Regularly updating strategy typically expands charity capacity by 53% and increases income by almost a third, according to research by the Garfield Weston Foundation. That’s a significant impact. Yet, charity leaders and teams say they lack the skills and are too busy with day to day operations to be as strategic as they need to be.
Even when busy leaders and their teams finally find time to discuss strategy, many struggle with the skills needed to make progress.
According to the NCVO’s 2019 analysis of voluntary sector workplace skills, 49% of voluntary sector staff say they lack complex analytical skills, 41% struggle with problem-solving and 38% say they lack detailed knowledge of how their organisation works.
In a world of continual change, where strategy is no longer the domain of the CEO, staff need to make strategic decisions daily. This means that broader team engagement with strategy development is an absolute must, if leaders want to get change off the starting blocks. Yet the same report showed that 67% of voluntary sector staff also struggle with the soft skills so essential to achieving shared decision making amid team and cultural dynamics.
It’s not really surprising. Charity strategy development is a unique skill and charity teams face quite specific challenges.
It’s not uncommon for charity staff and trustees to draw on business strategy tools when trying to organise their way forward. It’s understandable but charity strategy is different from company strategy and needs a charity strategy approach. For one, the charity buyer and the charity service user are often physically separated, creating the unusual situation of two, separated aspects to the market. They also follow different rules. One of its audiences (fundraising) is competitive, the other (services) can be a number of things from collaborative to oligarchic, where a few major charities virtually own a sector. As with any market, charities need to remain in touch with constantly shifting audience needs and provision. For charities though, this is hampered by an increasingly strident prerequisite for ‘ride to the knuckle’ service delivery as well as an often implied prerequisite to provide loss leading services. Sometimes, they face the added complication of outdated funder perceptions of best practice. These all make it that much harder for charities to predict and to adapt to change, and they are all considerations which differentiate charities from businesses.
Then there’s the universal issue that the success of many senior management team leaders has been built upon exceptional operational skills. Operational thinking forms a valuable knowledge base for strategy but to think strategically teams need a whole different skill set. Without it, teams will be overwhelmed at best. At worst, they can be obstructive and sweep valuable concerns under the table.
Yet few things are more central to charity sustainability than the ability of its staff and trustees to think strategically.
To understand this it’s important to define exactly what a charity strategy is. First off, it’s not just a plan. Neither is it a set of objectives designed to motivate staff. Either of these two approaches, by the way, carry the same risks as rolling a dice. Strategy considers a wide range of facets about what is going on inside and outside of a charity, and what may happen in the future. It’s a considered response to this knowledge and the result of a process of information gathering, analysis, imagination and shared discussion. It’s a pathway to achievement which takes into account potential change and which makes success more likely. It keeps charities relevant.
Companies take risks for financial reward. Charities want to be relied upon
Of course, companies, as well as charities, need and develop strategy and there are often good points of overlap and useful tools which can be applied. The difference is that the structure and needs of charities are very different from that of companies, so we may prioritise different strategy and change tools or modify them considerably for the sector. The other difference is that companies are not the most sustainable of things. 9 in 10 start-ups fail and 12% of companies are dissolved annually (Companies Register Activities, 2017-19), as companies, intent on day to day operations, find that their products fall prey to industry lifecycles and developments. Charities are, by their definition, the product of passionate purpose and intense commitment. This level of lottery would not suit the average charity staff member or volunteer. While needing to stretch and innovate, they’re in it to deliver a promise to beneficiaries – not for a high risk and potentially fleeting profit. This is borne out by their much lower dissolution rate of 3% (How Charities Work, 2019). And this is the whole point of developing and maintaining strategy, but in a charity way – for sustainable impact.
Considerations when forming charity strategy in a charity way
Unpacking some of the differences and obstacles helps charity staff and boards to get closer to the heart of being strategic in a charity way rather than in a company way. Let’s focus on 4:
- The two charity markets. Charity service buyers and service users exist in 2 markets sharing an outcome, except in the case of Social enterprises which are more akin to the corporate model. They have different, but equally valid, needs and structures and both should be part of strategic decision making exercises
- Connection with changing information. No one would deny that it’s an ideal for charities to stay in touch with shifting user needs, policy change, provision changes & funder circumstances. It’s also important to recognise too, that for the charity sector, perhaps more than any other, that there are structural and cultural obstacles to doing this which need to be overcome. Charity services often address complex, tricky problems so charity leaders and teams need to be able to read a complex system of interactions which, by its very nature routinely masks impending change. Yet these could be valuable opportunities or serious issues, which can threaten service demand and funding, seemingly overnight. These challenges can be overcome, but to do so they have to overcome the culture of frugality preventing charities from taking space to read the system and to innovate. This in itself is threatening the very sustainability of charities, as they fail to adapt
- The implicit requirement that a charity will provide loss leading services as well as self-sustaining ones. This cuts to the core of charity sector attitudes about the value of services and about the power of funders to negotiate added value. It also pinpoints the need, not just for greater impact and cost reporting, but also for greater use of this information to raise awareness of the issues and to help form strategic responses in the form of partnerships, marketing approaches or funding streams which sustain or adapt the business model
- The overwhelming nature of information without the tools to manage it. All these issues and ‘pieces’ of information make for a potentially unmanageable decision making process, when placed into a charity setting with busy staff and trustees, different and valid perspectives, a strong passion in the cause and limited time and charity strategy skills to absorb and consider the implications, let alone agree upon a shared course of action. Knowing which strategy tools to use and how to use them to create charity strategy is essential but so are the soft skills to invite participation and to accommodate diverse perspectives.
Change Q is a specialist charity strategy consultancy. Using high impact, practical services, which suit the limited resources and time of the charity sector, we help charity teams to access vital sector information, master charity strategy tools and create shared action plans. We support charities to develop charity service strategy, partnership strategies, fundraising strategy and marketing strategy. To find out more about how we could help you get in touch with firstname.lastname@example.org or visit http://www.changeqconsultancy.com