As trustees you will want to maximise the impact on your beneficiaries and achieve the best possible charitable outcomes with the resources at your disposal.
In many cases, there are ways we can steward our resources better, to make them stretch further for the public benefit.
However, having the opportunity to have a greater impact often means that a charity needs a greater pool of resources. This can only be done by increasing the charity’s income.
Should your charity grow?
For some charities, at certain times, growth might not be the right option. Those with specific missions might fall into this category, where closing the charity is the eventual goal, such as foodbanks and medical research charities.
For other charities, the nature of the charitable purposes (e.g. care of a particular historic asset) or size of the target beneficiary group will mean there’s likely to be a maximum size for that charity.
Why do you want to grow your charity? It’s important that you have carefully considered this question, because although growth is broadly accepted as positive, it carries its own risks. Quality is often preferable to quantity, where a larger, more unwieldy organisation could be restricted by greater complexity and potential bureaucracy.
Notwithstanding these considerations, in many situations, growth might enable you to carry out more good work and could very well be a necessary process to keep up with the demand for your services. In a time where the role of charities in meeting societal need is greater than ever, this will resonate with many.
How to grow
Fast growth can be particularly risky.
Expansion requires strategic planning, operational and managerial controls, all of which should be carefully monitored in line with your key charitable purposes. Your purposes are the yardstick that all aspects of your organisation should be measured by. Never forget them!
There are two directions growth can take…
Use existing income stream(s): Be more effective at obtaining grants than before. Win larger contracts for charitable work; run more fundraising events.
Diversifying income streams: This depends on your starting position but can include: commercial trading, ‘trading’ on donated goods, investment management, increasing service options, seeking donations, bidding for contracts for charitable work.
Both of these strategies require ambition, as well as an investment of time, energy, and often funds.
If your charity is excellent at what it does, growth follows more easily. Be professional, approachable and passionate about the charity’s work in your interactions with people. The positive relationships you build will carry you a long way. Make sure these are instilled in your culture, so you are widely appreciated as a force for good and a welcome partner.
Risks
Attentively manage the fixed costs of the charity. If you build the fixed costs of the charity before the income has grown to accommodate it, then the charity will inevitably run deficits. Should those deficits turn into cash deficits too, then the charity’s reserves will be put under pressure and sources of credit may need to be considered.
In a business context, one of the times when insolvency risk is highest is surprisingly during periods of growth. Charities can be similar.
Fixed costs can rise through:
- Additional staff costs
- Training for staff and volunteers
- Engaging with funders or the local authority
- Bidding for contracts
- Applying for grants
Does your board and management have the experience to take the next step?
Diversifying into new areas of activity risks failure; the assets and reputation you have already gained may be put on the line should you want to move in a new direction. Be confident that you have sufficient expertise, if you are exploring an unfamiliar avenue of opportunity.
Way forward
Steady growth is often a wise approach, seeing enhanced impact whilst reducing the risks associated with rapid growth. This may not work for you, as taking on a large new contract could increase your activity significantly in a short space of time, with favourable consequences.
Consult with individuals or organisations who have been through the process before; there’s no need to reinvent the wheel or fall into the same pitfalls as they did.
Trustee boards tend to have a wealth and variety of expertise, so utilise the people you are connected with. All of the board should have confidence in your growth plan, otherwise you are likely to confront challenges further down the line.
If you’re unsure how to grow successfully and sustainably, seek professional help. If you have already formed your plans and forecasts, it’s wise to get an outside perspective on how achievable your plan is.
Should you require any guidance or professional support with growing your charity, please get in touch with us and a member of the Burton Sweet team will be happy to assist you.
