Why every charity needs a strategy
All charities – whatever their size – need a strategic plan, says Richard Litchfield. A quick look into the future demonstrates that charities must be ready to navigate uncertainties and tackle big challenges.
Why do you need a strategy?
In a world of rapid change, planning how to navigate uncertainties and tackle big challenges has never been more pressing. The winds of change also bring significant untapped potential for charities to diversify their income, embrace digital technologies and benefit from people living healthier and wealthier lives.
And yet, despite us living in times which call for more and better planning, charities struggle to formulate strategic plans effectively while those that do manage it then report that they’re failing to see breakthrough performance on the ground.
A strategic plan will align charity staff and board members with a common understanding of where the organisation is going and how it should make decisions on priorities, resourcing and investments. It serves as a compass in the way that the discipline of a bottom line serves to guide a business.
So here are six graphics showing why we think that every charity of every size should have a strategy.
#1: Falling public confidence casts a cloud on all charities, with impacts yet unknown
Trust in charities has been hit by recent scandals such as the Oxfam sexual abuse revelations and Olive Cooke’s suicide. Alarmingly, charity donations are falling at very similar rates as trust, indicating that lower trust does feed through to drops in income. Recent analysis warns that it might take a decade to win back trust and re-capture former donor relationships.
#2: Statutory income is in the doldrums
The UK’s austerity programme has brought the biggest shift in decades in the way that charities fund their activity, with falls of 50% in some sectors, especially in those delivering public services commissioned by local councils. Only very large charities can engage successfully in a commissioning environment that increasingly favours having resources and capacity to deliver public services at scale.
#3: The funding crisis will continue for another decade
Unfortunately, we are not out of the woods. Charity funding is going to continue being dominated by serious shortfalls for adult social services, housing, education, leisure and libraries well into the 2020s. In social care, for instance, a spending shortfall of £1.5bn is expected in 2020/21, rising to £6.1bn annually by 2030/31. This will affect the prospects of 26,000 charities or one in five not-for-profits in England and Wales.
#4: But the freedom to trade and earn income is sweeping the sector
It’s not all doom and gloom, though, as many charities have responded to austerity by innovating and finding ways to increase trading income. In fact, a spirit of enterprise has swept UK charities with earned income rising from £7.8bn to £11.4bn in a decade. It is the big funding success story and a trend which we believe is set to continue.
#5: Digital communication is the great missed opportunity
While many businesses are taking advantage of new technology to communicate with customers, charities continue to use traditional advertising channels like mail shots and door drops. According to nfpSynergy, charities spend a meagre 5% of their advertising budgets on digital (while corporates spend 46% of theirs). Given that over 60% of the UK public use social media, according to Statista, charities are underinvesting in the most direct and efficient way to communicate with donors and beneficiaries.
#6: Our ageing population – the grey-haired warriors are a boon for charities
The share of over-65s in the OECD member countries is set to increase from 16% in 2015 to 25% by 2050. Longer, healthier lives mean that a new stage of life is emerging between the end of the conventional working age (65 years old) and the onset of old age as it used to be understood (85 years old).
Charities which can make the right ‘ask’ are set to be the real winners from what The Economist calls a ‘longevity dividend’. After all, the over-65s are the most willing and able to donate and have a wealth of professional experience and skills to offer causes which enable them to continue to remain productive.