Charities shouldn't be put off by recent negative attention around commercial partnerships, Andrew O'Brien, head of policy and engagement at Charity Finance Group, says.
Last week, the Charity Commission issued a regulatory alert to trustees about their legal duties when engaging in commercial partnerships following persistent media interest.
The Commission is right to remind trustees about their legal responsibilities and to ensure that trustees are aware of the risks that are involved in commercial partnerships. However, it is also important for charities to consider the opportunities that are available through working with commercial partners and consider the ways that they can help charities achieve their charitable objectives.
At a time when charities are trying to generate more funds in order to meet growing demand, charities need to be thinking about ways to diversify their income and mobilise additional resources. We have been encouraged to do so by a range of stakeholders, not least, the minister for civil society himself.
In June 2015, he said: "We all know money is very tight, and to realise that vision civil society must continue to innovate in the way it funds itself, runs itself and delivers social action.”
UK private businesses are more profitable today than they have been at any time in the past 16 years, according to the Office of National Statistics. Our sector, by contrast, is suffering from a contraction driven by the impact of government spending cuts. For trustees, that have to consider the best interests of their charity and beneficiaries, to ignore the possibilities of commercial partnerships would be wrong.
The fact is, that as with everything, it is important for trustees to get the right balance. Of course, trustees must do the appropriate levels of due diligence and they must think very carefully about the risks to their reputation, to their charitable mission and to their finances. But they also need to identify opportunities. We also need to be much better about talking about the benefits and reasons behind commercial partnerships. For far too many charities, commercial partnerships are buried in their annual accounts with little explanation. This breeds suspicion and makes it seem as if charities have something to hide.
The list of good commercial partnerships is long. Look at CRUK’s partnership with Virgin Money which saw over £3m raised to fund the construction of the Francis Crick Institute. Pampers and Unicef have had a successful commercial partnership, with over 100 million mothers and babies protected from new-born tetanus. I could go on and on.
The idea of seeking to turn private gain into public good is central to the idea of charity. We need more commercial partnerships, not fewer, if we are going to see social change. This process inevitably involves risks, which must be managed effectively, but charities should not be put off this because of media attention. It the job of trustees and senior managers to grapple with these challenges and meet them for the sake of their beneficiaries.
CFG wants to support charities in their commercial partnerships. We have spoken with a number of charities that are thinking about partnerships and want to know how they should proceed. That is why we are going to put together some best practice guidance on how charities can build commercial partnerships effectively into their strategies, how they should negotiate, manage relationships and move forward once partnerships have ended.
Working with commercial partners has been, and will be, a growing area for the sector, it is important that charities have the tools they need to make them work for their beneficiaries.
Andrew O'Brien is head of policy and engagement at CFG
