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Marianne Powell
- Thursday, March 13, 2008
THE DIFFERENCE BETWEEN charity and business used to be fairly simple, back in the old days. Charities did good stuff, often on a shoe-string. If they were lucky, they got money from the public or the odd grant from the council. Meanwhile businesses made money. They might occasionally do good by giving a bit of it away, but essentially the rules were clear. Not any more. Charities are under increasing pressure to be more like business. The buzzword (well, phrase) is social enterprise. Roughly speaking, this means doing social good and making money all at the same time.
Is this a terrible thing? No. The biggest charities have massive turnovers. Good financial planning and strategic thinking are just as important for charities as for business. Selling goods, services or expertise to make money can allow charities the freedom to spend these funds as they wish, rather than being tied into restrictive grant agreements.
It’s not a bad thing either, if the outdated image of charities as well-meaning amateurs takes a battering. You need real skills and expertise to change the world, often more than you need to run a business.
But with all the focus on what it is that businesses do well (making money) it’s easy to lose sight of what they’re not so good at. Big business, on the whole, doesn’t inspire trust, loyalty or engagement. It doesn’t usually care about anything beyond the bottom line.
"Can you balance a businesslike approach with a genuine desire and skill to change the world?"Charities have a unique quality that inspires people, and part of this is a focus on achievements that have nothing to do with financial gain. The public is increasingly cynical about business. And the more charities look and feel like a business, the harder it is to remind the public of this crucial difference.
New Labour, perhaps unsurprisingly, is an enthusiastic backer of social enterprise. The notion of charities that make their own money has proved irresistible. But this has coincided with a massive downturn in government-grant funding. There is a group of charities that will be lost if social enterprise dominates – the small organisations that were set up to meet a genuine need, and have no interest in becoming a business.
Can you balance a businesslike approach with a genuine desire and skill to change the world? There are plenty of examples that show this can work fantastically well. But this should not be the only way for charities to approach their work
> Stephen Hopgood - Oxfam.com?
I can see several ways a charity that deals with vulnerable people becoming a social enterprise.
Several times in the past 12 months I've been to training days where the food was purchased from a charity that has set up a social enterprise to provide work, training, wages and decent food to vulnerable adults. Plus decent, healthy food to paying customers. :)
A couple of furniture repair organisations exist locally too - charities that provide training, recycling and cheap goods.
Martin
and ask whether businesses can become charitable?
For example, Starbucks - possibly an evil corporation - but let's take it as it likes to portray itself as a caring, sharing, "lets-make-the-world-a-better-place" sort of company. It announces that 100% of its coffee is going to come from ethical sources. It says "look, we're helping the world's poor by buying their coffee at a fair price and selling it on. We use our profits and run to build schools, hospitals etc in developing countries." Isn't that what a charity like Oxfam is essentially doing?
Now - do you want Starbucks to get all the benefit of being a charity? Although there are lots of other niche benefits to being a charity, the primary one is the huge tax benefits. But I'd be uncomfortable with a business being able to claim charitable status simply for not being bad.
Personally, I think charities are defined where there is an inbalance of value between the parties. In other words, there has to be three parties - the organisation, the beneficiary and the funder. The funder provides what the beneficiary would otherwise have to pay (or in kind) for use of the service, without getting something of equal value back. When there is an exchange of value between any of the parties then it is a social enterprise.
So whilst charities should look at ways of exploiting their assets, once you turn your assets into pure money-making opportunities then you loose your claim to be a charity. This is where the arguments about Wooden Spoon originated.
And many charities don't have ethically exploitative assets. It's difficult to see how any charity that deals with vulnerable people could reasonably become a social enterprise. So we have to appreciate that charities will always have to exist; and there always needs to be a way of gaining funding that doesn't require something being provided in return.
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