Focus: Finance and Governance - Outlook - Why charities need to discriminate

Outcomes and impacts are coming to the fore as stakeholders seek to understand what their money is buying. Even the Government is being brought to account over precisely what all those resources delivered to the NHS have returned to the ill taxpayer. This arena is the natural habitat of the finance professional.

The key to setting priorities in a resource-constrained world is knowing where to start. However distasteful it might be, priorities must be chosen.

With their focus on beneficiaries rather than political plaudits or shareholder returns, charities are uniquely placed to take a lead in these debates.

Finance professionals can facilitate the agenda-setting so that charitable resources are targeted to best effect.

Thinking about a problem on a scale that creates opportunities often lies behind successful innovation and improved effectiveness.

A common commercial technique is to think about the link between producer and customer, finding ways to cut out the middlemen. Yorkshire and Humberside RDA wanted to improve future economic performance and, ultimately, the lives of young people. It commissioned £7m of youth mentoring support from Business in the Community.

Effectiveness is also about knowing where a business's offering is distinctive from those of its rivals. In the commercial world, that translates into greater profit. In the charitable world, it should mean meeting needs in the best ways possible. With more need existing than the voluntary sector can meet, it's a travesty when charities' services overlap. Because many problems confronting charities require multiple interventions, partnering, mergers and consortia are going to be key structures in the future.

The Government is committed to the voluntary sector, but in structural fiscal deficit, and with the latest consumer goods vying for donors' attentions, charities must make every penny stretch as far as possible. It shocks me that CharITyshare, the joint IT venture between the Children's Society and the NSPCC, is still unique.

All of this indicates an agenda to be shared by finance professionals, charity management, trustee boards and potential partners.

But there are testing questions to answer: have we thought about our beneficiaries' needs in a way that unlocks solutions? Are we duplicating the work of others? Do we need to remain independent? What partnering is appropriate and do we have the skills to deliver it? What internal questions are we dodging?

And finally, in a sector known for its lack of prejudice, the discrimination implied by ranking priorities will be the hardest but most vital test of all.

KEY POINTS

- With outcomes and impact increasingly to the fore, charities must take care to define their priorities

- This includes thinking about beneficiaries' needs in ways that create solutions and opportunities

- Partnering, mergers and consortia will also be important in the future.

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