Over the past 25 years charities have had to become more business-like. They now earn more than half their income and raise less than half through donations. Twenty five years ago it was the other way round.
The UK charity sector has also grown enormously since then, by more than 50% in real income terms, and is now worth £12.2bn. This means it has had to develop skills in strategic and business planning, marketing and contracting, while still keeping the beneficiaries – clients, patients, members etc – at the heart of what it does.
This week, we have celebrated 25 years of Charity Talks, the series where more than 150 charity leaders have talked about how they run their charities, for an audience of charity staff and trustees.
In the first series of talks, in 1992/93, Nick Hinton, then chief executive of Save the Children Fund, gave an example of how misunderstood charities were. He related that he’d met someone at a party who’d asked what he did. When he replied, the questioner said: “Oh! What a worthwhile job! Is it full time?” Hinton’s response was, he said, a prolonged, silent scream.
There has been progress since then, but charities can contribute even more.
Concerns are growing about outsourcing government services to commercial companies. One concern, for me at least, is distaste – to put it politely – about commercial organisations being able to make money out of other people’s misery. Capita and Atos, for instance, have earned hundreds of millions of pounds from assessing how severely disabled a person is. In too many cases they have got it wrong and excluded disabled people from benefits to which they have subsequently been judged to be entitled.
There are alternative outsourcers: non-profit organisations, including charities. There is evidence they can do it. Charities know about these services. After all they pioneered many welfare services and have a largely successful track record. Meals on wheels, for instance, were pioneered decades ago by charities like the RVS, Red Cross and Age UK, while the RNIB has been at the forefront of training blind people and helping them into work.
But few are now involved. Non-profit bodies must share the blame for remaining bit players in public services – or perhaps be congratulated for being wise enough to see the structural problems of outsourcing.
Certainly, many charities find the strain of bidding low to win a public service contract almost impossible to bear. Bidding low to win brings the danger of poor quality service for the very beneficiaries they exist to serve. Bidding higher, with good value for money and good quality services, is seldom a winner in times of major cutbacks in statutory budgets.
If charities are to provide the real benefit of their expertise, contracts must be more bite-sized and delegated more to local commissioners. They must have shorter and simpler tender documents.
Most important of all, success must be measured more qualitatively than quantitatively. Commissioners are too often obsessed with what is measurable rather than what is just. Welfare services must meet need rather than make money
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Professor Ian Bruce is president of the Centre for Charity Effectiveness, Cass Business School.
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