Anne Dickinson, director of The Birkdale Group and companion of the British Institute of Management, describes the trials of charity management.
It is acknowledged that charities are nowadays a great deal more business-like in their approach to problems and the management of their affairs than they were a decade ago. From my work with a number of charities covering diverse areas I have seen much evidence of this change and there are good reasons for it. The charity world has become increasingly competitive. Always a highly fragmented field, many of the smaller causes, as with smaller businesses, are having to amalgamate or shut their doors. The public's purse is being squeezed and charities like businesses have looked for greater recognition of their problems by the taxman.
In this increasingly tough climate the charity manager has become even more focused on the essentials of business management. Setting objectives, developing strategy, evaluation of policies and motivation of people are some of the essentials. Striving for excellence, looking after customers and staff, communicating effectively with both, and, of course, producing a balance sheet which does not stop you sleeping at night, are all points of similarity between the commercial and voluntary sectors.
There are, however, fundamental differences. Many charities are bound by their original charitable purposes which may have been set a century ago. These can be frighteningly specific or worryingly vague. For instance, the Family Welfare Association, of which I am chairman, is an old established charity which has to cope with both of those situations, and our work varies from the provision of professional social work to the relief of poverty and the promotion of health. The achievement of the first can be particularly problematic if based on outmoded notions of professional methods and values.
It must be remembered that unlike the commercial world, charity organisations are not allowed to make a profit; but to be run effectively they need, like businesses, management information and administrative systems. If these cost more than 10 to 15% of turnover there is a risk of incurring the wrath of individual investors, ie. the charity givers, or their major financiers, those statutory and corporate bodies which fund most charities.
The importance of hiring and motivating high calibre staff is common to business and to charities. It is recognised that a sense of vocation and commitment are particularly important to the staff of voluntary organisations. Staff in this area are unlikely to be motivated through levels of pay or other conditions of service. However, we have to bear in mind that good will and ideals do not pay the bills for organisations or individuals, and senior managers need to counter the assumption that people who work in voluntary organisations are angels of mercy, living on high ideals and a sense of vocation. Their employees eat, have mortgages and work like everyone else to provide a decent standard of living for their own families.
Unlike the commercial world, charities do benefit greatly from the free time given by volunteers, but the average time given to this work in the UK is only about nine hours a month. It is unwise to plan the provision of services, such as residential care of discharged psychiatric patients or remedial care of families of abused children, around a voluntary workforce.
There are many complaints in business that ever changing commercial forces, such as fluctuations in the strength or weakness of the pound and interest rates, make planning difficult. With voluntary organisations there is even less control. They have to survive a recession, too, and operate within legislation which often changes the ground rules.
As with other service sectors, there is a move to greater professionalism, entrepreneurialism and the promotion of a contract culture. This brings problems along with benefits. As government policies have changed, voluntary and private organisations are no longer expected just to fill the gaps but to deliver many of the social and health services once provided by a welfare state. These organisations are becoming major service providers and, like businesses, voluntary organisations now have to make contracts.
Any business manager complaining of his treatment by his bank manager may consider the problems of the charity manager who has to cope with funding bodies. They are powerful and can determine the rules of the contract, refuse to pay the costs of management and financial control, and then claw back the cash if they deem the contract to be unsatisfactorily fulfilled.
But the one great difficulty of the voluntary sector is its unique, ubiquitous market: the poor. The service provides practical, emotional and financial support for people in crisis, many of whom may need long-term help. Whatever the problem, the needy have something in common: they are poor and cannot buy their way out of their problems. They cannot wait for market forces to create the most cost-efficient service.
If the charity world is committed to providing a decent service with dignity, it may have to enter into contracts knowing that they are insufficiently funded and knowing that if it had to wait until they were, there would probably be no service at all. There would be a heavy price to pay in human misery and deprivation. So voluntary bodies enter into deals which no other business would touch - all the time. Managers of such organisations have therefore to be great planners, great problem solvers and great risk takers.
So the difficulties are those of any other business - trying to build long-term strategies on shifting sands. But some of them are aggravated by always being at the wrong end of a cheque book, from having to second guess the PR needs of corporate sponsors and, particularly, having to second guess the political agendas of central and local government. That is a tough one.
No wonder charities are more business-like than they were. Theirs is a constant juggling act, balancing the lack of finance with the ever growing need for increased professionalism and the need for brave risk taking. To business managers reading this, and bemoaning their lot in a tough climate, I say: take heart. Things could be a great deal worse - you could be running a charity!