a vested interest.
I am hugely committed to my commercial role but confess that the sense of responsibility that comes from running a small charity is overwhelmingly greater because of that additional social responsibility. Equally it comes with far less regard from a professional business peer group.
The perception is that people who want to make a social difference are less commercially competent, but how many times have we often heard that a business could be better if it ‘had a heart’.
I’ve no doubt that skills in the business world can help the third sector become more secure. So both models are vital to society, but there needs to be much more understanding to help constructively.
Taking risk in the business world is an accepted practice, applauded when it goes well, and rarely vilified if it goes wrong. Not so in charities.
Yes, every organisation needs new oxygen, fresh challenges and wants to expand capability, but security, sustainability and professional delivery are critical to its success.
One of the dilemmas faced by Kids Company (I suspect) was that its desire to provide the right support outweighed financial resource. Like any business it has to live within its means, but Kids Company, it seems, allowed its big heart to rule its operational decisions. Too heavy a price to pay.
Many charities are genuinely hampered by the imposition of restricted funds dictated by their benefactors. I have sympathy on both sides. Donors rightly want to know their money is reaching where intended, not in fancy offices and staff expenses.
Clearly, though, an acceptable percentage of funds for effective operating costs to deliver well has to be better than losing 100% through mismanagement.
Where the not-for-profit sector also differs considerably to the business world is its huge reliance on the role of volunteers. This is not necessarily a bad thing however; it’s essential for the continued success of any charitable organisation challenged by resource issues and looking to keep its overheads down.
Importantly it also contributes to the health of society as people, including business employees, benefit from giving back.
Rather than throw stones, the business community and third sector should engage in a partnership and collaboration agenda. Don’t let Kids Company die in vain.