For the last 23 years, the Charity Awards has been identifying and celebrating the magnificent work of UK charities large and small, weighing their achievements against hallmarks of excellence that, taken together, point to standout success. These attributes that award-winning charities must demonstrate include leadership, sustainability, innovation and evidence of outcomes.
Over the years, the hallmarks that characterise exceptional charities have remained largely the same, but the external environment that the sector is operating in has made it arguably more difficult for charities to exhibit these traits. Many are simply struggling to stay afloat, let alone being able to innovate, or gather and report their impact.
Against this background, we gathered together winning and shortlisted charities, and judges, from this year’s Charity Awards, alongside other key organisations, to explore the attributes and tools that can help charity leaders successfully navigate the challenges facing the sector, now and in the years to come.
Charting the challenges
Introducing the discussion, Nicola Toyer, head of charities at Investec Wealth & Investment (UK) and a Charity Awards judge for the last two years, says that her firm’s interactions with charities suggest that the sector is at a critical juncture. She outlines the biggest challenges as the cost of living, high inflation, and the implications of these two factors on fundraising. In light of these, she contends that strong leadership is “more important than ever”.
Amanda Tincknell is CEO of the Cranfield Trust, which provides pro bono management support for charities. She adds that burnout from years of permacrisis is another big issue. “Everyone is exhausted. There was a certain energy through the pandemic, a positive response from funders and an adrenaline that came from dealing with an unfamiliar environment. But we’re back to a place now where we know exactly what the impact is of rising prices and growing demand. As a result, leaders are overstretched by operational and workforce challenges. People are burnt out and leaving the sector.”
The triple whammy of Covid-19, Brexit and Ukraine is cited by Fadi Itani, CEO of the Muslim Charities Forum, with 30 years’ experience in the Muslim charity sector. “We always have to pick up the pieces. Wider politics is not helping, but is challenging and chaotic. Charities are the plaster for the serious deep injuries of society. This may help in the short term but the real solution is deeper than what we can provide.” Itani feels that for the last five years he has been like a magician trying to survive. “But we can’t maintain it and it is very tiring. Just surviving isn’t sustainable.”
Kate Higgins is chief operating officer at RefuAid, which won a Charity Award this year for its work helping refugees into good-quality jobs. She observes that more people are becoming dependent on charities over the long run as the public sector faces similar pressures.
“Cross-referrals and supporting each other is now harder as everyone is stretched. People’s needs have changed drastically. We used to offer straightforward support systems focused on employment and language. Now, clients face additional barriers in terms of food, housing and access to technology. They used to be able to access these through local government or local charities, but they are not so easily available now. So, we have had to adapt to take into account these additional needs.”
Taking up her role in March 2020, two weeks before the first Covid-19 lockdown, Rosemary Macdonald is CEO of UK Community Foundations. UKCF distributes funding to communities and aims to build a culture of philanthropy and sustainable sources of funding.
As part of bringing people together locally and building strategic interactions, it works closely with the Local Government Association. Macdonald cites Birmingham City Council’s well-publicised financial woes, but points out that a further 20 or so councils are also at risk.
“How will they fulfil their statutory responsibilities to the elderly and disabled? If the local authority can’t assist them, where do they go? Some of our local community foundations are really worried. There will have to be a massive reset as services have been underinvested in for so long. And the pathways that existed in the past for support aren’t there as the sector’s infrastructure is reduced.”
Kunle Olulode is director of Voice4Change England, a BAME (Black, Asian and minoritised ethnic) charity and infrastructure body. He identifies a difference between short and long-term challenges. “During the pandemic we distributed emergency funding, so things were OK in the short term, but we didn’t know long term what the situation would be, and how we would need to restructure. We were still trying to address that before the cost-of-living crisis threw a further spanner in the works. So, we’re back in a short-term situation without wishing to be. But needs must. I can understand that priorities are shorter-term support and to prop up the frontline. But where does that leave us in the future?”
Emma Taylor is CEO at Support Through Court, shortlisted at this year’s Charity Awards for its project providing information and advice to those navigating the court system. “There is definitely an increased demand for our service, while at the same time funding opportunities are decreasing. We’re seeing more people coming to us who have more complex problems because they have been unable to access help elsewhere due to closing support services. Following Covid-19 and now the cost-of-living crises, there has been enormous pressure on sector staff, stretching their resilience. The charity sector has found it harder to recruit volunteers and some haven’t come back from Covid-19.”
