Changing the mindset of charities to be commercially focused is crucial

Suzie Bogle, Breathing Space HR’s MD has been a Trustee of Leeds Women’s Aid  for 12 years and Chair for 4 years.  She has also been a trustee of Bradford Law centre for 2 years.

She says changing the mindset of charities to be commercially focused is crucial…

In the current climate of less funding, donations, salary increases and recruitment difficulties, it has been increasingly important to have a strong commercial focus at the head of the organisation.

This doesn’t mean that the charity should turn their focus away from their charitable aims, activities and their service users, but there is a need to combine this with a commercial view.

My view is that profit (or surplus) is not a bad word.   In the Third Sector it should be a focus to make the most out of the resources you have and tighten up on finances, productivity and employee capability.  This is a cultural change for most charity workers as they are fully engaged with the delivery to the service user.  For the survival of the charity this shift to running the charity as a “business” is important.  Charities are just businesses which provide a service to the community in whatever they do.   Surplus is ploughed back into the service, rather than going to shareholders.  Also, the need to keep a certain amount of reserves is critical for a charity.

Those who work in the charity sector at a senior level are fully aware of this need.  On occasion the education of trustees on this issue is lacking and this pulls the charity away from being efficient.  In terms of governance it would be important that the trustees are aware of the obligation on them to make decisions which further the charity’s aims and make the best use of resources available.  Usually this comes into play when investment is required for administration and other non-delivery functions.   My view is, that in order to ensure that the charity still exists in the future, investment is absolutely required.

Increasingly, local councils are contracting out services to charities and not for profits, placing the burden of cost on the charity as the tender process has a strong focus on cost, alongside quality and quantity of provision. If a charity is delivering a service for the local council, the funding for the back office support is usually only a small fraction of what the charity actually needs to cover that cost.  Thus making it even more critical to ensure business processes and people are as effective and productive as possible.