Partner Article

The business of charity

It’s Third Sector week on Bdaily. Richard Craig, CEO Charity Technology Trust, looks at running a charity.

In some circles, comparing the running of a charity to the running of a business is the equivalent of committing a cardinal sin. I’ve never understood this. In early 2011, I made the move from working for technology businesses and start-ups in the private sector to heading up CTT. I quickly learned that whether an organisation is selling products or working toward a charitable mission, hard work, good business sense and strong leadership skills are essential to success.

Like business start-ups, many charities fail within the first few years. All organisations need capital to survive and grow and charities also need money to have a sustainable impact, as well. While fundraising to support their missions is vital, charities cannot ignore the fact that funds are also needed to pay salaries, bills and for other general running costs, so it’s vital that their finances remain steady.

However worthwhile a cause, if a charity is unable to balance revenue and expenses, it will end up in debt. In order to maximise efficiency and effectiveness—just like in business—it all comes down to the bottom line and having a clear, effective strategy and strong financial discipline are required to ensure a charity continues to thrive.

Setting goals and monitoring your successes are as important in the third sector as they are in the private one. It helps you realise what works and what doesn’t – and with limited resources, there’s simply no point continuing with projects or campaigns that waste time, money or effort, no matter how well-meaning they might be. Software and IT can help you avoid funding wasteful projects by collecting relevant data, producing reports and applying the information to planning for future campaigns. Demonstrating measurable proof that your activities are having the maximum impact should also help prove to donors and supporters that yours is a charity worth investing in.

Much like Venture Capital funders, it is important to remember that donors and grant funders need to see the results of their donations – and that you are accountable to them, as well as to your board, managers, employees and intended beneficiaries. As many charities know, if you don’t achieve the goals that you’d promised, you may not receive such generosity or dedication next time support is needed.

Increasing our list of potential donors, collaborators and partners is equally as important at CTT as acquiring new customers and partners was in my previous private sector roles. New business is not only a source of valuable income, but also provides opportunities for joint activities that can help a charity to achieve its mission. Some charities may choose to operate like silos, believing that they can be more or less independent of others. It makes much more sense, however, to consider working with other, relevant organisations whether they are in the private sector or not-for-profits. Think about what you need to achieve and consider those organisations that could help you reach it.

As in any good business, it is essential to treat staff and volunteers with respect. Involve your team in generating ideas for fundraising, reducing expenses or cultivating future collaborations and provide incentives for achieving goals. Providing market rate salaries wherever possible is important —it’s not always fair or appropriate to ask people to work for nothing and staff will do a better job when they feel well rewarded. Monitor employee progress and at the same time, be open and honest about the successes and failures of the organisation.

Thinking strategically, or even aggressively, should not be the reserve of the business world – charities should not be afraid to do this. No less care and skill are required to run a charity than a business, so both should be approached with the same vigour, passion, discipline and drive for success.

We’ll be featuring more opinion and comment from the experts, and interviews with key actors who provide their take on the current state of the sector. Check out the other Third Sector focus articles: UK leads the way on social investment; what does “The Third Sector” mean to you?; the challenges facing the Not for Profit sector; how can charities maximise their cash generating ability; and it’s tough out there: investing in social enterprise.

This was posted in Bdaily's Members' News section by Richard Craig .