Charity Management

Leadership, Evolution, and Change

Sarah Mitchell

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000410020
• Edition: 1
• Topic: Business
• Subtopic: Nonprofit Organizations & Charities
• Index: Business

Britain faces challenges that weren't imaginable thirty years ago, challenges which charities, rooted as they are in community action and the public good, should be ideally suited to tackle. But the charity sector seems paralysed. Even after a decade of cuts and immense social and environmental disruption charities are still fighting hard to maintain business as usual. To develop new responses to our changing world the charity sector desperately needs to reinvent itself, radically re-engaging with communities and developing powerful and scalable responses to the challenges facing the UK in the coming decades. What are the ties that bind charities, rendering them unable to re-invent themselves and to re-imagine their services, even when they face existential crises?

This book explores how charities in the UK really operate, as seen through the eyes of people who work in and with charities, and investigates what holds charities back from change. It demonstrates what we can learn from entrepreneurship and market disruption in the private sector, and points to ways in which the sector can re-imagine what it does and how it does this. It presents a new ambition for charities to break free of their history and imagine a new role for themselves in shaping the future for our society.

Presenting a new ambition for charities to imagine a new role for themselves in shaping the future for our society, this volume is especially valuable for academics and professionals in the fields of charity and non-profit management, organisational change, and strategic management.

1

What is Charity Today?

DOI: 10.4324/9781003139089-1

What is charity today? Is it the slightly tatty community hall down the road or the Tate Gallery? Is it the group of volunteer parents who run your local kids football club, or the envelope that came through your door with the picture of the hungry-looking child on the outside and a free pen inside? Is it the retired people who run your local Oxfam shop or the software developers designing new products to support vulnerable young people?

Charity is all of these things and more. It is where we imagine it to be, located in rundown buildings with erratic opening hours, but also on state-of-the-art websites with adverts that track our online preferences. It’s delivered by well-off older people who want to ‘give something back’ and it’s a place of work for many. It’s about disabled people, it’s about pets, it’s about the natural environment, it’s about sport. The sheer variety of charity is sometimes bewildering but it’s also inspiring. This is not a state-mandated area where people are corralled into specific activities, but the creation of a charity is the spontaneous and personal realisation of an urge to make a difference. Taking a step back from the sector I have worked in for more than 15 years it is astonishing to behold – all those people, all those causes, all over the country.

But this very variety presents a challenge. All these different charities bring with them many different and often conflicting sets of expectations. These expectations come in the form of explicit regulations and funder requirements, but they are also implicit in the minds of donors, the public, charity workers and volunteers. These expectations have evolved over many years and some are out of date. In this book I will explore how these expectations mesh with the reality for charities in the 2020s and how they hold us back from anticipating the challenges of the coming decades.

Alternate Reality

The gulf between the reality of the charity sector and public perceptions is wide, as Penny Wilson, CEO of Getting on Board, told me:

The public has many misconceptions about the charity sector, about its size and complexity and heterogeneity, about CEO salaries. Also, the government doesn’t always recognise charities’ enormous contribution to society, as we’ve seen in their response to the sector’s calls for support during the Covid-19 crisis.

(Wilson 2020)

The traditional and enduring view of charity derives from its origins. Evolving out of a religious concept of ‘caritas,’ Latin for ‘caring,’ charity was originally conceived of as an action to benefit another without the aim of getting anything in return. Over the centuries this evolved into a sector that now complements and compensates for gaps in the services supplied by the state and the private sector (Dees 2012).

There are around 167,000 charities in the UK today. They employed 909,088 people in 2019 and work with a further 19 million volunteers each year (NCVO 2020). Charities come in all shapes and sizes and pinning down a definition has vexed academics for many years (Alcock 2010). ‘Charities’, ‘non-profits’, ‘the third sector’ or ‘civil society’ – each of these groups include a subtly different bundle of organisations but each tends to be defined more by what they are not (they are not private businesses, they are not the state, they do not distribute profit), than what they actually are. As Nicholas Deakin wrote in his 1996 Report of the Commission on the Future of the Voluntary Sector:

There is no single “authentic” voluntary sector for which a simple master plan can be drawn up.

(Alcock 2010: 7)

Most attempts to define the sector reveal surprising overlaps with both the private sector and the public sector. Peter Grant of City Business School’s Centre for Charity Effectiveness describes this as a continuum of sorts, with the most traditional, altruistic charity at one end and the most rapacious, profit-driven company at the other. Along this continuum both charities and businesses would locate themselves according to their degree of social responsibility or altruism, and so we’d see a clustering of ‘business like’ charities running trading companies or contracts around the middle, alongside B-Corps like Patagonia or mutuals like the Nationwide Building Society or John Lewis (Grant 2020).

