What Can Businesses Learn from Charities?

I’ve often heard that charities need to be more business-like and in my experience that is often true.  They need to learn from their nimble, agile and profit motivated cousins.  But it also works both ways - we rarely hear of the worthwhile attributes of charities that businesses should emulate.  As a digital entrepreneur who has enjoyed generating profit as well as impact, I thought I’d explore this area a little more.

The Golden Thread.  For charities to be effective it is important to ensure that every person and the activities they do are directly connected to the purpose, mission and charitable objects.  But of course we can swap the word “charity” for “business” as all charities are businesses.  This is just another way of saying that to help everyone feel connected and work towards the same goals, businesses benefit from having a purpose beyond just profit on its own.  In fact it has been said that profit is just a result and not a purpose at all.  Perhaps the best example we often hear about is the story of the cleaner sweeping the floors in NASA in the 1960’s.  When asked what they were doing, the alleged reply was “helping to put a man on the moon”.

Providing the best service or product to delight your customers is not so very far from maximising the benefit to those you serve.  Many companies are also adding in the opportunity to make a positive social impact too as part of their business model.  At TheGivingMachine, we’ve certainly seen more interest from businesses wanting to incorporate supporting local charities as part of their engagement with staff and customers.

Vested Interest. In several businesses I have been in, they were startups and so the employees all had share options.  This meant that the common goal was to increase the value of shares to cash out of course at some point in the future.  In charities, that sort of structure just won’t work but combined with the golden thread, there often seems to be a form of emotional share options in play.  I’ve seen it over and over in charities that have a really clear focus on making a difference.  The team gets seriously invested in maximising the outcome and it is truly amazing how much energy and focus that can generate.  The reward is knowing that you’ve made a difference together.  For most businesses, share options may not be an option but some form of additional reward connected to team achievement should be possible.  It aligns everyone and the bonus becomes symbolic of reward and achievement.  Plus of course, the reward could be quite innovative rather than purely financial.

People really love to know what they do actually matters and why.  It creates a feeling of belonging and fosters a culture of contribution especially when supported by public recognition.  While that is perhaps easier in a charity, many companies have managed to use that emotional connection to their advantage to achieve greater success and have a happier, more engaged team.  Studies have also shown that a happier team is often a healthier team too!

Good Governance. Charities are legally bound to implement good governance structures to ensure that they stay true to their legally stated purpose and to safeguard their resources to ensure that appropriate legal practices and reporting are followed.  While this often feels cumbersome, it does not have to be overly so.  A diverse board and associated advisors can be a great source of guidance, especially during tough times, and really help the management team with decision making and strategy development.  Many medium and large sized private businesses that have grown up as family businesses have not yet tapped into the opportunity of building that diversity of experience to benefit themselves and their company.  One difference is that people will volunteer for charities but for private companies non-executive directors (NEDs) and advisors would have to be paid.  Given the potential value and improved governance, that could be money well spent - especially if there are stakeholders who are not represented on the management team and/or the board.

Many of the free resources available to charities to develop best practices in governance and management are also great resources for companies to distil what’s the most relevant and apply best practices.  Being a good charity chair is not that different in skills to being a good company board chair for example.  Developing a strategy whether a charity or a profit measure business is also similar.

There are many attributes of businesses that I wish charities would adopt more - the motivation and will to merge to create more impact for the same audience would be one for example.  However, if recent events have taught us one thing, it is that our world, communities and people are fragile and interconnected in so many ways.  We need the corporate world to fully adopt and integrate a sustainable approach to business in all its forms, be a force for good for our world and help solve social needs while meeting business goals.  The social enterprise movement and B-Corp movements are all about that and it’s great to see the momentum picking up in these areas.

I feel compelled to finish with a quote from Merry Brandybuck

“But you're part of this world! Aren't you? You must help! Please! You must do something.”

Thankfully, many, many people and organisations are “doing something” but we need this to be the new normal as it were for all of us.

I’d be delighted to get feedback on other areas of crossover too!