OPINION: Hot Issue - Should charities start sharing their back-office functions?

Charities are under increasing pressure from the Government and other funders to operate more efficiently. Sharing back-office functions such as IT, payroll and human resources could enable organisations to reduce costs and focus resources on their mission. But not everyone is convinced.

Chris Ball, voluntary-sector secretary, Amicus


Sharing or outsourcing human resource management functions is not a new idea but it is relatively unusual in the voluntary sector. This could have important implications for those working in personnel departments in these charities. For example, how secure are their jobs? But it could also point to a more profound trend towards achieving economies of scale by mergers or partial mergers. And even if it does not end up going in this direction, the idea of a shared approach to human resource management will surely lead inexorably towards common policies on pay and conditions.

When the new Information and Consultation Regulations become operative, managements will be under a legal duty to consult with their workers on pay and conditions and other issues relating to change in their organisation.

If important policy decisions are being taken by a kind of cartel agency of human resources professionals, there will be some interesting points of law that could arise.

Ian Theodoreson, director of finance, Barnardo's


I say yes as in principle this is an obvious solution to cost containment. However, unless the shared service is carefully planned, it can be a recipe for escalating costs. For instance, cost savings will only occur if you can avoid setting up a structure that needs to interface with your shared service provider - the managers of the shared service need to be integral members of your own team. Herein lies the dilemma, and why I suspect any shared service arrangements will only ever work on a small scale.The second hurdle to overcome is the tendency within the sector to assume that we are different. It is what sets us apart in the first place but it doesn't lead naturally to collective working. We found just that problem when setting up the Charity Consortium. It proved impossible initially to get a small group of charities even to agree on what photocopying paper to purchase. We had to work very hard to overcome that kind of reticence.

Mark Parker, network development manager, British Association of Settlements and Social Action Centres (Bassac)


Sharing resources at community level provides a range of benefits. Savings through economies of scale is one. But beyond the purely financial, sharing support for the practical tasks many community groups have to do, such as mailings or keeping the computers running, improves both quality and productivity.

There is no doubt that funders look favourably on sharing core costs with others with a similar value base. The community too sees every effort being made to squeeze the most from the money they have been given. And, of course, this route will make profit for reinvestment in front-line services - unrestricted income in a world dominated by focused giving.

Bassac's project Sharing without Merging in Southwark, London, is exploring how critical management time can be freed up from day-to-day operations to tackle the strategic issues. Ten Bassac members are beginning to collaborate in this way. Starting from the premise that this approach is supporting the wide diversity of our members, the lessons will provide strong evidence of how a local infrastructure can be sustained.

Chris Harris, director of finance, Action for Blind People


The answer should be "it depends". Back-office functions are an essential part of delivering services. Good management theory teaches us that they should add value. The question is are they pouring oil or sand into the wheels of your organisation?

The issue has been widely debated in the public sector recently. Charities are becoming more professional, requiring greater investment in finance, IT and HR. Rising overhead costs are never popular with charities or donors and sharing these as a method of cost control is attractive. However, successful mergers are rare and while sharing a single resource such as an internal auditor can work, persuading a single team to adapt to two different sets of management agendas is challenging. Sharing back-office functions is not ultimately a long-term option. It is either a step on the way to a full merger of charities or a short-term fix to allow one party to benefit from the expertise and infrastructure of another.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in
RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners

Third Sector Logo

Get our bulletins. Read more articles. Join a growing community of Third Sector professionals

Register now