The last few months have seen great upheaval in the charity and social enterprise sector, as organisations have sought to react to COVID-19. Aside from the severe impact on small and medium charities, even household names are announcing major cutbacks – Bowel Cancer UK recently reported a 40% income reduction, while St John Ambulance are projecting losses of £45m over the next two years.However, even these challenges will be overshadowed by what lies ahead. Nearly one in five of the UK’s charity workforce is estimated to be on furlough, a looming cliff edge. Yet while uncertainty stalks charities and social enterprises, opportunities are also arising for building back better – this is clear with digital adoption and the way that COVID is accelerating integration, such as in health and social care.
How to respond?
At my organisation Eastside Primetimers, we are focusing hard on helping charities and social enterprises to get on the front-foot, with new strategies to rebuild their organisations and communities. I outline below what we think is the best way to do this – six themes to guide you in finding the right size and shape for your organisation’s resilience and impact. This is what we mean by “building back better”. I’m impressed by those that are being proactive such as chief executives Martin Houghton-Brown, Genevieve Edwards and Gemma Peters, who have used their platforms to speak honestly about restructuring. When I recently interviewed Richard James of YMCA St Paul’s Group, he talked about how this period has presented a rare “opportunity to stop and take stock”.
We believe that there are six ‘pillars’ of what building back better will look like for social organisations. These are the core foundations which need to be reviewed and prioritised as we reboot. Some will need more attention than others, depending on individual circumstances. And while few of these strands are new, the crisis has heightened their relevance and presented an opening to make rapid progress in each one.
1. Financial Resilience
Every organisation will need to review their cost and revenue model for 2021. First, charities should rapidly and thoroughly examine their fixed costs and put in place cost-reduction programmes. With the best of intentions, as a sector we are prone to taking on too much and spreading ourselves thin. Although painful, cost-cutting programmes enable us to do the opposite: focus very hard on the knitting and only protect resources where there is evidence of funding. We are seeing some early examples with recent announcements from St Johns Ambulance and the Alzheimer’s Society.
Simultaneously, new income generation strategies are required. Take The Big Issue – with their street-vendor model temporarily unviable, the magazine went entirely online for the first time, generating 8,000 paid-for subscribers in 7 weeks. There are many possibilities to digitalise services and reach new types of customers and funders.
- Take costs out by focusing on delivering a smaller range of viable services
- Communicate the restructure process clearly, in order to maintain trust and avoid raising false hope among staff
- Establish an income diversification plan to transform the business model and take advantage of new opportunities
2. Flexible work
COVID-19 has shown many organisations that having more of your staff working partly or entirely from home can work well, with benefits for employee satisfaction and productivity. Economy-wide, employers now expect this practice to double. At least 33% of employers plan to introduce some form of flexible working, including options such as part- or flexi-time, per CIPD. New work patterns are also intimately connected to the finance picture – success with homeworking has recently prompted Action on Hearing Loss to end the lease on their expensive London office.
However, home working also creates a lack of physical connection and requires more effort to bring teams together in virtual spaces. It can also disadvantage those who do not have space at home to double as an office. It’s important for employers to invest in technology and training – 44% of employers plan to do this, and charities must make sure they are among them. Articles here give advice on data protection and honing your practices for recruiting and onboarding virtually.
- Review medium-term work arrangements for staff and update terms & conditions to enhance flexibility
- Review your IT systems and data security arrangements to cover the requirements of flexible working
- Provide training so that your workforce can upskill in recruiting and managing in virtual settings
The need for a digital revolution in charities has long been talked about (see our 2019 issue of EP Insights on charity digital), but since then necessity has indeed proved to be the mother of invention. The latest Charity Digital Skills report finds that 66% of charities are delivering all work remotely, while 61% are planning more online services or are seeking to train staff and volunteers with digital tools. However, there are challenges to ensure momentum is maintained and investment will be required into technology, staff training and recruitment – 27% of charities have had to cancel some services due to lack of skills.
WPF Therapy is one of many uplifting examples of an organisation that had largely delivered services in physical settings, but rapidly moved them online. In the space of a few weeks, it started to offer counselling consultations to customers virtually and updated its pricing structure to accommodate this new type of service delivery.
- Review technology usage across your team and seek ways to embed operational/service delivery enhancements
- Review the digital skills of staff and put in place training
- Recruit Trustees with digital skills
The charity sector has a poor record on race and gender equality. 62% of large charities have all-white boards and men hold nearly 60% of top posts (despite women representing 65% of the sector workforce). Rather than being a beacon of leadership, the charity sector sadly mirrors structural inequalities across society.
COVID-19 and the increased prominence of Black Lives Matter have brought this even more to the fore, as the burden of the epidemic has fallen harder on BAME communities and threatened the solvency of so many of the organisations that support them. There are those who are showing the way forward, though: #CharitySoWhite and Ubele’s campaigns are must to learn from on race inequality, while Windsor Fellowship and Inclusive Boards are brilliant on diverse leadership.
Recovery planning gives every not-for-profit organisation a chance to rethink practices and plan for a more representative and cohesive workforce. There will be many benefits from doing this, including expanding the talent base within organisations and designing services that reflect the experiences of the communities we serve.
- Make a diversity and inclusion plan
- Have a recruitment policy that actively seeks applications from ethnic minority candidates, those with lived experience and other under-represented groups
- CEOs/Chairs upskill on current implicit bias and equality practices
COVID-19 has seen many new partnerships cemented, whether that’s collaborations such as British Red Cross and FareShare pooling volunteers in effort to combat food poverty, or new mergers like South West substance misuse charity EDP joining national charity Humankind.
We forecast two major trends ahead. Firstly, the rate of organisations merging as part of financial recovery will be higher than usual, with numbers spiking in hard-hit sectors. Second, many more organisations will be open to explore transformative partnerships, whether that is a merger or another type of strategic alliance. This is rocketing up the priority list of charity executives, with a recognition that the scale of our problems calls for new approaches.
For any organisation with M&A interests, it will be important to decide how to balance competing priorities. You must be ready and responsive, but you will also need a clear process to assess opportunities critically and undertake due diligence of partners in an environment where forecasting is less certain.
- Establish a partner development plan – review existing partnerships (including what’s working and why) and then develop an approach to seeking new partners
- Consider new partners in adjacent sectors, not only organisations which are familiar
- Join the EP Partner Register if you’re experiencing financial concerns and are interested in finding a partner
6. Leadership and governance
Finally, effective management and board governance is needed to ensure the rest of these changes come to fruition. Some charities we supported under our Business Continuity scheme reported that when it came to the crunch, certain trustees were inexperienced, inaccessible or risk-adverse. Stronger organisations have benefited from having experts in finance and digital in their governance team, or can learn from what YMCA St Paul’s Group did when they made board and subcommittee meetings more regular to speed up decision-making. To adapt to the new environment, social sector organisations need to balance responsiveness with well-informed discussion and scrutiny.
- Review Board performance and decision-making processes
- Recruit new Trustees in line with the strategic direction of the organisation
- Consider if the Board is well-balanced in terms of diversity and digital skills.
This is a time of great change and uncertainty for the sector, but done right, it can also yield opportunities to reposition your organisation for the future.
If you would like to talk to us about the next steps in your Build Back Better strategy, contact me at email@example.com for a consultation about how we can best work together.
Richard Litchfield is chief executive at Eastside Primetimers