Are charities and businesses really two different species?
Several charity CEOs have recently shared the same concern with me, that because big businesses are increasingly staking out ethical positions, there is an emerging public belief that they can be a better vehicle for social change than charities, and that this should be a worry for us all.
In his recent rebuttal of Dan Pallotta’s conclusion that “charities should behave more like businesses” (per his book-turned-film, Uncharitable), Ian MacQuillin also invoked that same concern and mused that charities might, if anything, need to become less business-like.
I like MacQuillan’s writing but on this occasion, I think he, and my CEO friends, and indeed Pallotta, are all looking at this wrong.
This idea that charities and businesses are separate species who must either emulate or eschew each other, doesn’t just conflict with reality, it misses a huge opportunity.
According to NCVO’s 2023 Almanac, of the sector’s £57bn annual income, £26bn was voluntary income and £26.4bn was earned. You read that right – we earn marginally more money commercially than we get from all our fundraising and grants combined.
The idea that we shouldn’t behave in a business-like way when business underpins almost half our income seems bizarre. I mean, do we genuinely think the National Trust could do what it does without a skilled, business-like team running its commercial operations to help fund and support that vast portfolio of properties?
As seductive as it may be to view ourselves as sole occupiers of the moral high ground in this binary era of “goodies and baddies”, there is no ethical Rubicon between charities and businesses, there is simply a spectrum, and from Barnardo’s to Barefoot College to where Body Shop started to where Bear Stearns finished, every organisation sits somewhere along it.
I’m not arguing that charities should become facsimiles of businesses, but they invariably rely on some kind of business model, and the more commercial that model, the more business disciplines can help grow both the financial and social value of the work they do. That’s just reality.
The fact that many businesses are endeavouring to become, or at least to be seen to become more ethical, doesn’t mean charities need to become any less business-like to maintain some imaginary clear blue water. We have more than enough examples of charities losing their shirts through commercial naivety as it is.
For sure, we’ll need to get better at differentiating ourselves: more confident in our unique expertise and perspective, more connected to our causes, communities, and supporters, more effective in our work and our storytelling, and both the charitable case and the impact case will remain as central as ever.
But it is our visions that will be most important when it comes to actually harnessing and taking advantage of that shifting business landscape.
Those visions might be of a world “in which everyone can love later life” (Age UK) or “that works for autistic people” (National Autistic Society) or your own charity’s unique and precious one, but it’s unlikely any of them can be achieved without businesses getting on board.
Whether as employers or providers, designers or builders, the products and practices of business have a huge impact on our world, our society, and our beneficiaries’ lives – they are inevitably going to have a part to play in achieving pretty much any form of visionary societal outcome.
And it’s also self-evident that the “free market” is not going to solve our big social problems on its own, having been a pretty big contributor to creating and embedding most of them in the first place.
Which is why charities are in such a unique position, to work alongside those businesses who can demonstrate they’re serious about making an ethical shift, to engage them with our visions, to hold them to account on their commitments and principles.
We have an oppotunity here to shape and influence those new-found ethics into partnerships between both charities and businesses, that translate to genuine improvements in the lives of those we care about and the environments in which they live.
It might sound like I’m being idealistic, but if the cynics were right, there would be no autism friendly workplaces today, no manufacturers working towards a net-zero circular economy, no Fairtrade Alliance or Body Shop-inspired startups, no B-Corp movement, no green tech or ESG or social investment funds, no corporate foundations or partners at all for that matter.
That more businesses are finally showing signs of wanting to join the ethical movement might strike anxiety into the hearts of the more defensive members of the sector.
But the visionaries should be rubbing their hands in delight.