Paul Streets, chief executive of Lloyds Bank Foundation, casts his mind back to 1997 to draw parallels. “The Blair government coming in felt like a significant moment, but I think now the context is different. Climate change looms over us, which compounds inequalities. The fiscal position is different. The funding crisis in local government has a profound impact on small, local charities which receive income from them to deliver essential services. We’re at the end of over a decade of austerity, and a huge redistribution of capital. This was compounded by Covid-19 where those on lower incomes were often our key workers and at higher risk. There is a declining tax base and an ageing population so that even if local authority budgets rose, they would be taken up by older people and social care.
“It’s difficult to see the light at the end of the tunnel. The fiscal reality means things aren’t going to change even if there is a new government. The future looks bleak and we’re going to have to have a fundamentally different approach to how we’re structured. As a result, the sector will look very different in 10 years.”
Effective responses
One of the secrets of sustainability is adapting to changing circumstances, however dire they may seem. The two panellists that made it onto the shortlist at the 2023 Charity Awards were both quick to evolve their services to meet the new challenges they faced.
Support Through Court overcame the growing pressure on its staff and shortage of volunteers by forging innovative new partnerships with universities and enabling law students to step forward and provide support to its client base. This not only benefited the charity’s service users, but also offered valuable professional experience for the students.
And RefuAid, noting that its refugee clients were coming up against various barriers to access its core English language services, worked with partner organisations to introduce more online and part-time tuition. It also introduced a loan scheme to help asylum-seekers pay for rental deposits or childcare costs to enable them to get housing or start work.
And, after identifying that many of its clients had professional jobs in their home countries, the charity launched a loan programme to help them gain UK-equivalent qualifications so they could get those types of jobs here too.
Campaigning for change
Most of the panellists agreed that strong leadership in present times means playing a political role, even if campaigning can also create additional headaches for leaders.
“We’re dealing with the consequences of political decisions,” says Itani. “We don’t enjoy campaigning, but if any government isn’t willing to have a critical friend from a sector touching lives across the country, what’s the point? We just become aid deliverers. We help people but they keep suffering. We become like silent witnesses. It isn’t just about a political agenda. You can’t raise social issues without commenting on political decisions. If we can’t speak out when we see something is wrong, how can we change things?”
Streets states that charities should definitely be more political. “All charities have a fundamental right to use what they know to leverage change and get involved in politics, otherwise they’re abdicating responsibility. Not in a party sense, but we have an absolute responsibility to speak out on issues we know about. Stick to what you know, though.”
Olulode laments that the Lobbying Act created a fear of speaking out among charities. “But it’s our role to speak out, while recognising it’s a balancing act. We need to understand when to press the button and when to retreat.”
Election optimism
The upcoming election offers cause for optimism among the panel.
Streets sees the likely new government as an opportunity for the sector. “Old governments always hate criticism whereas new ones welcome it as criticising the past helps them frame the change they will make. So, the general election is an opportunity to reset some of the narratives. The sector has played a big role in the climate change narrative, for example. We need to also change those around inequality and refugees, and remake the argument that we should welcome refugees as a source of economic wealth.”
Macdonald suggests that hope may lie in greater devolution. “If we have more proper power locally, and decisions on infrastructure made on a regional basis, better and more efficient decisions will happen. We can’t keep applying solutions that are right for London across the country.”
Olulode agrees that the levelling-up agenda, “as twisted as it has turned out”, still has an important role to play. “The difference between town and country is something that politicians are becoming more sensitive to. But physical infrastructure projects like rail capacity and the obvious need for a housing rebuilding programme require funding commitment. And if no one responds, then the charity sector will be left to cope with the problems that flow from that, while being less able to.”
Evidencing impact
Another of the Charity Awards hallmarks is the ability to demonstrate outcomes. But individual charities are often just one cog in an engine of change, and measuring their particular contribution to that change can be difficult. Most of the panellists reported challenges in trying to evidence their impact, and many chastised funders for having unrealistic expectations – even if these eased during the pandemic.
