I loved the email article, The Challenges of Leadership in the Charity Sector by Charles McLachlan in this week’s Cinnamon Network mailing:
As my career developed in commercial organisations, I believed I also had something to offer charities – the Third Sector. It seemed easy to get invited to join trustees, act as a treasurer or get more involved in operational activity. Here was a place that I felt I could contribute, if only they would adopt some of the commercial disciplines of project management, financial control and clear lines of authority that I knew so well, then we could really make a difference together!
My early attempts at introducing some of these commercial disciplines were welcomed in principle however, but resisted in practice. As my mentor used to say, “Charles, just because it makes sense, doesn’t mean that it is the right thing to do” and even more confusingly, “Charles, just because it doesn’t make sense, it doesn’t mean it is not the right thing to do”. I felt I must be missing part of the picture.
Then it clicked. I had hardly imagined the challenge charity leaders face when:
- 90% of your customers don’t pay you for your services;
- 90% of your staff hours are provide by individuals who cannot be motivated by pay or financial reward;
- your investors often have stronger opinions about how you do things and what you do than the actual outcomes delivered;
- available resources may be allocated in response to perceptions (internal or external) rather than a business case;
- too often, absolute cost trumps value for money in spending decisions;
- individuals with power may have no responsibility, and those with responsibility have little power.
As I began to fully understand this, I developed a new respect for leaders of charities. I also realised how much of what those leaders achieve could be applied with enormous power into commercial organisations.
The Third sector is often incredibly entrepreneurial. With almost no resources, a community action group can initiate the transformation of an entire neighbourhood, for example. The Jubilee Debt Campaign released billions of dollars of Third World debt to education and health care.
Does the commercial sector have nothing to offer the Third sector? No, I still believe that many of the disciplines of the commercial sector are required. But it is easy to squeeze out the power of the relationships that are the Social Capital underpinning the Third sector if you just turn the organisation into a more efficient financial machine. And for all of us, where financial resources are increasingly constrained, we should look to Social Capital as the entrepreneurial resource for leaders who want to re-invigorate Britain in the 21st century.