The Great Transition: what it means for voluntary and community organisationsNovember 7, 2010
It has been an eventful few months for the voluntary and community sector. Having worked as a social enterpreneur myself and been involved in social action at a local level I know what it is like to go from grant to grant, and to struggle financially, whilst demand for your services rises inexorably. I also have experienced the exhilaration when funds start to flow, when you begin to see the impact that your charity is making on the ground, and when it starts to scale across the country, indeed the world. And I have also witnessed wise and courageous Trusteeship and leadership at work, balancing the temptation to accept certain kinds of funds even though it might distract you from your mission or put you in a vulnerable situation in future, with a desire to have a more mixed model with funds from earned, private, and philanthropic sources.
It would be an understatement at this point to say that this is going to be one of the most challenging times for our sector, a time in which many organisations will – having experienced tremendous growth in government grant and debt funding for charitable activities over the last decade – see real reductions whether at the local or central level. Many are now already taking having to adjust to the new climate, and some are months away from running out of funds. It is not surprising therefore that there is concern from a range of quarters, including over the last few days from the Archbishop of Canterbury himself.
But there is also another way of looking at what is happening – to acknowledge that this is a time of huge transition for the sector. Transition – not just because of the need to move away from government funding to a greater mix of sources of funds from different sources; but also because the charitable and voluntary sector is about to enter a new phase of growth and prominence, and will require a boost to its skills and a repositioning of almost every organisation and group in it to make the most of opportunities coming just over the horizon. Whether you are large, or small, or in between, organisations in the social sector up and down the country are not just coming to terms with more constrained times as we all are in society, but also having to think about what their role might be in the coming era.
To make this shift well there are several things that will have to happen, through partnership between the public, private, and voluntary sector, and with the involvement of citizens as well. The first is simply to survive. I’m pleased that the government has announced a £100m transition fund to support organisations from £50k turnover to £10m to help bridge this period, with a focus particularly on those most at risk of state funding withdrawal. Organisations in this size category have the greatest exposure to government reductions since they have the capacity to apply for state funding relative to smaller organisations.
There is more we need to do to help those organisations with a turnover below £50k, even though their exposure to statutory funding can be as low as 14% depending on what statistics are used. Such organisations tend to be partially staffed or have no staff, and they are particularly hard for central government to reach because of the sheer number of them. This is a time when we as citizens can respond because the sums needed can be within our reach to help fundraise – £5k-20k, sometimes more. Here in Shoreditch, as I’ve written about before, I’m involved in setting up an informal group called the Shoreditch Group (sorry not a very original name I know) to help respond to need and support new and existing local voluntary and charitable organisations. The basic idea is that I and about 10-15 others with a heart for the area will get together in the pub once a month, enjoy each other’s company and have a few drinks, and then share our skills and networks to help identify and support local voluntary and community organisations. I’ve put out a challenge to those joining the group to pledge £5k this year over a twelve month period for us to donate or socially invest, which I’m asking everyone else who joins to match – not huge compared to some of the super wealthy philanthropists I’ve come across, but I guess that is the point. The idea is that actually everyone can get involved in philanthropy, and join effectively what is a social angel group, and at whatever level. Some groups might get together with each pledging £50 a year, others might pledge £500k a year. It’s a movement that has been historically popular in this country over the centuries, and also in the US with organisations such as Giving Circles. If more of us applied our skills and funds in this way, as we’ve seen with campaigns like the Dispossessed Campaign in London, we could achieve a lot.
The second challenge beyond survival is to look at how what one currently does could be done in alternative ways that reflect more constrained times. Perhaps by partnering (or even merging) with other charities in the area. Or by finding pro bono space or support. Or by focussing on your very core activities and working with other organisations or individuals to ensure that non-core activities that have demand are still being carried out in some form. Those that have excess space and resources whether in the voluntary, private, or public sectors, might look at sharing that space to help small organisations at risk reduce rent and property costs. Some staff may be willing to go part-time (this happened to me at a charity I worked for during the recession), which is a method used in the private sector over the last few years to not lose people but which acknowledges the challenges everyone is facing, whilst helping everybody transition. Timebanking is also an option for non-core activities, which means the charity can focus on its core, but offer to those around who have time to provide peer-to-peer support and self-help, with the right training and oversight. I also know of charities that have shifted their volunteer recruitment to get people who can in turn manage other volunteers, allowing management to focus on core operations, reviewing strategy, and fundraising.