Tincknell asserts that impact reporting has become something of a false science. “You can read impact reports and pick holes in them. Organisations feel driven to produce complex impact information, but who is it for? Is there any value? It’s a big effort. Impact activities can fail to take into account context. One charity may just be better at telling the story, so they aren’t necessarily directly linked to quality. A lot of people want growth stories, for example, but growth isn’t the only strategy; charities don’t have to be growing to be doing vital work.
And it’s disproportionately harder on smaller organisations. It’s a problem for funders as they need confidence and real knowledge about what they are funding, but we have fallen too far down the impact industry rabbit hole.”
In terms of collecting data, Support Through Court collects information about clients at a certain point in their court journey. “But as a small organisation, it’s hard to demonstrate social value and show how we’re saving the court system money, even though we know we are. We can do it anecdotally, but without investment, hard data is trickier.”
Higgins feels that data never does justice to what charities do day-to-day. “Figures can look amazing but don’t reflect the human and social impact of what we do.”
Olulode points out that Covid-19 cruelly exposed funders. “All of that information they had been asking for over the years, they didn’t know what to do with it. For example, they had no collated data around the BAME sector, even though we had been sending it to them. Managerial tools around impact and social value are sophisticated but tell us little. Instead of funding things because they’re good, it was becoming outcome-led.”
Toyer suggests that part of the problem is that not only funders, but donors, especially one-off givers, want to see the direct impact of their donation and do not want to pay for core costs.
Macdonald raises funder vanity. “They want their money to have made the real difference, and know exactly how it has changed a life, rather than it being part of a wider effort. Simplifying applications during Covid-19 for emergency funding was positive but we’re creeping back.”
However, Streets states that some foundations are changing their approach. “All of our responsive funding is now unrestricted funding which means a shift from attribution to contribution. The message becomes ‘we’ll give you unrestricted funding as we think you’re well run, but tell us how you’re accountable to the public you serve, and show us how you’re representative and how are you demonstrating that’. Covid-19 was a wake-up call in terms of whether we were reaching people we thought we were.”
Itani argues that charity leaders need to collect and analyse data to ensure their organisations avoid duplication and wastage for the sake of the sector generally. “Charities that specialise will have more impact, while those that try to do everything will struggle. We can think that because what we do is a good cause, everything we do is correct, but it isn’t always. There could be better solutions and other people able to offer them.”
Streets cites good practice from the private sector: “If we were commercial organisations, we would segment the message of who we are telling our impact story to, rather than having one version.”
Collaboration and mergers
Despite the current crisis once again seeing suggestions that there will be an impetus to more mergers, Tincknell does not see an appetite despite the pressure for consolidation. “When they happen, they tend to be forced ones that no one is happy with. And it’s hard to get meaningful collaborations because of a lack of time and trust. They’re often driven by funding, so occur out of necessity rather than strategic thinking.”
Itani contends that there have been cases of successful mergers that we do not hear enough about. “There is no one-size-fits-all, but the challenges in the sector we’ve been discussing will only increase, so we need to be strategic. So, mergers undertaken by leaders with vision and time are fine. But when you’re fighting to survive, the merger happens too late and is forced. Ultimately, you should only consider a merger if it’ll benefit your beneficiaries.”
Olulode’s assessment is that mergers are hard to achieve with prohibitive legal costs. “That rapacious scenario where one organisation swallows another is often what happens, which is essentially asset stripping. Informal working together is much more important.”
While also believing mergers to be time-consuming, collaboration is key for Taylor. “Even though we’re national, we have local focus so being plugged into other agencies is vital in terms of signposting to services clients need locally without doubling up. Fostering those relationships helps them.”
Lloyds Bank Foundation has recently closed a fund supporting local collaborations focused upstream on prevention and systemic issues, and Streets thinks it is useful to articulate things in terms of the benefits to people helped. “There is a stronger case for merger at national level as it’ll be more powerful. But at a local level, those small specialist organisations would be lost with their emphasis on local networks and building trust.”
Hope and perseverance
Streets also muses on how these small charities still have the energy and will to keep going and remain optimistic. Itani responds: “Hope drives charities and the difference we make to people’s lives. We’ll continue to try and make society more just and peaceful.”
Toyer concludes by saying that clearly everything is complex. “But when I hear everyone pulling in the same direction to try and solve these problems in a challenging environment, it’s positive.”
With thanks to Investec Wealth & Investment (UK) for its support with this article
The Charity Awards 2024 will open for applications on 1 December 2023. See www.charityawards.co.uk for more.
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