Third Sector Organisations in the Marketplace
Funding is a major issue for Third Sector organisations unless they have sufficient reserves to keep themselves going, increasingly problematic where there are low interest rates.
The main sources are either donations or grants. Dependency on donations puts an organisation into a particular market and I have discussed how to build a website for donations in some detail.
Grants have many advantages but also significant disadvantages. They are a significant industry in their own right, and with the recession many groups are finding it increasingly difficult to get access to continuing funding.
So, another approach is to trade and this can present problems for third sector organisations. There are three main issues found in many third sector organisations. Successful organisations work out how to transcend these problems.
“We’re Not a Business!”
I’ve heard this several times in recent months. It may be a UK mindset because in other countries businesses and community organisations are natural allies. Many of the techniques used to generate and implement ideas, were developed by church, community and industry; sharing, developing and sharing again many familiar techniques such as brainstorming.
If you don’t think you’re a business then you don’t act like a business. So, for example, a group opposed to business may think it is competing with businesses and so, bizarrely, third sector organisations can be unnecessarily aggressive in the marketplace. This might be expressed as moral superiority but the result is they are not trusted by business people who generally work by building relationships.
Of course, there are businesses out there that haven’t understood how relationship building is at the centre of any successful business. The community group that encounters such businesses will have its prejudices reinforced. But the rule is to build alliances wherever you can.
But it is not only that third sector organisations don’t think like businesses, they seem to be less driven than businesses. Members are not personally dependent upon making sales to pay their bills. Paid staff, whose income is from grants are resigned to moving on when the money runs out. Most volunteers have their own sources of income.
An organisation whose members have no personal financial incentive is not going to work in the marketplace. This is why the retail co-operatives were so successful; everyone could see how the co-op would be of direct financial benefit to their household.
“We’re Ethical and They’re Not!”
Yes, some businesses are not ethical and they make the news headlines. Whether they are individuals who con people or massive corporations, salting away the country’s finance in offshore accounts, we definitely hear about them.
But many businesses are ethical. For a start many people who set up businesses are driven by ethics. They may find they have to compromise their ideals but at least they’re trying. Others perhaps start out with a more pragmatic approach and then learn from experience that an ethical stance is pragmatic.
The problem in the third sector is the idea that we’re ethically superior because we’re volunteers. The cause may be ethical but the means used to support the cause are not always squeaky clean.
Occupying the moral high ground is not a good place to start. If you want to take part in the marketplace, you have to make deals and any business will want to know what’s in it for them. Successful business people get dozens of requests for help. They will be interested where there is mutual benefit. They will never do anything that does not benefit their business and especially they will not enter alliances with people who might inadvertently draw them into ill-repute.
So, a poorly run small community organisation will not get support from business because businesses will not see them as a viable concern.
“We’re the Community!”
Oh dear! I want to know who I’m talking to. You might be an organisation but I do deals with people not organisations. I know how seductive and stupid organisations can be. I’m not going to make a deal with a genuine person who might be replaced by a charlatan at the next AGM.
You might be a member of a community organisation and your officers might be drawn from the neighbourhood. Self-help is respectable but any business will want to see evidence that as a group you can manage your affairs.
If it’s not clear who is in charge and will be in charge over during the collaboration, then you will need to work harder to show you can honour the agreement. If it is a named person then the personal integrity of that person is important, just like the business owner’s integrity on the other side of the deal.
The reason the world does not owe the community self-help group a living is because the group has to prove itself. Declaring that I (or we) am (or are) going to do something is not the same as doing it!
It is much easier to do deals with real people who have a track record and are no more likely to melt down than a small business. There are alternatives, where leadership is more diffuse but also reliable, see for example Citizens’ Organising, but they still have to prove they can deliver.
Being the community is not an advantage. It is a circumstance thrust upon a group of people because they have no other choice. The social entrepreneur will show what they can make of such circumstances.
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