Running a charity or not-for-profit organisation is not for the lily-livered.
Firstly, charities must comply with the regulations of the Charities Commission. Their purpose is to ‘register and regulate charities in England and Wales, to ensure that the public can support charities with confidence.’
Charities are expected to demonstrate that they are well run, have strong leadership, are operationally and financially sound, and are making an impact. It is no longer enough to file accounts on time and demonstrate good practice. Charities have to prove they are delivering on their stated outcomes as laid out in their governing document.
Secondly, if your charity is registered as a company, your directors must be registered with Companies House and you should comply with those rules, regulations and reporting as well.
That means two different sets of reporting and accountability, as each regulator has its own set of requirements. All to ensure that Joe Public, HMRC, the Charity Commission and other stakeholders can rest assured that charities have been great stewards of the funds at their disposal.
Funding and Fundraising
Charities frequently face financial challenges.
Funding sources vary. Many rely on grants, statutory funding, donations from foundations and income from fundraising activities. The world of fundraising has changed since the financial crisis in 2008. It has been further compounded by increased regulation, adverse publicity about unwelcome fundraising practices, and the unknown implications of Brexit. Some strategies are no longer acceptable. There is more competition for available funds. Donors want to be certain that their money will be used for its stated purpose and that it will make an impact.
It is evident that charities must be meticulous in their governance, management practices and operations to keep ALL their stakeholders happy: donors, beneficiaries, regulators, staff and volunteers.
Business vs Charity
Charities also face financial constraints, time pressures and people problems, just like typical businesses.
Successful charities, like successful businesses, start up, grow, employ more staff, make a greater impact and need more resources to expand their work.
Successful charities, if they want to continue to expand their good work, encounter the same familiar problems faced by owners of growing businesses. They start off, all goes smoothly is very manageable. As they grow, it becomes more complicated and demands more leadership, managerial expertise, processes and practices.
Smart companies hire experts to help them get organised and restore a sense of order and calm!
The reason sensible large companies invest in planning, organisation structure, leadership development, control and performance management systems, is because it gives them the control, information and insight they need to run their company. In short, it helps them be more professional in managing their organisation.
Growing organisations, regardless of whether they are charities, social enterprises or businesses, benefit from implementing systems that help them manage their organisations in a smarter, more professional way.
It does not mean giving up their reason for being, entrepreneurial spirit or soul. It merely means taking time to work ON the organisation. Getting clear on their vision and strategy, the people they employ, organisational structure, communication, key performance indicators, processes and such like. These systems help them keep their finger on the pulse, help free up the mind from worrying about hundreds of little things, and focus their attention where it is needed: projects that will drive their organisation forward and the big issues that must be solved.
Build a strong culture
With a strong focus and direction, it becomes easy for the people in the organisation to do the right thing. An integrated management system, enables you to build a culture of accountability and discipline. The kind of place where the right people love to go to work, do work that they love and help you achieve your vision.
Charities and not for profits benefit from ALL of that AND it will give you the means to prove to the Charity Commission and donors that you ARE well-managed and deliver on your charitable purpose. It will help you demonstrate to prospective donors that you are good stewards and can be trusted with their donations. You’ll be able to show that your charity makes a difference, that you deliver on your promises and that you make a tangible impact. How does it get better than that?
The issues raised in this article are only some of the numerous issues organisations in the third sector encounter. What is your experience? What challenges have you faced? Please comment below.