IN MY OPINION: Chartered Management Institute companion Mike Whitlam, partner and CEO of Solutions for Charity, urges service-sharing for hard-up charities

IN MY OPINION: Chartered Management Institute companion Mike Whitlam, partner and CEO of Solutions for Charity, urges service-sharing for hard-up charities - Every day we are bombarded with television shots of new crises, such as in Afghanistan, Goma and,

by MIKE WHITLAM
Last Updated: 31 Aug 2010

Every day we are bombarded with television shots of new crises, such as in Afghanistan, Goma and, closer to home, disenfranchised young people or increased drug misuse among younger children. Most days, many of us receive one or more appeals from charities, asking us to support their cause.

The British Government has recently invested pounds 19 million in a campaign to encourage skilled over-50s - 'The Experienced Corps' - to get involved with voluntary work. It has also put further money into the Giving Campaign, a scheme designed to encourage the giving public to give even more.

Both the numbers of people engaging with the voluntary sector and the number of registered charities are growing.

The UK now has more than 170,000 registered charities, which together spend more than pounds 22 billion, deploying millions of volunteers. The larger charities are big by any standards, with annual expenditures of more than pounds 100 million. The problem seems to be that, despite this increased involvement in the voluntary sector, many charities are struggling to fund their work.

In the past 12 months there have been many media stories of major charities like the Red Cross and the Children's Society having to close projects and make people redundant. This is even more of a problem for the small to medium-sized charities.

Part of the reason is that the cost of managing these agencies is becoming harder to fund. Donors don't want to fund the core management costs - they prefer to feel the warm glow of having saved a life or of having helped someone in distress. Yet volunteers cost money to recruit and support. It costs money to ask people to give.

So what is to be done? If the solution does not lie in our ability to increase the numbers of donors who will fund the core costs, then we in the sector must find innovative ways of cutting our core expenditure.

CEOs and managers in the charity sector will doubtless say that they are doing all they can to ensure that their agencies are cost-effective. We generally pay lower salaries than our commercial equivalents. But charities have to be more radical in their thinking, if they are to survive. Voluntary agencies must explore the myriad of opportunities that exist to seek strategic and financial alliances, and maybe even mergers. This would ensure that core management costs support the maximum number of services or campaigns.

Unfortunately, where charities recognise this as part of the solution, they tend to go straight for the merger option and often do it publicly.

Such a move almost always brings a negative response from the trustees, volunteers, and staff. Their organisation is special, different and has a unique ethos, compared to that of the agency with which they might be merged. The end result is often failure.

Recent merger bids that failed to come to fruition include Crisis and Shelter, Help the Aged and Age Concern, and Marie Curie and Macmillan Cancer Care.

But there are alternatives to the merger possibilities. If these and other charities will reconsider the role of their core support services, such as finance, training, direct mail, IT services, office space, print services and many other similar services, we may have a different solution. These are rarely special to them or their core business. They are common services that could be shared or combined.

Examples exist of consortia, where one charity services another, but what if a number of charities were to combine and invest their current expenditure in a new venture, a not-for-profit (NFP) commercial business, that serviced these support functions and other areas for its stakeholders?

This new NFP commercial company could cut its own costs further by taking on executives from the commercial sector, as volunteers. We know from the work of organisations like Reach that such a move would not harm the brand or ethos of the individual charities. It might cause a problem for the commercial companies that make money out of the charity sector - but competition is healthy, or so we say.

This idea is not new, and although it might feel like a revolution in the charity world, many major commercial holding companies with large numbers of brands have been working this way for years. So what is stopping this move? I suspect it is the conservatism of charity trustees, who feel unwilling to 'risk' their charity reserves, for which they have a legal responsibility, on such a venture. The Charity Commission often requires that charity investments must be held in companies that have at least three or four years of audited accounts.

However, a commercial business plan from a consortium of charities sharing this vision would show that charities spend billions of pounds on these core support costs. 'Charity Services Ltd' would have the best talent and a ready-made market. It would leave the charities to do what they do best - make their part of the world a better place for those of us who need it.

I believe it will take only a few committed people to change the face of the charities sector. If you share this belief, maybe we could get together with a group of charities and explore the possibilities.

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