Knowledge Peers

Following the money - Part 1

First, find your corporate….

With a growing number of charities chasing dwindling public funding, if it’s not statutory, increasingly it’s not even on the list.

Public donations are falling so ‘following the money’ in today’s bleak economic climate leads inevitably to corporates. Having worked for the charity regulator for many years, I thought I was pretty familiar with the ‘do’s and don’ts’ for prising cash from big business. That, however, was before I started working for it. With the help of my company’s Corporate Social Responsibility (CSR) team, I’ve pulled together a series of key tips for charities seeking corporate funding which I’ll post over the next couple of months.

Bonuses – the good, the bad and the downright ugly

It is people’s abilities and behaviours that drive business success (and also failure).  

Training, leadership and motivation are critical to success. For people to perform well they should understand the purpose of what they are doing and its relevance to the organisation as a whole;  it is also important for them to have feedback.  Something that may also encourage people to go that extra mile is a bonus.  Bonuses are likely to influence behaviour, however behaviour can be good, bad or downright ugly:

One client operated a number of depots and was experiencing problems in collecting money from customers. When I looked into the reasons it became apparent that the credit controller was having problems in getting depot managers to respond to customer queries, which in turn was delaying payment.  The managers received bonuses based on their depot’s profit and I suggested that this was changed to also reflect the collection of money from their customers – this together with some other improvements resulted in the equivalent of an extra two weeks’ sales in the bank.

Growth: Time for direct action?

The Government’s “Plan for Growth” was published in March 2011.  When you hear Ed Balls (and others) shouting “there’s no growth plan”, well perhaps they could just go ahead and download it here. When I first read it back in April, my reaction was “good ideas, right direction, a bit thin on substance”.  When we interviewed Mark Prisk, Minister for Business, there was more of the same - see here. Not really a lot to disagree with.

Cloud, riots, and collaboration - the tools of growth

With our upcoming event in September, 'Technology: transforming growing businesses?' only weeks away, we thought it would be fitting to hear from an expert on Cloud Computing. Dalbir Singh Ahluwalia, ACMA of Arithmo Accounting Software, is an ERP consultant and advocate of utilising software to manage business information. 

People and groups of people are driven to innovate to solve identified problems or to create new opportunities.

An effect of the downturn is acceleration of innovation from conception to implementation, with the aim of stimulating demand and reducing consumption as quickly as possible.

Growth in collaboration, since the global economic downturn, is one such innovation.   Collaboration allows organisations to enter new markets or provide new products through sharing of resources and knowledge amongst members.   

Cloud based infrastructure provides a platform for all parties to realise innovation through collaboration quickly as there is no requirement for unconnected organisations to integrate their internal systems to successfully manage the delivery of their joint end product / service. 

What will shape business in 5 years time?

At a recent Knowledge Peers gathering we had some debate and discussion on what will shape business in five years time. Inherently these tend to be more “strategic” influencers and, with the help of our network, we ran a research poll asking executives to rank their top 5 opportunities and threats in the longer term horizon. If you want to read through the full results and commentary take a look at our Survey Results.

Visionary strategies...and who exactly is Mark Prisk?

How far ahead should a board be thinking when developing their business strategy? Knowledge Peers focuses on looking forward, rather than backwards. As a general principle, and not a criticism, if we ask SME business leaders what challenges they see on the horizon, that horizon is typically no further out than two years. Funding, sales, management etc are quoted as the “strategic” concerns.

Cost Index

The Charity Commission has said that they are looking to develop a new index for the public to gauge whether a charity is spending the right amount on its charitable cause, but also said that any index won’t be perfect, but will be ‘good enough’.

21st Century Philanthropy - The importance of showing impact

As the UK economy recovers from one of the deepest worldwide recessions and steep cuts in government funding begin to bite, 160,000 registered charities as well as countless tiny community groups are trying their best to help the poor, sick, disabled, old, young and others, not to mention causes as wide as the planet itself.  Charities are having to compete for the donor pound against other discretionary spending – as well as each other. 

In exchange for making tough choices for their donations, donors are developing high expectations of their chosen charities, including the donations that charities should accept, as shown by the outcry over the Royal British Legion‘s decision to accept the proceeds of Tony Blair’s memoirs.  Donors increasingly want accountability. 

How are charities responding to this trend?  In a number of ways:

Is no news good news when it comes to business?

Not sure I can get myself too worked up about the Yes/No vote on AV this week. However, combined with the Royal Wedding (we even had a street party, and I enjoyed it!), endless bank holidays, the death of Osama Bin Laden, Andrew Marr’s embarrassment and numerous high profile sporting events means that economic gloom is getting much lower coverage than it might otherwise merit. The same applies to Government policy on tackling that gloom: all seems a bit of a mess, but who cares!? The most interesting thing I learnt on the radio last night was the fact that the Snooker final attracted the biggest Chinese TV audience for ANY global sports event this year.  Far more exciting, and potentially beneficial, than the Government’s efforts at making the UK the “best place for business”.

Budgeting in a Big fraudulent Society

Our organisation’s managers have experienced more than the usual pain over recent weeks as they have grappled with preparing budgets for 2011/12. Like most charities our budget process is necessarily very detailed - we have many sources of restricted funding against which to plan our expenditure, although for 2011/12 many of the possible sources of income are not at all certain yet. 

Amidst the managers’ groans, confusion and pleas for help at this micro-organisational level, I read last week of the estimated £38billion cost of fraud in the UK each year, with £21billion of this being within the public sector and £1.3billion in charities. For many of us, reading about amounts in billions is incomprehensible and meaningless – the figures are just too large and we need some context. 

In the spending review the government announced that £470million was to be invested in the third sector over the next 4 years which, at the time, seemed quite a large number. However, the figures above for the cost of fraud give some perspective to this figure. If the government were to recoup just 2.2% of the public sector fraud in 1 year then they would meet their 4 year commitment to give the £470million. 

So, having gained some perspective about the numbers, perhaps we need to put pressure on the government to take more steps to recover the money lost through fraud and give a small amount, say just 5% of the £21billion, to charities (we’re not greedy). This would only be about £1,050million a year, and it would really help us balance our budgets! 

Victoria Reynolds, Director of Finance & ICT, The Princess Royal Trust for Carers