'Charities are at a historic crossroads'

Former Capita chair Rod Aldridge is banging the drum for a revolution in the way charities operate. John Plummer finds out why he's calling for change

Rod Aldridge
Rod Aldridge

Three years ago, Rod Aldridge was running Capita, a FTSE 100 company that was worth £4bn and employed 27,000 staff. After a row about a £1m donation to the Labour Party, he left the company that he had founded in 1984 and turned his attention to the voluntary sector.

He set up the Aldridge Foundation, which helps young people by means of sport and entrepreneurship, and became chair of v, the youth volunteering charity established by the Government in 2006 with £117m.

Compared with Capita, which won huge outsourcing contracts, the charity sector might seem a rather small place. Aldridge's foundation employs only six people, and he answers the door, makes the tea and even finds time to man the switchboard before the interview. After years of management meetings, however, he enjoys having a hands-on role. Being in the sector gives him a platform to air his views on public service delivery, some of which might make many charities uncomfortable.

In a speech to the annual conference of chief executives body Acevo last November, the 61-year-old said the voluntary sector was not fit for purpose and needed to change dramatically if it wanted to deliver more services. Charities, he said, were more bureaucratic and cut-throat than either the private or public sectors. He said the sector was full of back-stabbers and often struggled to handle big contracts. How did that go down?

"Good, because I got a lot of feedback and people do accept some of the points," Aldridge says. "But it's a question of how to change things, and that's where there is some reluctance." Aldridge is happy to put forward his blueprint, however, and hopes others will join the debate.

Like Geraldine Peacock, the former chair of the Charity Commission, he thinks the sector needs major pruning. He was amazed to discover there are almost 200,000 charities and 600,000 not-for-profit organisations in the UK. This, he says, creates unhealthy competition because charities end up bidding for the same money. "This sector thinks about raising money, and only then worries about how it's going to deliver the services it's paid for," he says. "It merely replicates to keep itself going."

He says funders don't know who to support because there is no market to weed out poor performers and no serious performance monitoring to separate the wheat from the chaff.

"If true accountability was applied, it would be less comfortable for some," says Aldridge. He also detects little appetite for better accountability in the sector. New Philanthropy Capital has been beating this drum for some time, but often on its own. "I don't know where the thinking is going to come from," he says. "Is it going to come from Acevo or the NCVO? I don't think so."

'Egos get in the way'

Aldridge welcomes the impending merger of Help the Aged and Age Concern and praises an initiative led by the Prince's Trust that mapped charity-led youth offending projects. A combination of mergers and takeovers is required, he says, but once again he detects resistance. Too many charity leaders, he says, are prepared to undermine or compete with people in the same space, often for their own selfish ends. "Mergers are not likely to happen, because egos get in the way," he says.

Aldridge believes charities should collaborate more, not only with other charities, but also with the private sector. He claims organisations could save 30 to 40 per cent on back-office costs by outsourcing functions such as IT and human resources, and that many would benefit from corporate skill and muscle in cross-sector contract bids.

It might sound like a sales pitch for his former company, but Aldridge says he sees a far broader picture - one where the voluntary sector is at a historic crossroads, and in danger of crashing if it opts for the direction of wider service delivery. "Charities are at the table of government," he says. "Government listens to them; opposition listens to them. They have achieved that because they have done great things. But it's a massive challenge to move from being a donation-raising organisation to a service-delivery organisation. Service-delivery targets are very demanding.

"Everybody loves the third sector, but the love-in is going to move on, because when you give someone contractual responsibility to deliver a programme, your reputation rests on that. It is a very different world from raising money, because you are more accountable."

So what does Aldridge, contract-winner supreme at Capita, think companies look for in charity service-delivery partners? A route to market, deep understanding of end clients' needs and a similar culture, he says - and the last one is the trickiest.

But isn't it a bit rich for someone who has set up his own foundation - which has filed its accounts late for the past three years - and who chairs v, a relatively new charity, to complain about the number of charities? Aldridge says both organisations he is involved in are pioneering models of collaborative working. And he is scathing about the sector's failure to support v. "A lot of people wanted to undermine v," he says. "They saw it as a threat. But it has stimulated a market. We have raised £34m from the private sector from a standing start.

"If I had been at a third sector organisation, I would have perceived v to be a massive opportunity, and I would have worked out how I could have worked alongside it. We had to work hard at getting the third sector to accept what we were doing.

"Some were saying that if the money had come directly to them, they would have done what v is doing. But I don't think you would have got government to put that money in without v. It was a conduit for stimulating the sector, and I think it was needed. It's a very good model: ask the users what they want; listen; find out what is there at the moment; look at the recommendations; invest money in it; then let it run."

He says his own foundation, which sponsors two university departments, including the Centre for Public Service Partnerships at Birmingham University, funds projects only if "we see an evaluation model around the project from day one". "This is about driving change," he says. "I could have given money, but I wanted to give a piece of me. If I was going to fund a foundation, I wanted to make a bit of a difference myself - that's a natural thing."

Opportunity for change

With his business background and zeal for reform, Aldridge presents a striking contrast to the often self-satisfied opinions in the sector. He warns that if charities don't change themselves, the recession might force change upon them. "There is going to be a squeeze as demand for services increases and funding decreases," he says. "My worry is that a lot of good, innovative charities won't survive. But I also see it as an opportunity for more mergers."

Aldridge paints a picture of a sector at a key moment. But he is sceptical about whether it is ready to take the service-delivery route.

"There is a great opportunity for the sector, but it will be able to grasp it only if it changes," he says. "There's no doubt a lot of people feel uncomfortable with that."

ALDRIDGE CV

2007: Appointed chair of The Lowry theatre in Salford and a non-executive director of the Ministerial Advisory Board of the Foreign Office

2006: Resigned as chair of Capita after a row about a £1m donation he made to the Labour Party. Formed the Aldridge Foundation and became chair of v

2003: Appointed chair of the CBI's public services strategy board, a post he held until 2006

2001: Made a trustee of the Prince's Trust, a post he held until 2007. Now a patron of the charity

1994: Awarded an OBE for services to the computer industry

1987: Led a management buyout of Capita from the institute

1984: Founded Capita Group as a division of the Chartered Institute of Public Finance and Accountancy

MARK HIS WORDS ...

'Is the new thinking on accountability going to come from Acevo or the NCVO? I don't think so'

'Mergers are not likely to happen because egos get in the way'

'Everybody loves the third sector, but the love-in is going to move on'

'A lot of people wanted to undermine v. They saw it as a threat'

'I could have given money, but I wanted to give a piece of me'

'My worry is that a lot of good, innovative charities won't survive the recession'.

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