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Seven ages of a charity?

Seven ages of a charity?

This is an opinion piece by Andrew Cates, CEO of SOS Children reflecting on dealing with other charities and watching them develop.

 

"Thirteen years of parenthood has taught me that imparting experience is not as easy as it might be. Even when they are stuck and want your help children still prefer to learn by dismissing what you tell them, making their own mistakes and inevitably tell you at the end that their way is much better than yours (even though it looks exactly the same). As a father I have long since ceased minding about what opinion they end up with as long as they are doing the right thing. So it is with charities... SOS Children has sixty years experience and international statutes requiring that we should support other charities but sometimes people prefer reinventing the wheel.

Although most charities are made up of well meaning people trying to improve the world, the differences are sometimes puzzling. Sometimes some of the little ones say things which seem far from fair. It is interesting to reflect on where charities come from and how they change along the way, and it does make it easier to understand why charities which are basically look-alikes describe each other as "totally the opposite". With a wry smile, please allow some gross simplifications on the seven ages of a charity!

Act One: The do-gooder

Turnover 0-£0.25m, age<10 year, <500 donors

Someone sees a need (or a cause, such as a bereavement) and tries to help. They set up a small charity fund. They often give years of their life for free. Sometimes they burn out but sometimes their drive, commitment and vision takes them on to the next stage.

Donor viewpoint: A relationship with a charity at this stage can be exciting. Assurance depends on individual relationships and trust. It is a high risk stage, administrative costs are often virtually zero but monitoring and evaluation can be weak. Support can make all the difference to the charity’s survival and progress.

Things to check or consider: Why did the founder decide not to fundraise for an existing charity but go it alone? How dependent is everything on them? How is the audit, scrutiny and control. 

Act Two: The band of friends

 
Turnover £0.25m-£0.75m, age 5 -15 years, 1000 donors

Infectious enthusiasm brings in spouse, friends relations. Scale increases. The biggest risk is an over-dominant founder when other perspectives are needed.
 
The money gets sent out to the field based on relationships and trust.
 

Act Three: A small enterprise

 

Turnover £0.5m - £2m, age 5 -15 years, 5000 donors
 
The scale starts involving paid employment. This includes employing people out in the field (workers in an Africa etc). At this stage responsiveness is very high and communication lines are very short. Policies and controls are few, trust is a basis for business. When trust issues arise with employees at home or abroad they are hard to fix.
 
Most commercial enterprises fail because of insufficient skills. With charities this stage is the one where there seem to be the most failures. A common cause we come across is being let down in the field (people approach us asking if we can take over their projects or control their finances). Local partnerships or local trusted individuals may change nature as the amount of money flowing increases. It is easy to underestimate local pressure on field workers to exploit their position as a charity grows.
 
Generally, those which evolve past this stage seem to turn into ‘committee of one’ types.
 

Act Four: A band of one


Turnover £2-£5m, age 15-25 years, 5000 donors

 
The saying "a band of one gets things done" has some truth in it. The more successful small charities often pile grow through the small enterprise scale based on a benevolent dictatorship perhaps by the founder or someone else. Often control is handed over to a new management team with pronouncements about the charity "coming of age" only to see the founder move back in and retake control a few years later because they cannot bear to see things done anyone else's way. The issue of keeping a distinctive identity (especially when they are very similar to established players) becomes hard.

The stage can work well with a good "dictator"; administration costs are typically low but eventually the span of control of the founder becomes more than they can manage and a good enterpreneur is not often good at judging other people's character. Things go wrong.
 

Act Five: Power plays and delegation


Turnover £5-10m, age 15-35 years, 10000 donors
 
Often there follows an extended period when the influence of the founders is less helpful for the charity. Growth seems to slow considerably. After trying to hand over and backtracking they tend to appoint managers who agree with them, rather than choosing the strongest candidates. This is understandable human nature: the charity was formed because of the founders own distinctive ideas, new management is always likely to have more mainstream views and call some of that into question.

The founders sometimes execute strong but incomplete control and struggle to keep the charity the way they want it. At worst they can become highly critical of parts of their own organisation or demonise other charities as a means of trying to keep a tight identity and control. They are not good at listening or learning.

"Good corporate governance" rules, which should stop board members micro-managing, are flouted. Many people wish the founders were no longer involved but no one says so and ambiguity of who runs everything reigns. 
 

Act Six: Rediscovering identity

 
Turnover £5-20m, age 15-35 years, 15000 donors

Eventually stronger management is appointed and a rediscovery of identity takes place either with the founders or after they have left the scene. Sometimes that means rebuilding a donor base or changing religious nature, purpose or way of working. Administration costs start rising as management struggles with balancing "doing things properly" against cost control.

Typically the organisation becomes more open, learns more from mistakes, copies other charities more, redefines its partners and starts having a more rigorous set of procedures. "Child protection procedure" for example ceases to mean having a folder on a bookcase and starts meaning knowing and living by standards. As another example people stop denying that fraud exists and start measuring and mitigating it.

Act Seven: Where to now

 
Turnover £20m to very large, age 40+ years, many donors

Then major identity decisions start being made. In international aid this is typically around two (or three) questions:
  1.  Do we exist to help people directly or to lobby for change?
  2.  Do we run our own projects under our own brand and take on the reputation risk or do we have shorter term engagements with a series of local partners and walk away from problems which occur?
With child charities a third question arises. Alongside schools, hospitals, family strengthening program, vocational training, micro-finance, emergency relief and livelihood, when a child has no other options are you prepared as a charity to go the whole way and take on the long term commitment of ensuring they are looked after? You have to weigh the fact this may not look good in "number of beneficiary" terms against the certain knowledge that you are the child's last and only hope.

With further growth further problems although risks are lower, administration costs become lower and professional standards rise. Internal communication is harder with worry more about IT systems and processes. Large numbers of people have to share visions and values without much travel budget to support it. Local rooting and central control tussle with each other and some of the exciting feel of the small charity can be lost.

All in all it becomes more like an establishment. Whether a good or a bad establishment in my view depends largely on the people and their beliefs. Many are excellent with everyone working to a shared vision of helping a real need; a few inevitable become institutions which love money too much and cross lines in fundraising they should not cross.

I hope you enjoyed these reflections. Although this is a caricature and no single charity fits the entire sequence there is plenty of truth in it and I can think of examples of all the stages above.
 

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