Trends in the charities sector

With statutory funding rapidly declining and the demand for high quality service provision unceasing, charities are finding themselves in a brave, and incredibly competitive, New World. The question is; are they able to create sustainable and robust business models with the service user still being the most valuable stakeholder?

With local authorities adopting new commissioning frameworks for large public service contracts, the charity sector – and particularly those organisations operating in health, social care and criminal justice - are moving towards a position where they will be able to compete with rather than be the "arm candy" of the prime contractors. However, that could be a long time coming for some of the smaller to medium sized charities as one of core the issues around being able to compete is that they lack the scale and vital commercial & management skills to challenge the private sector.

‘Professionalisation of the workforce’ is a phrase I hear frequently. What makes a good frontline client facing manager doesn’t mean an automatic promotion to a good operational or commercial director. Much work could still be done around training the workforce so that they are able to deal with the challenges of working in an open market with performance management and business development being particular key challenges. I am often asked to find experienced interim managers who have a blend of both commercial and public sector experience, who have worked with multiple stakeholders and have knowledge of a shifting regulatory and commissioning landscape.

Charities are - in effect - social businesses and in any market-led model greater emphasis is needed on evidencing high professional standards and good quality products that are backed by robust governance, greater financial accountability and best value for money for the services provided. This doesn’t mean you ‘stack them high, sell them cheap’ when it comes to working with the most vulnerable people in society, but the rigours of the commercial sector should still apply.

Of course it would be erroneous to suggest that all charity managers are not as forward thinking as their commercial counterparts. I have met many incredibly commercially minded yet socially driven directors who effectively have to achieve more out of less whilst not losing sight of the person at the heart of the care they provide.

Comments

Gordon at 27/09/2013 08:48 said:

Rebecca - one trend we’re encountering is the arrival of large outsourcing suppliers in specialist sectors, using what look like loss-leader tenders to drive out specialist providers and then outsourcing delivery of the contracts to individual contractors. The Compact was supposed to help prevent this but is proving pretty much worthless. Your focus on high professional standards and product quality is exactly what the charity sector needs to adopt to thrive or at least survive in the new environment.

Frazer at 27/09/2013 10:40 said:

Rebecca, you make some astute observations. This is reflective around all sectors of organisations where they are having to find efficiencies in the way that they run to compete. Not just because of the current financial challenges, but because society has changed and people want more from their roles to be able to perform at a level demonstrating intrinsic motivation where they are prepared to put in discretionary effort.

The carrot and the stick, or command and control are no longer appropriate in most businesses for the long term. Leaders of all organisations, especially in charities and public sector, will need to adapt and develop leadership behaviours and cultures that provide clarity of purpose and progress whilst allowing employees a voice, autonomy and input into how the organisation as a whole will progress. When they can achieve this, people will deliver more efficient and creative ways of working to maintain the long term benefits of the their organisation.

As you say, some are already on this journey, but for others, now more than ever, is the time to adapt and embrace this change to maintain an important element to UK PLC, that being the charities or as you say "Social Businesses".

Digby at 04/10/2013 15:58 said:

I work in a growing organisation and recruitment of quality personnel with potential to develop is the critical path to future success. A key factor is dispelling the myth that the charity sector is somehow a "softer" option and less professionally demanding than wider business. The demand for commercially experienced, confident and professionally competent senior management with an interest in working in the sector far outstrips supply.