The third challenge will be to understand what the future landscape for your sector will look like, which is rapidly evolving and segmenting. In future it won’t be enough just to call yourself a social enterprise or charity and hope for the best (if it ever was!). Some will decide they are and want to continue to be a professional charity or social enterprise out to get government contracts on a payment by results basis or through tenders, and will need to either join consortia or get working capital to participate in the opportunities that will be opening up (a share of £60bn worth of public contracts annually). Others will eschew government funding, and seek to become mainly earned income social businesses, selling direct to customers or institutions, and offering patient or commercial equity and debt to help them get established and scale. Still others will want to focus on fundraising because of the nature of their cause, either through targeting the mass market or high net worth individuals or foundations. Given these tend to be right now quite swamped, I think it is also a good idea to look at fundraising opportunities that are allied with shopping, online and offline. Giveasyoulive.com for example allows users to download an application, and if you shop with their affiliate online retailers (of which they have many), as much as ten percent of your purchase can be donated to any charity of your choice via justgiving.com. This market alone apparently could generate £2bn of donations a year for charities. Still others will want to continue to operate as very local community organisations, social enterprises, or charities, and will draw a mix of local funds. Sites like localgiving.com here can be really useful as a way to signal your existence and tap into a market of donors interested in getting involved in organisations in their neighbourhood.
The fourth challenge will be to understand what your skills and financing gaps are to help you realise your mission. This review could either be done in house or with the help of mentors and external volunteers, and will cover everything (even if just on the back of an envelope) from the make up of trustees and directors, the business plan, a growth strategy, a staff and leadership strategy, a volunteer recruitment strategy (including how one might make the most of timebanking), and where there might be opportunities for offering investment opportunities (whether loan or patient capital or hybrid). Crucially for those wanting to tap into the future social investment market, it will be important to work with organisations known as “social venture intermediaries” or “social finance intermediaries”, who specialise in helping organisations, new and existing, to tap into such finance. An alternative is to go to social angels such as the group I am setting up with finance skills, as well as to – in future – social exchanges – where organisations looking for investment can put their pitches up online. Another route would be to use the skills of a lawyer or accountant or business person with financing skills (or get them to join your board of Trustees!).
The fifth challenge will be in knowing what your impact is and making the most of future funding opportunities that will arise so that you get paid for the achievements of your voluntary and community organisation. So if you play a valuable role in creating social capital in future and have a powerful model that works, apply to the Community First fund or in future to local neighbourhood budgets (which will ideally be co-commissioned with citizens). Or if you are a youth organisation that happens to also reduce crime (e.g. midnight football I am told can reduce crime by 70%), look to get paid for by results for the crime reduction achieved, and not just seek funding for the work you do with young people generally. Or if you are really good at managing the space you rent from the council, and they are threatening to double your rent and want to put other tenants in alongside you, suggest that they keep your rent the same and let you bid to manage the contract to look after the space with the other tenants (this is a true case I have come across recently; and with the right to bid it will be easier in the future to do this).
There is no getting away from the fact that this period of transition will be difficult. But the potential rewards for those that successfully make it will be immense: greater freedom, more diversified streams of income, greater focus, better partnerships, greater impact, happier and more satisfied beneficiaries. As the state and private sectors respond and adapt, the voluntary and community sector has a huge opportunity to become more sustainable and self-sufficient by working more closely with each of the other sectors to support citizens in turn to take more control of their lives. And we have an opportunity as citizens to help the sector in turn successfully meet the challenges that will arise in the Great Transition.