If charities aren’t making a ‘social profit’, don’t fund them!
Every day I hear stories from charities (and other “not for profits”) bemoaning their lack of funding and it got me thinking… so what! why should we give our money to charities anyway?
The key to making a charity sustainable is shifting them from programmatic funding (always looking for funding for new projects) to core funding (paying the charity for what they are good at delivering)
If you don’t already know, I have started a number of successful charities so I am not a charity hater by any means, in fact, I love charities! but I learnt the hard way about the perils of project funding, but that’s another story!
So how do we go about helping charities become worthy of our money?
It starts with the charity having absolute clarity about what they were set up to achieve, they need to know their purpose!
I ask charities to answer the following 5 questions when I start working with them:
- What are you passionate about and why?
- What problem do you solve?
- What evidence have you got YOU are solving it
- How will you get people to trust that you can do it and share their time and money with you
- How much will it cost you to deliver it?
Answering these questions and committing to concentrate your effort on taking action on the answers will help you avoid mission drifting. Mission drifting is my number 1 peeve with charities, it essentially means bending what you do to fit the criteria a funder wants to pay for, trust me I know organisations that scrape along by constantly transforming themselves to keep getting funding for new projects, here lies the problem, they are creating a self-fulfilling prophecy!
I will only fund a charity that is running ‘on purpose’ and Question 4 above is one of the keys I use to creating successful and sustainable businesses… its all about brand building and charities need to learn about it fast or risk ceasing to exist.
Let me give you an example, would you buy a new car from Apple? No? Why? Probably because you couldn’t trust them to make a decent car, they make awesome gadgets but a car is a different thing altogether, the flip side is Apple wouldn’t even consider building a car as they understand that they aren’t passionate about or good at building cars and there isn’t a tangible link to what they are already known for, so they stay ‘on purpose’ and avoid mission drift. This has resulted in Apple becoming one of the most powerful, recognisable, influential and valuable brands on the planet!
So once your brand is building you need to think about making a profit. OK don’t freak out but it’s times to realise that great charities make a profit. Large national charities will always get money because people trust them, they have fantastic PR and businesses fund them because they want the ‘halo effect’ of aligning their brand with a well-known and respected good cause.
The best way for a small or new charity to get core funding and become sustainable is to prove they can make a ‘Social Profit’.
“Social Profit is the difference between the savings a charity achieves for society and what it costs them to deliver it”
Traditional grant funding is becoming more and more competitive, local authority commissioning is an ever moving beast and businesses tend to lean toward high exposure PR focused partnerships BUT no one can or will ignore a charity that changes the world and can prove it.
In summary, before you give any of your time or money to a charity ask yourself the following 3 questions.
1. Are they sustainable?
2. Are they making a difference?
3. How do I know?
It sounds harsh to say but if they aren’t making a ‘Social Profit’ don’t fund them, if a business isn’t making money it is forced to wind up and it’s time to face facts and admit if charities cannot become sustainable its time for them to wind up too.
If you run a charity and need some help to become sustainable get in touch there is a number of ways I can support you.