People, profit and purpose in charities

Today, the work of the social sector has never been more vital. But while the world’s most entrepreneurial companies focus obsessively on productivity, the charity sector struggles with innovation and pace. With the large-scale ambition and effectiveness of technology companies, surely charities could stop triaging social crises and start the imaginative work of building a more equitable and effective society?

Last year, generously funded by the Churchill Fellowship and the Rank Foundation, I took up a Churchill Fellowship to understand what charities could learn from the world's most enterprising companies. I visited New York, Nashville and San Francisco, interviewing some of the world’s fastest-growing and most effective technology companies and advisers to understand how they drive productivity. These included Google, Facebook, Netflix and Founders Space. (The poster above is from the Facebook office in New York.)

To build cultural context and rigour into my research, I also interviewed innovative US-based nonprofits (including the Center for Nonprofit Management, Pencils of Promise, St Luke’s Nashville), consultants with insight into local non-profit and for-profit culture, and individual experts (including London and Partners and Bridgespan).

My findings surprised me. The question I was asking was - what what culture drives impact and productivity? I found that the answer isn’t simply more resource; we need a fundamental shift in how we choose to spend our money.

My research found that the most effective organisations share five key characteristics. They are open, clear, frictionless, talent-focused and continuously improving. They drive these characteristics in the following ways, which all charity leaders could emulate.

Open

• Culture is set and cemented by the top. As a leader, you need to be open, accessible and accountable to your staff.
• Your staff are your most valuable resource. Put them at the heart of all of your decision-making. Share with them company information, good and bad, and they will repay your trust with theirs. Share information and what you learn outside of your organisation, too; we have a moral responsibility to help other organisations not to make the mistakes we’ve made.
• A culture of transparency and openness breeds better decision-making, at every level of the organisation. Research has shown that donors and stakeholders prefer clarity and honest communications.

Clear

• Understand your mission, and systematically build all of your HR processes around helping you to deliver that mission. Too many charities hold flabby mission statements; drill down into it, until every colleague knows precisely what your ambition and aim is and can quantify it.
• Set simple, measurable targets for all staff. Don’t move the goal posts, and don’t assume you know everything about a person’s performance; build a function that allows all levels to feed back on performance.

Frictionless

• Do all that you can to make it easy for people to do their jobs. When you’re watching every penny, hiring an office administrator might seem an unnecessary expense. However, this administrator means that fundraisers can focus solely on bringing in income, and that frontline workers can focus on high-quality delivery, rather than on office management.

Talent-focused 

• Build a structure that allows your best performing frontline staff to stay on the frontline, while still providing opportunities for growth.
• Recognise that, as a manager and leader, it is vital to tackle poor performance quickly, openly and fairly. The staff member in question, and the broader team around them, will thank you for it. As charities, we can rely too much on being the ‘good guys’ - it is far fairer, in the long run, to recognise when people aren’t delivering.

Continuously improving 

• Publicly celebrate what hasn’t worked – and the hard work it took to fail – as much as you celebrate success. Recognise that innovation only comes from a culture where people feel confident in experimenting. 

This process is difficult. My report sets out 14 critical questions for UK charity leaders to ask themselves as they set off on their journey, which should help ensure that their people are in the right shape to take on new models and new approaches. 

By developing open, clear, frictionless, talent-focused and continuously improving charities, we’ll drive more social impact. By focusing internally for once, rather than externally, by putting our own oxygen masks on first, we’ll ultimately do more good for those who need it most.