Is the charity sector too smug for its own good?

Charities do amazing work. They reduce poverty, they cure cancer, they save the environment, and a host of other amazing things. But is this both their greatest strength and greatest weakness?

The problem is not whether the quality of their work is good, but the quantity, the scale of it. In other words, no matter how good any individual charity they aren’t big enough to make a difference.  If you want any proof of the diminutive impact of charities, then the fact that we are only 20% of the impact economy is surely a sobering stat (£105 billion out of £423 billion economy, and that £105 billion includes higher education and housing associations alongside charities - https://www.thinknpc.org/resource-hub/impact-uk/ )

If you started with a blank sheet of paper and asked, how do we get rid of child poverty, or transform the lives of disabled people, or shift the dial on climate change, would charities really be part of your plan? I am not sure they would, and certainly not on their own.

And part of the reason for this is that charities are so busy saying we do ‘great work’, that we don’t see that the great work we do is tiny compared to the size of the problem. The government realises this. It's why we feature so little in their plans. And the sector is deliriously pleased when the government takes any notice of us, we can be patted on the head with a covenant and a few small pots of money.

Our problem of great quality, but poor quantity, of impact is compounded by three big changes that are enveloping us.

Funding and fundraising will only get harder.

The last few years have seen a double whammy for non-profits. Government funding is decreasing, and the cost-of-living crisis has made fundraising harder. This means finding the funds to deliver services, let alone grow them, is only getting more difficult. There is no prospect of this improving.

Lifestyles and companies are in competition with charities as ways of doing good

Once upon a time, people did their ‘good’ in the world by supporting charities. Now ‘good’ can be done in a whole plethora of ways. Go vegan. Buy an electric car. Buy ethically. Change your lifestyle.  The list of ethical lifestyle activities is huge, and somebody can do ‘good’ through their lifestyle without having anything to do with charities.

Will young people choose charities as careers?

There is already a demographic reduction in the number of people in their 20s and 30s. As student debts pile up, houses become more expensive, and charities become poorer, will young people want to work with charities? And will they be able to afford to? The sector faces the prospect of fewer and fewer young people wanting to have a career in charities over the next 20 years or so.

What do we do about this problem of great quality, poor quantity?

A commercial start-up that has a good business model finds investors or borrows money to grow. Neither of those routes is open to non-profits. So while successful for-profits can rapidly grow, successful non-profits have to find funds to grow, and not just once but every year. This means the size of charities is limited in a way that it isn’t in commercial organisations. How do charities tackle this limit on impact? I see three broad areas.

1. Campaigning and influence are a strategic imperative.

If non-profits can never be big enough to eradicate child poverty, reduce climate change, or address a host of other areas, we need to influence others to do that job. This could be influence or campaigning with citizens, governments or companies. The key thing is that if charities can’t have the scale to do good, then they will need to influence those that do.  

2. Innovation and inspiration are key

Alongside the campaigning and influence route to achieving scale is the innovation and example route. In other words, non-profits innovate in their services, show what really works (and what doesn’t) and then use those as examples to help government deliver the services. This could be done by providing consultancy services as well as social media/comms activities to highlight the success of innovation.

3. We need a theory of change for the sector

In order to maximise the scale of impact of the sector, we need a plan. We need to have clarity on how we take the meagre (comparatively) resources of the sector and coordinate them for the greatest achievement of our goals. Effectively, we need to agree on how charities and non-profits deliver change, in other words, a theory of change for non-profit work.

The sector needs to spend greater energy working out how it delivers more on a limited budget. We can’t be bigger by turnover to achieve the scale of impact. We need to be smarter because we can’t be larger. And we need to work collectively to achieve that. And to answer my own question, of course the charity sector isn’t too smug for its own good. However it does need to constantly evaluate whether it is working in all the ways that multiply and maximise the scale of its impact.