If we narrow our focus, as I do in this book, to UK-registered charities, most have some core founding elements in common. Charities are created by private actors, but they are set up to deliver work that must benefit the public (and which would perhaps not otherwise be undertaken); they may have the ability to reach groups that government, private sector and the state cannot, or do not; and they are run through a more diffuse power structure than other organisations, which gives their stakeholders – service users, volunteers, trustees, workers, donors – more agency and involvement. This creates a very different culture and a distinct set of expectations. As Noel Hyndman puts it:

charities are very different from businesses. They have missions other than to make money. Funding comes from donors who provide funds with no expectation of direct economic benefit to themselves. Recipients of goods and services often have no ability to pay or seek an alternative provider. Charities rely heavily on trust relationships and communal accountability, rather than market relationships and contractual accountability.

(Hyndman 2017)

However, as well as being culturally distinct from the business sector, charities are also very different from one another. Charities today work across an enormously wide range of areas, but they also do their work in increasingly diverse ways. This wide-ranging sector isn’t necessarily visible to the general public. Charities don’t talk about themselves as a sector but only as individual organisations, and they lack the spokespeople to represent them, as Dan Corry, CEO of New Philanthropy Capital advised me. Each charity CEO represents her or his own cause, and charity membership organisations such as NCVO or ACEVO are, hidebound by their members’ diverse interests, limited to speaking in generalities (Corry 2020). The diversity of charities makes it difficult for anything specific to be said about the sector as a whole, either in defence or in criticism. The fact that any point cannot be held to be true across this vast ‘loose and baggy monster’ (Bryson et al. 2002) may have contributed to the slow pace of change across the charity sector. When no single improvement, change or solution can be identified, which does not have a negative consequence for other parts of the same sector, there is a risk of inertia within the charity sector itself and from funders and government.

A Thousand Flowers Blooming

Charities are set up by highly motivated citizens or groups of citizens, and they spring up organically. They are not planned or coordinated and they are not required to be a logical response to objectively defined need. Nevertheless, whether or not their work corresponds to the areas of greatest social need, governments in general recognise the value of charity. The reasons for this are subject to much debate, but include the idea that charities complement state provision by piloting innovative interventions, as well as the idea that charity models the positive engagement of citizens as volunteers and as agents in solving social issues rather than relying on the state to intervene. Governments may also welcome the additional resource that charities can bring, potentially reducing the burden on the state and taxes (Dees 2012; Davies 2016).

The regulation of charities in the UK has signalled an attempt to harness the power of citizens’ urge to philanthropy by nudging this gently towards generating genuine ‘public good.’ The Charity Commissioners Board was first appointed in 1853 in an early attempt at formal supervision of UK charities, but it wasn’t until the 1960s that government introduced the first comprehensive charities act, which required all charities to be registered. Only as recently as 2006 was a statutory definition of charity set out in more detail and for the first time required charities to pass the public benefit test (House of Lords 2017).

Today all registered charities in England and Wales are regulated by the Charity Commission, in Scotland the Office of the Scottish Charity Regulator fulfils this function and in Northern Ireland it is the Charity Commission for Northern Ireland. Charities across the UK have to follow the rules set out by their national regulator, on the way they are governed and also on the broad types of work that they do. In exchange, registered charities are exempt from corporation tax on any surpluses they make (though they still pay VAT and national insurance), they can apply to receive Gift Aid on individual donations and (depending on their local government) reductions in business rates. Registered charities also enjoy a sort of accredited status: many grant funders will only fund registered charities, seeing this as a mark of quality which gives them comfort that their money is indeed going to a good cause.

There are, then, significant incentives to become a registered charity, but the government does expect something in return. The quid pro quo is that the work that registered charities do must provide a public benefit. Unlike businesses, which might be purpose-driven by choice alongside their profit-making objectives, charities are required by law to put public benefit above all other considerations. This makes common sense – after all, the public would expect a children’s cancer charity to put children with cancer at the heart of what it does. If the charity also happens to benefit others (e.g. by giving some positive PR to a company that has sponsored one of its events), this has to be an incidental by-product of its main aim, which should always be to help children with cancer.

Public benefit is a fairly vague concept and today there are 13 different types of public benefit under which a charity may register. These range from the “prevention or relief of poverty” and “advancement of health or saving lives”, to “advancement of religion”, to “promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue services or ambulance services”(Charity Commission 2013).

