What can business learn from the charitable sector?

What can business learn from the charitable...

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Over the past 10 years I've got increasingly involved with charitable & not-for-profit organisations and, in general,  I find that their "business practices" in terms of money management, forecasting, budgeting and making the most of what they have is way in advance of the equivalent practices within my SME clients and the large businesses I come into contact with.

In more recent years, as many will know, I have also been frustrated by the lack of interest within the SME sector and their advisors over Sustainability and Social Responsibility (recognising the impact the organisation has on the community & the environment) (see discussion group) whereas, within the charitable sector this is just part of what they do, it's in their DNA and they raise eyebrows when I inform them it's not a requirement in the business sector.

I have read many reports on how the charitable sector can learn from their commercial counterparts and many charities have been persuaded to recruit from business and I'm sure there is a benefit in that flow of experience and skill but should this always be a one way flow, isn't there a great deal that business could learn from the charitable sector?  This point is put far better than me by Debra Allcock Tyler in a recent article in Third Sector.

I suppose when you sit back and think of why they are there in the first place it's not surprising that a charitable organisation will care far more about how it handles money and other resources, not just because the Charity Commission says it should, but because the people involved care about what they do and the results they achieve.

Consequently I tend to get far more enjoyment out of acting for and helping a charity/NFP than I do with many business clients; where the preoccupation with the bottom line, both pre & post tax can easily manifest itself in greed.

This is a personal view and whilst not 100% true for every business or non-business I can't deny my experience.

Any thoughts anyone?

Replies (6)

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By Moonbeam
14th Apr 2011 17:17

Everything not rosy in Charity sector

Sorry, Paul, but you did ask...

I have worked for some truly badly managed charities. The worst have a high turnover of staff, mainly because the boss is so awful, and many seem very keen to pay high management salaries. The trustees of these organisations seem to be plucked from the ranks of the great and good (many of whom are good for nothing). A bad boss can stay for years with no comeback.

I have a very well managed charity client at present and I think they do a very good job. So much seems to me to depend on the quality of the chief exec, as too many Trustees don't want or aren't capable of truly managing anything.

I think the charity sector contains far too many rogues and needs much better public scrutiny.

Similarly, there are some very poorly managed private companies. They do at least have to make a profit to survive and then pay corporation tax.

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By User deleted
14th Apr 2011 18:15

Doing very nicely thank you .....

CEO Salaries excluding pension contributions

http://society.guardian.co.uk/salarysurvey/table/0,12406,1042677,00.html 

Or to put it in simple terms a Charity needs 10,000 £10 donations just to cover a CEO on £100,000 pa (exc pension etc) - so nothing goes to the 'needy' until those running the show have had their cut !

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By cymraeg_draig
14th Apr 2011 18:24

Comparing chalk and cheese

There's a fundemental difference.

Charities are formed to meet some need - (helping the poor, training guide dogs, saving whales, or whatever).  

Businesses are there to make money.  A business doesnt care about the quality of it's products or the standard of its service, so long as it's profitable.  

A charity on the other hand is all about supplying a good "product" - and doesnt have to worry about profit, merely survival.

Therefore the two are coming at the market from totally different directions.

A business measure success by how much money it makes - a charity measures success by how many lesser spotted three legged Albanian grasshoppers or whatever, that they save.

 

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FT
By FirstTab
14th Apr 2011 23:35

Paul - A request

I am sorry totally off topic.

Paul I would love to read your blogs. How about starting this?

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By Steve Holloway
15th Apr 2011 09:05

Not so different ...

 some of the practices of the larger charities when it comes to exploitation of legacies would make the likes of BP think twice! We had a case in point here recently. Old lady leaves large charity her land (on which she has created a nature reserve) on the explicit proviso that it is kept to provide a habitat for wildlife. Charity challenge the will term and apply to build houses on the site as 'it is their responsibility as trustees to maximise the assets of the chairty'. The council have thus far turned down the planning application but the anger of local people is huge.

I think there are well run and badly run charities just as there are businesses. I am not a great believer in altrusim and I certainly don't think the chief exec of the RSPCA (for example) is motivated any differently on a personal level to the chief exec of any other business. From a professional point of view it is not a sector that interests me; I am happy that it is my clients' taxes and wages paid that provide the funding though.

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By Robert Lovell
19th Apr 2011 16:06

New Charities discussion group

There have been a lot of threads like this in the past few months, so when we had a number of requests from AccountingWEB members to set up a discussion group for charities, it was an easy decision for me to go ahead and create one.

If you are affected by similar charitable issues - or just want to share tips and ideas with other users - come and join us there.
 

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