Charities of the Future Roundtable (HSBC UK, RSM and Stone King) October 2023 – Article Follow-Up with Key Themes

Last week, we hosted the latest in our growing Charities of the Future roundtable forum. Like all sectors, charities have faced a number of headwinds, from the Covid pandemic and the cost-of-living crisis to recruitment challenges and digital transformation, which can result in organisations falling into a survival mode. As many are now pivoting and revising their long-term plans to ensure financial sustainability, our roundtable zoomed in on strategic planning, with organisations from across the sector sharing their views. The key question discussed was: how can charities adapt to the ever-changing environment, and use their strategic and financial planning to ensure long-term sustainability and allow them to better support their charitable objectives? 

The obvious first discussion point was – what does your current strategy look like and how has it been impacted by these headwinds? While some charities paused their strategies or increased the timeframe for achievement due to the pandemic and ongoing headwinds, almost all reported “mission spread”. As they look to support beneficiaries in the best way they possibly can, there was a consensus that some activities may have broadened over time, which led to some concerns around being spread too thinly and possibly reducing impact on their core charitable aims. 

The Covid pandemic somewhat acted as a catalyst for strategic reflection, with resources becoming scarcer for many and some amending their operations to “digital first” due to restrictions. The very appropriate analogy of using a “North Star” was used, as charities looked to hone in on their mission statement and charitable aims – which is still relevant for charities as they continue to assess their impact. When considering a strategic change, many debate whether to go for the “top-down”, or “bottom-up” approach. Most had adopted a “top-down” approach, which allowed them to ask themselves whether pillars are really serving their overall direction now and also led to greater innovation rather than bringing their current operations to the forefront.

When it comes to managing their impact and becoming a sustainable, long-term organisation, there were some innovative examples; one organisation managed the sometimes conflicting pull of impact on current vs future beneficiaries by creating two separate but overlapping boards, with one focusing on the immediate and another focused on the longer term to ensure adequate attention for both. 

With the charity sector having the unique challenge of reliance in many cases on volunteers, the maximisation of engagement with this group was a key topic. Naturally, volunteers have a greater layer of autonomy than those in similar positions in the corporate world – if they are unhappy with any proposed strategic changes, they are able to step away. With the drop in number of volunteers at a time when charities are facing increased demand, this is particularly vital. Consultations with groups of volunteers, as early as possible, was a common solution to ensure buy-in. A similar solution had also worked around engagement with fundraising teams pushing back on the new strategy and the need to pivot their work towards a slightly different message, with the need to instil a culture where colleagues view change as an opportunity to adapt.

Digital investment is something that we often discuss day-to-day, and there was no change in the roundtable! With such a broad bracket, which has the potential to touch almost all of the charity’s operations, where do we start? Could it be HR systems, banking, infrastructure, cyber security, websites or something else? Some have innovated in various areas and then consolidated. But there was an understanding that there is a real need to prioritise when investment might be over months and years instead of immediately, balanced with ensuring what we are investing in is “fit for the future”.

With all of this to think about, why would we change our strategy? Like the corporate sector, charities must ensure that they are operating in a way which is efficient and financially sustainable so that they can support beneficiaries and continue to make a real difference in the long term. It is a careful balancing act to put as much capital into achieving their charitable aims as possible, while also ensuring they have an effective, safe and sustainable organisation and workforce.

There are, of course, other factors to consider. A change could leave the organisation with underused assets, which we are beginning to see (and having many conversations around) regarding properties, significant cash reserves etc. Might it be worth looking at other liquidity solutions, or even asset sale (taking into account any restrictions)? We also know that at times of change, resource may be scarce. A theme throughout our roundtables has been how organisations can collaborate for mutual benefit, and this roundtable was no exception! Could collaboration with the corporate space on e.g. digital investment, allow charities to increase their capacity and corporates to further their CSR impact while building employee skills in new areas? Last but certainly not least, how does this fit with our own sustainability agenda at a time when all organisations are facing more scrutiny on their support of the transition to net zero and other ESG factors?

Throughout our discussion, though, the underlying tone was how we can build long-term plans without making too much of an industry out of it. There is often a nervousness that the charity spends a great deal of resource on re-evaluating its strategy, only to end up with a very similar outcome. The solution might be not to change strategy altogether, but instead to be clearer on its communication. However, long-term strategic planning remains a vital exercise in the “new normal” of uncertainty, to ensure that organisations are following their “North Star”, perhaps via a deep dive each year, to reflect on how they are tracking vs objectives and any areas they may wish to amend. 

Please do let us know if you would like to join our next roundtable, as we continue to grow this forum of charities from across the sector to discuss key topics!