In recent years, charities have been growing fast. The NCVO's Civil Society Almanac 2008 reported a 10 per cent rise, after inflation, in charity income in 2005/06 - a growth spurt far outpacing the UK economy's growth in the same period.
All very impressive, but what makes one charity grow quickly while others stagnate or decline? According to research by fundraising consultancy Action Planning and software firm Blackbaud, there is one major contributory factor: leadership.
The two companies will release Inspiring Success, a paper based on a study of 24 fast-growing charities, at the Charities Aid Foundation's Funding the Future conference in London next week.
"There are lots of factors behind successful growth, including infrastructure and governance changes, but the main driver is having an inspirational leader who is willing to take risks and is entrepreneurial," says Kerry Rock, director of research at Action Planning.
With the UK economy in freefall, it might seem a strange time to discuss growth. But Rock believes the lessons from the paper, which focuses on four charities, apply in both good and bad times.
"The research shows what stresses and strains fast-growing charities have experienced," she says. "There are positive and negative changes behind the massive growth of these charities. For example, one of them lost a contract, which resulted in it making changes that allowed it to expand rapidly."
The paper examined what traits define these charities' 'super chief executives' and came up with five key qualities. First, great social entrepreneurs use social impact rather than income to measure their organisation's success. Second, they are able to spot and pursue new opportunities. These leaders are also willing to take managed risks and increase their organisation's accountability. Lastly, they are willing to adapt and innovate continually.
Here, we look in more depth at how these traits have helped the charities featured in the research paper to grow rapidly, and at the lessons that can be learned from their experience to help others develop their own super chief executives.
The research was done for Action Planning and Blackbaud by Sanjay Tanna as part of a Masters course at Cass Business School. It is available at www.actionplanning.co.uk/insight
TAKE MANAGED RISKS
The research report says great social entrepreneurs take calculated risks and act to reduce the harm failure might cause. It's an approach demonstrated by offender rehabilitation charity Crime Reduction Initiatives, which has developed a risk-taking strategy that involves starting work in new locations and creating the management and business infrastructure to support that work afterwards. "You secure funding and then send off the operations team to lead in a new area at the front end of service delivery," says Ray Jenkins, a former director of the charity. "The rest of the organisation and infrastructure follows."
The approach means the charity, which increased its income by 54 per cent to £17.7m between 2004/05 and 2005/06, can identify the risks and direct resources to where they are needed most.
Anti-poverty charity Concern Universal, which grew its income by 81 per cent to £14.8m between 2004/05 and 2005/06, encourages various parts of its organisation to take responsibility for managing risk. Managing director Ian Williams says this devolved approach creates an "entrepreneurial spirit" and makes people feel responsible for the success or failure of their work.
ASK YOURSELF: Are there ways your organisation can better support managers and leaders to take measured risks
- Continually adapt and innovate
After joining the International HIV/Aids Alliance as executive director, Alvaro Bermejo recruited a team of experienced senior personnel to expand the organisation. He also invested in new systems, such as a financial information system, to help the organisation cope with its growth - the charity increased its income by 44 per cent to £26.7m during 2005/06.
Once the charity had between 80 and 90 employees, Bermejo altered the management structure and business model. After a period of further growth, these systems were overhauled again because they had become ill-suited to further expansion: they were too centralised and sometimes caused bottlenecks in the decision-making process. The result was a more decentralised business model that divided the organisation into regional hubs.
Crime Reduction Initiatives, meanwhile, has created a finance and audit subgroup charged with identifying potential weaknesses that could undermine future growth. It has also changed its approach to senior staff training, putting employees on MBA courses to support growth by developing staff internally. David Royce, chief executive of CRI, says: "There are two views. One is that if you need skills, get them from the labour market. But if you value loyalty and unity, it is better to look within your own organisation. We believe in enabling people to improve their performance and to step up."
ASK YOURSELF: Do you have an equivalent of CRI's finance and audit subgroup to ensure you don't outgrow your systems and infrastructure
- Pursue new opportunities
The Sussex Association for the Rehabilitation of Offenders had big hopes for its Get It While You Can scheme. Three senior employees had spent significant amounts of time developing the drug-use prevention programme and it was a central part of the charity's three-year strategy. Then came a hammer blow: the charity's bid to provide the programme in Brighton & Hove was rejected and its three-year strategy was left in tatters.
The loss of the contract, however, prompted a change in direction. The trustees recast the organisation as a national provider of offender rehabilitation services, renamed it Crime Reduction Initiatives and began successfully pitching its services outside Sussex.
"We turned Get It While You Can into something significant," says David Royce, chief executive of CRI. The decision to go nationwide coincided with an increase in government spending on efforts to break the link between drugs and crime. "We penetrated that marketplace and forged a significant reputation for ourselves," says Royce. "Before that, we were unknown."
ASK YOURSELF: Is a centralised and hierarchical structure stopping your organisation developing an entrepreneurial culture
- Use social impact as the measure of success
When Alvaro Bermejo became executive director of the International HIV/Aids Alliance in 2003, the charity was already growing fast. His primary goal was to make sure the increase in income was matched by improvements in the social impact of the charity, something he says can be easily forgotten as organisations grow.
"To keep an eye on the quality of your programmes while you are growing is the biggest challenge," he says. "It's easy to think you are successful just because you are growing so quickly, and to forget that what matters is the impact you are having on communities."
Bermejo's answer to the problem was to think big about the charity's services as well as its fundraising efforts. He set about convincing the organisation and its stakeholders that it should be doing more large-scale projects without compromising on quality. "We needed to take a much broader approach with much larger coverage," he says.
ASK YOURSELF: Do you measure impact to please your funders or to improve the services you offer
- Heighten accountability
Great social entrepreneurs make themselves more accountable to service users and give those who work with them more responsibility. David Royce, chief executive of Crime Reduction Initiatives, says it holds quarterly audits of service users' opinions to help it assess quality. The charity makes itself accountable by treating organisations that commission its services as if they were investors.
Fast-growing charities also make local teams more accountable for their actions. Ian Williams, managing director of Concern Universal, says the charity's belief in devolved decision-making is crucial to its success. "People have a right to find their own solutions," he says.
The Liverpool School of Tropical Medicine has also sought to give staff more responsibility.
"A number of our staff are on short-term contracts," says Janet Hemmingway, executive director of the school, which increased its income by 36 per cent to £23.8m in 2005/06. "We told them that if they wanted to be placed on open-ended contracts there were targets they needed to meet."
ASK YOURSELF: What might 'decentralised autonomy' look like in your organisation.