In this article I am going to provide 7 reasons for charity failure. I have also written about Charity turnaround. I have said it before, just under 90% of UK charities turnover £500,ooo or less. According to the FSI only 19 per cent of small charities collaborate effectively together “to any meaningful degree”.
I am aware that demand for the services of small charities is increasing in the wake of continued public sector cuts. At the same time, finances of small charities remain unstable in light of a public funding environment that has shifted towards competition commissioning and contract models rather than grants, squeezing smaller charities out of the market. Only 7% of small charities recorded an income increase.
Assuming you have a charity up and running and the vision and values is attractive both to its clients and donors charities fail because
- charity efforts falter and you get charity failure because the leaders, most often founders and Trustees simply did not accurately calculate the amount of support that would be available and the alliances and partnerships that would be needed to sustain their charity. and didn’t take the time to measure this before they put time and money in.
- charity executives and trustees are frequently blind to the external changes and “market” forces that bring them down. Often, as is my experience in social care, it’s because they are so focused on the needs and crises around them, or they believe their cause is righteous and so must succeed. Very often charities appoint to senior positions people who have not got commercial experience, who are unfamiliar with the notion of “competitors,” so they don’t recognize charity rivalry or adjust to compete. Executives need the ability to adjust programs to match changing situations, culture, or competition and to compete for donations, volunteers, media coverage, or program space. A charities competitor is not necessarily one in the same filed, but one in the same locale, or making the same ask of local donors.
- Business likes to extend its brand. Charities can do that as well but because charities can be campaigning or fulfilling a need, leaders often cannot seem to stop themselves from seeing every need as a call. The result can be no mission clarity, and donor confusion of who you are and what you do, so they don’t give. Then you get charity failure
- Healthy organisations establish core values I have written numerous articles on this. If you don’t have bottom up driven values and behaviours for your charity there is often little internal trust, and insufficient values to guard against abuses of whether from the top or the bottom. It is also an environment in which Trustees can get lost, direct badly and allow unethical and unhealthy attitudes and practice to flourish. Remember values and behaviours are not something vaguely in someones head, they are worked out, written down and communicated and they do not work top-down.
- Digital Strategy, so many charities just don’t get it, don’t know how to invest in it or support and sustain it. They certainly do not know how to use it to innovate. If you do not innovate, you will disappear. Often there is no adjustment, or only one from an antiquated outlook, of creative content and communications. Creative presentation and original thinking allow the creation of a more attractive profile, enable you to capture attention in a crowded field, and present new ways for people to engage with your mission and donate to your cause. If you are unsure about Digital and how it can help get in touch with charitycheckup.co.uk.
- The clever charities have done number 5 and are using it to guide and innovate in fundraising. Those that haven’t don’t have enough data to guide planning, analyse fundraising systems, or redirect underperforming programs or communications. Often Execs and trustees in charities see investment in the framework of fundraising (like in Digital generally) as being not necessary “we invest in people not machines” or because they have no marketing strategy and are steered by instinct rather than needing data and facts.
- Now we come to the crunch, Charities who do not collaborate. Who do not work to improve their quality by working together with others. I have helped charities or been in discussion with charities that appear to have no real external relationships and sometimes do little or no fundraising. Without building a community of people, business and especially other charities they are vulnerable to economic downturns. Sometimes charities start from conflict and this can affect their attitude to local community but this must be overcome. Sometimes smaller charities don’t have any profile and don’t reach out to their other small neighbours, perhaps they don’t want to seem vulnerable. Charities that work together and even merge can build better profiles, help more clients, have better relationships and lower costs through economies of scale.
In the end charities fail because of finance and in spite of all it would seem that good governance is improving with a greater number of small charities now holding reserves.
The FSI report said “The role of the charity trustee has never been more complex. It is therefore important that trustees are supported to have the skills and capabilities to lead their small charities through the complexities of working in the voluntary sector”
To end on a positive note staff motivation remains high, with just over three-quarters of respondents – 76 per cent – reporting staff morale as “good to excellent”