To thrive, charities must become purpose-full

To mark the launch of his new book, Paul Bird shares the six steps he believes will help companies and charities achieve lasting social and environmental impact alongside better operating and financial performance.

Over the past 15 months, COVID has changed all of our lives and those of the people we support, especially women and children, with impacts from increased poverty to accelerated income inequality, unemployment, and family violence.

The pandemic has also altered how the not-for-profit sector is perceived. Since it began, the Edelman Trust Barometer had reported that not for profits were seen as ethical but not competent, while businesses were the reverse. This is no longer the case. The 2021 index reported that, for the first time, Australians now see not for profits and businesses as both ethical and competent. 

This represents both a challenge and opportunity for the not-for-profit sector in a post-COVID recovery.

Back in 2014, the then head of the Brotherhood of St Laurence, Tony Nicholson, voiced his concern that “if we don’t begin to re-think now, the way we operate, the next two decades will witness the sector’s gradual demise”. His premise was that not for profits could not continue to meet society’s current and emerging needs, and so fulfil their purpose, by contracting to the government and having to become ever bigger, more efficient, more professional and subject to regulation. 

Nicholson concluded that, ultimately, in being beholden to government for their funding and authority to deliver their services, charities would die. If not now, at some point in the future, they would not be big, efficient or professional enough to win the government’s favour. In the meantime, the gap would inevitably widen between the needs of constituents and the response of the government’s prescribed and regulated services delivered by not for profits. 

Since then, we have seen more reform and budget tightening of government services and competition with the private sector. At the same time, the number of Australians donating continues to decline, as do fundraising returns.

In the face of investor and customer demands, the momentum to improve environmental, social and governance (ESG) outcomes, along with the growth in the engagement of the sustainable development goals and B Corporations, has seen businesses scale up their environmental and social activities, some at a scale unimaginable to not for profits.

The post-COVID recovery will be crucial for the not-for-profit sector if it is to not just survive, but to thrive.

The answer is not to be a business. Far from it. As the most read management guru, Jim Collins noted, “we must reject the idea – well intentioned, but dead wrong – that the primary path to greatness in the social sectors is to become more like a business”.

Instead, every not for profit needs to identify, live out, measure, advocate, partner and innovate its point of difference as its competitive advantage. To do so, I suggest six steps:

1. Begin with belief 

Dig beneath the archaeological strata of vision and mission, values statements and promotional materials to unearth the underlying timeless and closely held belief that the organisation was created and stands for. The belief anchors the organisation in these uncertain and changing times, powers the purpose, sets the basis for strategic decision-making, drives positive culture and behaviours, demonstrates responsibility and impact, strengthens the brand and client and supporter loyalty, develops better products and services and enables enhanced performance. 

2. Live the dream 

Because not for profits engage a wide range of key stakeholders, the belief and purpose need to be able to be consistently and visibly realised across constituent groups. If not, a reality gap grows between what an organisation espouses and what it actually achieves, leading to disillusionment and dissatisfaction, and the loss of staff, clients and supporters, and even its social licence to operate. 

3. Demonstrate impact 

The measurement and reporting of impact is not only essential to demonstrate effectiveness, it enables staff and stakeholders to feel part of achieving the organisation’s belief and purpose, creates new partnership and funding opportunities, drives improvements and innovations in products and services, and demonstrates to funders the unique value added achieved over and above the contracted outputs.   

4. Work for change 

The greatest impact not for profits can make is to influence the positive change of community perceptions, government policy and systems that are aligned to their beliefs and purpose. To do so, not for profits must engage and galvanise stakeholders across sectors to develop and advocate for evidence-based solutions.

5. Partner with purpose 

No one organisation or sector can address the social and environmental challenges we face today. Not for profits need to be networkers, not just producers, and form mutually beneficial partnerships across the private, government and not-for-profit sectors, especially as recognised go-to leaders in environmental and social outcomes. 

6. Evolve or else

Not for profits are used to uncertainty and adaptation with time-limited service contracts, fluctuation of fundraising receipts, government service system reforms, regulatory requirements, and changing political cycles. It is not surprising then that the CommBank Innovation Index ranked the not-for-profit sector higher than any other Australian industry. Furthermore, the pandemic has seen the sector respond to unprecedented change. Whilst energy levels and the appetite for more change are low, not for profits must prioritise their forward thinking, positioning and strategies to identify and harness opportunities.

The six steps feature in Paul Bird’s new book, PurposeFull: How businesses and not for profits do better as purpose-driven organisations, which launches this week. For more information see here.