David Ainsworth: By failing to grow, charities are failing beneficiaries

27 Nov 2017 Voices

Charities too rarely try to take their interventions to scale, says David Ainsworth, and it presents a problem for the sector.

One of the most serious issues facing our sector is its failure to successfully replicate good ideas. When charities do find a way to help people, they often don’t share it.

When a charity develops a great intervention which really helps its beneficiaries, it’s able to do things better than other charities. Outcomes in the areas where it works are better than outcomes in the areas where it doesn’t.

Yet too often, that's where it stops. The charity remains local, delivering small-scale services, with no appetite to expand, and relatively little appetite to ensure that other charities have learned what it knows. Even when scale is an active tool for success – when local authority commissioners would prefer to deal with a bigger charity – the sector fights to stay small.

This is of course a problem. Charities exist to deliver public benefit and social impact. I would suggest there ought to be a moral duty on a charity to try to deliver as much benefit as it can. Failing to grow fails to maximise impact.

I don’t suggest that growth is easy, or that scale is without problems, of course. It’s hard to remain close to your beneficiaries if you’re focused on growth. It can be easy to lose track of what you’re about. And it requires a lot of effort and a lot of risk. Some charities, such as 4Children and the Lifeline Project, have come badly unstuck because they focused on growth.

But this isn’t an excuse to give up. If helping people is the mission of your organisation, and helping as many people as you can means you have to do something a bit uncomfortable, so be it.

The evidence is that this isn’t happening. Research by NPC in 2014, for example, found “a general lack of will to seriously pursue scale” coupled with “a number of systemic and attitudinal barriers to scaling”.

What are the barriers to growth?

One problem, of course, is money. You need cash to grow, and it’s often hard for charities to just keep the wheels on the wagon, let alone think about growth. There’s a lack of appetite from funders, for sure, who seem to actively prefer backing smaller organisations, and won’t give grants to back expansion.

There’s also the technical problem of investment. While growing a commercial enterprise is easy enough with loan and equity finance, these avenues are difficult for charities, and have only recently been available at all.

So yes, lack of money is an issue. But another problem is lack of ambition. Charity workers, unlike business owners, don’t get anything out of growth, so there is less motivation to take on the work.

Trustees boards may also be an issue. Boards may be risk averse, and slow to sign off on exciting plans to grow your impact. Even if they are commercially skilled individuals, with a history of growing companies, some may have a tendency to park those instincts at the door.

Charity back offices also tend to be underfunded, leaving FDs without the time or resource to effectively deliver forward-looking plans for growth. And charity chief executives may look at the idea of growth via merger, and identify that if they go ahead, there is a 50 per cent chance they will lose their job. For this reason virtually every merger story I have ever written, in ten years of charity journalism, has featured a chief executive who has either run out of cash or is ready to retire.

Small is beautiful

The entire narrative of the charity sector is that small is beautiful. We hear it from the general public, and from charities themselves. We offer “small charity” rates and preferential tax reliefs that are only useful to small organisations. The implicit belief of many, even at big charities, is that small is better.

Often small is better, especially for the people who are getting help. But it leaves problems unsolved. One charity finds a way to recruit volunteer dentists in one small town, for example, and helps loads of disadvantaged people who were unable to access services. But in the next small town, dentists continue not to volunteer. Chronic toothache remains endemic among the unemployed and homeless, causing more serious problems of malnourishment, and costing the NHS a fortune.

It can lead to a confused environment for service users to access, with users forced to navigate between hundreds of organisations. Lesley-Anne Alexander, former chief executive of RNIB, used to complain that the partial and confused network of sight-loss charities meant that too many blind people were simply not getting help. Christopher Moore, chief executive of The Clink Charity, which won our Charity Awards, told me that the same was true for rehabilitation charities.

“One is not the right number of rehabilitation charities,” he told me. “But nor is 1,300.”

Sticking with that sector, look at the big companies which hoovered up all the contracts in Transforming Rehabilitation, the government’s eminently ill-conceived attempt to replace probation services with payment-by-results contracts. Many of them were younger than the charities which they were competing with, yet they were many times the size. Not because there was anything better about their model, but because they were focused on growth.

Given the public sector’s obsession with commissioning at scale, and the dismal job that many commercial primes do when delivering, one might think it a social obligation on the sector to get big enough to compete with them, and stop them messing up any more government services.

What next?

It is hard to see a solution to these issues. They are structural barriers, and arguably the single biggest weakness in the charity model is that, unlike in commercial entities, the best solutions do not tend to rise to prominence. It may be that this an endemic flaw in the charity model, and we just have to accept that charities are not the best at everything.

What is encouraging is those charities which are focused on growth, such as Catch 22, which set itself the target of being a “social prime” – although it is now just as focused on campaigning for government to take on the learning from its services. Which is another form of scale, and perhaps the best one.

All I can really ask is that we have a conversation about this. How do we find the best ideas and best services in the charity sector, and ensure that they are replicated, so that everyone has the opportunity to benefit from them?

 

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