The Great Debate - By Paul Ronalds and Ray Yoshida

At a time of change and reflection, what is the future for our charities? Is the current number of charities sustainable? Has the COVID-19 pandemic changed the charity landscape forever? In this month's Great Debate, Paul Ronalds, from Save The Children Global Ventures and Ray Yoshida, from Hands Off Our Charities alliance discuss the important question: Could charities compete less and co-operate more?

Could charities compete less and co-operate more?

By Paul Ronalds, who leads Save the Children Global Ventures and is on the Board of the Centre for Social Impact

There are more than 600,000 not-for-profit organisations in Australia. Nearly 50,000 of these are charities. 

And while the latest statistics from the ACNC show continued growth of the sector – revenue rose to $176 billion in 2020, up by more than $10 billion on the previous period – the health of this critical sector is not as rosy as these numbers would suggest.  

The simultaneous impacts of COVID, changing funding models, government spending cuts, new technologies and changing stakeholder expectations has placed charities under enormous strain. In response, it’s vital that the sector follows the lead of other industries under pressure to increase the pace of innovation.  

This innovation must include more and deeper co-operation.  

Across the globe, well-meaning donors are growing tired of being hassled by endless charities with similar causes, all seeking to emphasise their contribution to complex social problems that can only be solved through multiple interventions and working collaboratively. 

There are many ways for charities to co-operate more, including in service delivery. For example, Save the Children is seeking to deliver more of its services through smaller, local organisations. This can be a win-win. For the local organisation, it provides access to new funding streams that they may not be able to secure on their own. Save the Children, in turn, can leverage the local knowledge and networks of its partner to deliver better contextualised services.  

Even in areas of fierce competition, such as fundraising, it is possible to co-operate more. Save the Children and 14 other international NGOs recently joined together to create the Emergency Action Alliance. This joint fundraising mechanism will increase humanitarian reach and impact during large-scale global crises. 

Organisations also need to be thinking about structural co-operation, such as joint ventures and mergers.  

Save the Children Australia was created when six state-based Save the Children charities merged more than a decade ago. This unleashed a leap forward in overall efficiency and effectiveness and paved the way for three subsequent local mergers.  

Mergers are not about large charities getting bigger. They are about organisations that are pursuing similar missions using the same infrastructure to achieve their goals more effectively. For Save the Children, this means having a bigger impact for the world’s most vulnerable children.  

So, what’s stopping charities from cooperating more?  

Engaging in partnerships, joint ventures and mergers takes a significant investment of time and talent. In a sector where so many charities are under strain, it can be difficult to find or pay for the required resources, which is where philanthropy can play an important role.  

Sometimes it’s due to a mindset that confuses ends with means. Charities exist to achieve their mission. The organisation is just the means to this end: it’s a fundamental difference to the private sector. If an organisation’s mission can be furthered by greater co-operation or even a merger, then there is an ethical imperative to consider it. Concerns such as brand, organisational culture and who is going to be CEO should be secondary considerations.  

This can be exacerbated if the charity is not clear about measuring its outcomes. For example, revenue growth is sometimes used as a proxy for impact, which can create perverse incentives for management.  

Finally, it can come down to not appreciating the true risks that the charity faces.

Certainly, there are operational risks associated with partnerships, joint ventures and mergers. However, these can often be effectively mitigated. In contrast, too many charities underestimate the strategic risks they face if they don’t innovate. Ask the Kodaks, Blockbusters and Encyclopedia Britannicas what happens when you don’t keep up with a fast-changing strategic context.  
 

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By Ray Yoshida, Co-ordinator, Hands Off Our Charities alliance

The aftermath of the Federal election presents a momentous opportunity for charities to achieve transformative changes for communities and the environment. The Hands Off Our Charities alliance – a coalition of over 120 charities – has worked tirelessly over the past 5 years to hold at bay numerous attempts to undermine the sector. But with the promotion of Andrew Leigh as Charities Minister and the resignation of Gary Johns from the ACNC, there’s a chance for the government and the regulator to reset their relationship with the sector and for charities to be genuinely empowered in seeking lasting policy change. 

However, the challenges still loom large for any charity seeking to address the underlying causes of social and environmental ills. And charities will need to co-operate more than ever if they wish to overcome them.

The rationale for charities to co-operate on advocacy strategies is simple: the vast majority of charities simply don’t have the resources on their own to influence policy decisions on the issues they advocate for. As for-purpose and non-profit organisations, a charity’s ambition and desire for change is often disproportionate to its resourcing. Most charities also don’t have the kind of access to decision-makers enjoyed by the corporate sector. Charities have to be smarter in their advocacy strategies in order to make up for this asymmetry of power and influence. One crucial way they can do this is through collaboration.

By collaborating, charities are able to pool their resources and contribute to advocacy strategies in ways that match their strengths. In the Hands Off Our Charities alliance, for example, some charities have provided public commentary, others have worked with their supporters to engage with decision-makers in their electorates, while some have played crucial roles behind the scenes in advocating to parliamentarians across the political spectrum.

That said, it’s important to go beyond simple platitudes that co-operation is always needed or always beneficial. The reality is that collaboration is hard. It requires commitment, good will, an ability to listen and understand the priorities and pressures faced by partner organisations and building relationships that can endure conflict and differences of opinion.

In a word, co-operation is costly, and sometimes the costs of co-operation outweigh the benefits. But this is where philanthropy can play an important role. 

Funders often have a good birds-eye view of the advocacy landscape, allowing them to identify collaboration opportunities that may have been missed by charities working in their silos. Philanthropy can also encourage collaboration by underwriting the costs of coordination, such as the salary of staff who play coordination roles, or by offering joint funding to the organisations involved in advocacy collaborations – thereby reducing the need for charities to compete for funding.

Co-operation can be difficult and it’s not always necessary. But in a context where charities are often tied up addressing the symptoms of systemic problems, philanthropists and charities should carefully assess every opportunity to collaborate on securing lasting policy change on the issues that matter to our communities.

Jun. 23, 2022

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