As these broad definitions indicate, the type of work that charities do is still incredibly varied. Within the field of social services alone, charities run children’s day care centres, supplementary schools, adoption services, child development centres, foster care, nurseries, parent education classes, single parent agencies and domestic violence refuges. Charities run an overwhelming array of services supporting people with disabilities, such as by providing transport services (community buses), employment and education services, independent living and leisure support, in-home services for older people, home meals services, nutrition classes, support groups, personal counselling and credit counselling/money management services. In the UK and overseas, charities provide disaster and emergency prevention and response including volunteer fire departments, lifeboat services, air ambulance services, temporary shelters, emergency and temporary housing, food and clean water, clothing, education, emergency cash assistance, and furniture. UK charities do everything from digging artesian wells in Afghanistan to providing food banks in Bolton.

The sheer range of what charities deliver all around us is astounding, and the Charity Commission’s categories of public benefit seem all-encompassing. But they do conceal some surprising anomalies. One of the most controversial areas is the inclusion of private schools, which qualify as charities under the “advancement of education”. This is despite the fact that evidence shows that private education perpetuates inequality and suppresses social mobility in the UK (Green, Anders, Henderson and Henseke 2017).

By contrast, some community-based non-profit organisations are not able to register. The community-based organisation where I was a trustees for eight years, CFPT, supported private tenants in slum rentals in a highly disadvantaged area of Camden. It survived on a shoestring of grant income, but it did not qualify to register as a charity (despite repeated attempts). This was because not all private tenants are necessarily disadvantaged – even though the ones we worked with were suffering severe health and financial problems as a direct result of their tenancy type. As a result this organisation (total annual income £65,000), which is registered instead under the Co-operative and Community Benefit Societies Act 2014, is excluded from applying to the majority of grant funders. Nor does it enjoy the tax breaks that are enjoyed by, say, Eton College (income £50,900,000 in 2018) or the Sidmouth Donkey Sanctuary (income £42,000,000 in 2018).

So, not all non-profits are registered charities and not all registered charities are what we might expect to be charities. However, for the purpose of this book I will focus on registered charities because these are the sub-sector that the government is explicitly encouraging through regulation. Later, I will explore whether alternative forms of constitution may offer more flexibility for organisations to respond to the changing world around us.

Change is Coming

For more than ten years the charity sector has been telling itself that change is coming. First the financial crash, then years of government cuts, governance scandals like that of Kids Company and safeguarding scandals such as that which consumed Oxfam, immense advances in technology, dramatic shifts of emotion in identity politics – all have changed the context in which charities operate. But seemingly little in the charity sector itself has changed. We still have a broadly similar number of registered charities and they work on broadly similar areas. What’s more, the same charities dominate. As Sir Harvey McGrath, Chair of Big Society Capital and major UK philanthropist, told me:

In the business world new entrants would push out incumbents, as the market drives innovation in products and services. But this doesn’t happen so much in the third sector. Often charities seem to suffer from inertia, perhaps due to the lack of these ‘market pressures’, and to a combination of governance issues and funding challenges

(McGrath 2020).

Now, in 2021, the Covid-19 pandemic has forced a break with the past like no other challenge in living memory. Charities have been jolted out of their usual rhythm and now find themselves able to deliver their work in ways they had never considered possible. However, the question I’m most concerned with in this book is whether this situation can, and will, bring about the sort of shift in thinking that the sector needs, in order to prepare itself and its people for the rapid changes we anticipate in the coming decades.

So, what are these changes likely to be? One of the rare pieces of work exploring the medium to long-term outlook for the charity sector finds that shifts in demography, technology, funding and volunteer support are the key trends that will influence the charity sector in the developed world (Cordery et al. 2017). Peter Grant identifies two themes that have dominated my conversations with charity leaders:

Climate change and digitisation. That’s not just about getting a website set up, but also digit...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Dedication
• Table of Contents
• List of illustrations
• Acknowledgements
• Introduction
• 1. What is Charity Today?
• 2. What are Charities For? Case Study: Church Mission Society
• 3. Do Charities Really Make a Difference?
• 4. How Should Charities be Funded?
• 5. How Should Charities Be Managed?
• 6. Should Charities be Run by Volunteers or Paid Staff?
• 7. Who Leads Charities?
• 8. How are Some Organisations Changing the World?
• 9. Can Charities Change the World?
• Bibliography
• Index