Valerie Morton: Maybe it's time for a 'fourth sector'

Far from lumping social enterprises, not-for-profit companies, CICs and so on under the 'charity' umbrella, we should attempt to redefine what a charity actually is

Valerie Morton
Valerie Morton

When I started out, charities were predominantly perceived as organisations doing great work that wouldn’t happen without donations. Of course, some charities had investment income and/or received public funding, but the overall messaging was simple: it was about good causes.

Now we have more charities commissioned to run services, more trading (not just charity shops) and fundraising events that are in themselves so attractive they have become part of a leisure industry in their own right. We also have social enterprises, CICs, not-for-profit companies and the rest.

A number of charities have tried to set up commercial arms but failed because they have not appreciated the level of capital investment needed, have not been able to marry the required business culture with the charity culture in the rest of the organisation or simply have not been able to compete with commercial organisations that are able to accept early-year losses or put in loss-leading bids.

This all makes me wonder whether some of the challenges we face with regard to public confidence in charities exist because there is no longer a clear understanding of what a charity actually is.

The government's recently published Civil Society Strategy defined the "social sector" as including charities and social enterprises. I would argue that we need to do the exact opposite: have a very clearly defined role for charities and perhaps use the term "fourth sector" to describe organisations that trade for social good. This would include trading to make a profit that is donated to charity and non-profit trading (where the long-term business model is simply to break even). What would make these organisations different from existing models is that they would have the freedom to seek investment, would be focused on being run in the most efficient and effective way, would not be able to make use of subsidies from donors and, most importantly, the "social good" requirement would ensure they were values-driven.

Charities would then be able to focus on activity that requires funding through the raising of voluntary income, whether that be campaigning, research, delivery of subsidised products and services, disaster relief and the rest.

Anyone who has worked for a charity and been a director of its trading subsidiary will know how difficult it is, culturally, to have those two hats. Perhaps if charities went back to their roots we would restore public confidence.

Sadly, though, there would be an unintended consequence of doing this. Charities have made a significant effort to change public attitudes towards charity and remove the archaic concept of "patronage". Our language is all about empowerment, rights, responsibilities. We know we cannot solve world problems by donating £5 to feed a child for a week. We know that charities cannot be run by kind people who think they know what is best for beneficiaries. Witness, for example, the RNIB’s name changes over the years, from "for the blind" to "of the blind" and then to "of blind people". Look at the criticism Bob Geldof faced because, although he raised so much money, it was felt that the efforts reinforced stereotypes. Perhaps we don’t want charities to go back to their roots because those roots don’t reflect the society we are in or want to have in the future.

The not-for-profit sector has grown organically over the years. I am fully aware of the potential flaws in my solution (where would events fit, for example?), but perhaps the time has come to look at what we want it to look like in the future and work backwards to how we get there rather than simply redefining the status quo. Food for thought – and healthy discussion.

Valerie Morton is a fundraiser and consultant

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