Government funding, donations and similar funding are reducing across the spectrum so the need to be entrepreneurial is moving from the periphery of charity life to centre stage. So what are the keys aspects about enterprise in the charity sector:
Fit for purpose
The traditional charity model is not conducive to enterprise for a number of reasons:
Cultural: many trustees are change adverse and see their roles more as guardians of the charity than champions
Appetite for risk: too much emphasis on avoiding risk than managing it
Skills and competencies: in a world where they often have more ideas than time how might charities create the additional expertise and resources to make things happen.
So some new thinking and concepts are required.
Having your cake and eating it too
A possible way forward is not about breaking the charity model but adapting it. Maintaining the independence of the charity along with its brand and heritage and looking for added value in a different way.
A group of community transport charities did not want to merge but wanted to collaborate. They reckoned that by working together they would be a force to win a large school bus contract or take on the local hospital visiting. Collectively they would have the critical mass, access to resources (buses) and credibility that they would not have alone.
Another charity looking at possible trading opportunity realised that this could not be undertaken by the charity itself. The traditional route has been a trading company, but what of a Community Interest Company (beloved by social enterprises) limited by shares where the charity holds the prerequisite control but does so by 51% of the shares, leaving 49% available for partners to buy into.
In both cases a separate legal entity would enable the charity to continue its previous existence while being entrepreneurial in a collaborative manner.
In the above illustrations new entities would be formed and while some trustees would be involved as directors representing the charity it provided an opportunity for the CIC to recruit independent board members specifically for their skills. In one instance this is being taken one step further with these board members being treated as part-paid directors using their expertise in terms of real delivery, thereby enhancing the organisation’s capacity and capability. While not suitable for everyone it does provide an alternative way of doing things.