We needn’t go back over it blow by blow. 2015 was an annus horribilis for charities.
Bullying? Incompetence? Greed? Deceit? Egomania? You bet. The media turned its gaze on charities and hurled all these allegations, and more.
Most problematically, the attacks came at a time when we have never needed charities more.
With government (taxation-funded) finances squeezed dry and many social problems on the rise (poverty, cancer, mental illness, homelessness…) the £10-15 billion that the public gives directly in the UK each year has never seemed more of a lifeline for our shared wellbeing. Add to this the £24 billion value of UK volunteering and clearly any threat to public goodwill has to be addressed head on – through robust self-defence, merciless self-scrutiny and committed transformation by charities.
The most worrying outcome of all this change is that it is becoming ever harder and more expensive for charities to find and keep new supporters. On the other hand, it’s a truism that every crisis also contains the seeds of regeneration – and with it opportunities for innovation. What is needed; is being vocally demanded; and must be delivered, is a great leap forward in donor accountability, with digital technology at its heart.
Understanding the accountability crisis.
Charities are both similar and dissimilar to corporations. Similar, in that they both start by pinpointing a need ‘out there’ in the world and addressing it, but obviously different, in that corporations exist to make a profit whereas charities exist merely to make an impact. And this difference makes all the difference.
Many, perhaps all, charities start life from the energy of individuals or communities that believe passionately about a cause. Whether you are Bill Gates or Joan Smith, you decide a problem needs fixing and then use your own resources as well as asking other people to help you to fix it – by empathising with the urgency and legitimacy of the need, unlocking their innate generosity and trusting in your ability to make something new and important happen. Emotionally, and in generality, you draw on their philanthropy – the widespread instinct to give for the love of mankind. But rationally, and specifically you elicit their benefaction – a decision to take a specific action for good.
The latent assumption here is that these donors (whether that donation is time, energy or money) will believe in your cause (and your intent) and agree to act as benefactors to support your efforts. Initially this natural support network works well – building on a ‘strong-enough’ alignment of interests, intimate relationships, implicit trust and abundant goodwill. There is often no clear line of sight (accountability) between the contributions and the outcomes. And it doesn’t necessarily matter. Compassion, clarity and community are what count at the outset.
And it’s not only true at the outset. There are many (indirect) fundraising or supporter-mobilisation situations in which this ‘benefactor’ model still works well – when you run a marathon for example, and hence lean on your friends’ relationship solidarity and generosity to fund your chosen cause. Or say when you buy a charity Christmas card and the ‘spirit of giving’ is part of the cultural Zeitgeist. Or more currently, when a social moment is so much fun that the donating process becomes part of an irrational expression of public exuberance – like 2014’s Ice Bucket Challenge. Or perhaps when the whole nation gets behind Comic Relief or Children in Need. However, in general the suspension of disbelief that underpins ‘benefaction’ goes against the grain of modern living.
A model under tension
The reality of our hyper-connected society is that, over time, many similar causes will proliferate, the delivery of solutions will become more complex, relationships more distant, trust more instrumental and goodwill more fragile. Time-pressured donors become more promiscuous and less engaged, and it becomes harder and harder to knit together these individual ‘moments of benefaction’ into a reliable blanket of support. Unless tended, the donations and the cause gradually wrench apart.
This is a fair caricature of what often happens today ‘at scale’. Charities’ operations teams plan their activities based on their best estimates of need, and then ask fundraising to try to raise the money they need to hit their targets. The two processes are intrinsically and frustratingly separate. In trying to execute the benefaction model at scale, and especially in a competitive context, there is an inherent risk of tipping into the worst stereotypes of transactional fundraising – playing a numbers game, spraying attention onto inattentive donors and building a pipeline of reluctant giving. It’s all ask, and no give. In effect it’s Zombie fundraising. By doing the wrong things really well, charities create a fundraising bubble that risks eventually going pop. The good news, however, is that charities can inflate a ‘new reality’ inside this bubble, if they focus on substantive accountability to donors – and beneficiaries. And many of them are in fact doing precisely this.
Even before the backlash of 2015, the most recent (2014) Survey of UK Giving from the Charities Aid Foundation had already highlighted the two dominant reasons that people don’t give to charities – “Confusion”: not being able to decide WHICH charity is best and “Scepticism”: not understanding exactly HOW they make a difference.
In order to prop up the strained and dislocated benefaction model, charities invest heavily in their brands. Brands seek to recreate the empathy, trust, and goodwill that would formerly have lived in tight social networks. But they also have a major downside – by heavily editing both the underlying information and the surface emotion, the simplified brand idea that exists in donors’ heads often becomes very different from the reality of what a charity is actually doing. This dislocation would matter relatively little if your raison d’etre was to produce a sugary cola beverage, but it matters a great deal if you exist to support starving, abused or destitute children, for instance.
A question of accountability.
When the corporate sector hit its own accountability crisis in the 1990s, the Corporate Social Responsibility (CSR) movement came into being. Corporations recognised that in an increasingly well-informed, multi-stakeholder environment, they faced an array of hidden risks to their intangible assets. Their institutional interaction with the world was often seen as irresponsible, short-termist and unsustainable. But only by addressing head on the externalities of their conduct could they really deliver long-term value to their investors. They realized, slowly and reluctantly that they owed a duty of care both to society and to the planet and were blatantly not honouring it within their core social contract – their simple promise to translate customer value into shareholder value.
A proliferation of solutions then came into being to address the problem – dialogue, assessments, disclosures, standards, reports, and audits of these unintended consequences. The charity sector is now at a similar inflection point. But inside out.
Charities surely understand very well all the complex peripheral effects and dependencies of their conduct – after all, the reason they exist is social. They ‘get’ complexity in ways many corporations don’t…
However at the core of the charitable organisation the basis of value-creation, and the terms of value transfer, from the donor to the beneficiary (or impact) are often surprisingly unclear.
Think of Corporate accountability as a jammy doughnut – the hot, yummy, gritty bit – the business model – is in the centre. And around it are wrapped its social and environmental implications. This doughy context was both lacking in definition and largely undifferentiated until CSR came along.
On this analogy, Charity accountability is currently a ring doughnut. The doughy circle of external stakeholder interdependencies is what the charity is actually made of. But in the middle, where its central social contract should be – the agreement between donor, charity manager and beneficiary – is often just a hole.
There are two main ways charities try to fill this hole. Both are based on analogy with the corporate sector. Both are valuable. Both can be substantially improved through digital technology. But both are imperfect.
I want to work through them, and explore their implications, in the next blog…
Tim Kitchin is client service director and director of consulting at Copper, the digital marketing agency.