Dilemma 1: Where are the boundaries? On the one hand, there is pressure do everything we can to avoid blurring boundaries, and to make sure that we are crystal clear about our definitions: what is charitable, what isn’t? When is something for profit, and when does it just happen to be generating a surplus? On the other hand, we are an organic sector. We grow and develop at times of change, and we really welcome everyone focused on social value. Are the businesses which sign up to B corps part of civil society? To understand something we must first define it, but do we really want to draw boundaries? Our capacious and welcoming nature is surely our greatest strength.
This isn’t a dilemma: there are no boundaries. Perhaps a generation ago it helped to categorise but today it doesn’t, the approach needs to be inclusive. Whilst I welcome the idea of the ‘for purpose’ company, B Corp is a distraction, not least because it only applies to 100 small companies in UK after a decade of existence. It doesn’t answer this question: “If a ‘for profit’ company commits its entire work force to supporting a charity partner over a period, in innovative ways, producing value to both parties, is it behaving as part of civil society?” I’d say yes, of course. Does the same apply if only half the workforce is involved? Yes… and so on, ad absurdum. Where do you draw the line?
What’s the difference between a profit and a surplus? Does it really matter? The American version of ‘non-profit’ is at least defined (organisations dependent upon external funding for their survival) whereas ours isn’t so concise. The only true ‘not for profits’ are taxpayer-funded services, charities, voluntary groups – and companies that have gone bust. Social enterprises and B Corps are ‘for-profits’ but it’s what they do with their profits that makes them different from companies which exist to drive ‘shareholder value’ only, who take money out of their companies to benefit (principally) ‘the few’. Even CICs are allowed to take some of their surplus/profit out of the system! Shareholder value is very much under scrutiny as more and more business leaders, as at Unilever, argue that environmental sustainability and community engagement are actually the best ways to deliver long term shareholder value. Does that make them part of civil society? (When we say ‘not for profit’ we mean ‘not for dividend’ but that’s not very catchy!)
A well run business will regard its workforce as a community and espouse community values of engagement, representation, activism and sharing; the employee-owned John Lewis Partnership does all of these things. Does that make JLP part of civil society?
We don’t need to spend time and effort excluding people and organisations from our definition of civil society: if it has a bill and it quacks, it’s a duck. Let’s get swimming together…
Dilemma 2. Civil society is one of the places where we express affiliation and associational life is our great, and growing, strength. Many voluntary organisations invest heavily and successfully in developing an active and engaged membership. But trustees are charged with governing for today’s beneficiaries as well as future generations. Does that create impossible conflicts within organisations with growing and more engaged and voluble memberships? Do we risk the engagement of members who quite naturally will have demands and aspirations for now? Are members our stakeholders, or are they are owners?
Those conflicts can and do arise. As Martin Luther King said:
‘Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary’.
In other words, every charity should have the goal of putting itself out of business by conquering the cause of the injustice against which they fight; that’s how you serve the beneficiaries of the future. Whilst this isn’t usually a realistic (lifetime) goal it should, nevertheless, always be reflected in the mission and programme of both individual charities and civil society in general.
You identify two risks here: one, that I call the ‘philanthropist’s risk’ is that s/he may choose to fund a campaign which isn’t a priority, or in a way which is not appropriate, perhaps operating in isolation from others and possibly even undermining those with a more rational approach. Bill Gates is a star not for the quantity of money he donates to good causes but for the fact that he delivers nothing: he uses his wealth to enhance and coordinate proven ways of working by others. The ‘democratic risk’ is that the majority have the right to be wrong. A charity with ‘youth’ in its name had a very democratic structure which, over the years, delivered an elected trustee board with an average age of over 60. The membership had to be told they were wrong – a brave action – but re-organisation was well handled and it worked.
‘Membership’ – an active, engaged, controlling mass membership – is not the flavour of the month in the charity world where today ‘followers’ (in both the ancient and the modern, Facebook sense) and supporters are the most wooed. This helps protect the mission from transient changes in public mood and other influences (given appropriate safeguards) and leaner, slimmer organisations are more agile than those which are constantly looking over their shoulders to judge public or members’ moods. But a compromise is needed: the charity sector is paying a price, literally, for regarding supporters as money-fodder rather than building relationships with them.
Few businesses could be described as democratic but they certainly know how to build brand loyalty…
Dilemma 3. We know that reputation is a hugely valued asset. We gamble with it at our peril. And yet active civil society will always want to empower people to take action. Our risk frameworks and control systems may protect our reputation. But do they also dampen enthusiasm and engagement and make it difficult for people to take initiative? Does our proper desire to be business-like and professional, stop us from allowing people to take action?
The charity sector is notorious for its risk aversion and fear of failure. Whilst the latter is justifiably seen as letting down the beneficiary, the former prevents many (especially mid-sized) charities from maximising their impacts. A balance must be struck.
A good example of this is the way that charities regard business as a resource. Traditionally this is an arm’s length relationship although the charity arm is normally outstretched, palm upwards. A recent report says that in 2012 only 20 per cent of our largest charities agreed with the statement:
‘…by effectively harnessing our corporate partners’ competences and non-cash assets [our organisation] can make much more of an impact on our mission delivery objectives than through cash-based relationships’.
In 2013 it was 34, 48 in 2015 and 60 per cent agreed by 2016. Things are changing. The Dell Foundation has identified a significant shift in corporate philanthropy: given a choice between a $100,000 gift and an equivalent value in counselling, skilled volunteering or access to decision-makers only two fifths of the 700 NGOs they work with, worldwide, would today choose the cash.
I’m interested in what ‘action’ Julia have in mind in the last sentence. Some would argue that the swing from ‘public funded’ to ‘state funded’ charity-run services has both grown charity capacity and stifled innovation as it (usually) pays for reliability of pre-existing services. As state funding dries up (half of government funding to medium sized charities has already gone) that idea will be tested in years to come! One thing that stifles action, of course, is the Lobbying Act, often creating an over-compensation in a community not used to being regulated in this way.
If ‘action’ means ‘taking part in demonstrations’, forget it (useful for cause-building, no good at getting results). If ‘action’ means empowering collective activity to directly serve beneficiaries then that focus will be more important than ever. As the public sector shrinks (for evidence, look no further than care provision in relation to growing demand) the imagination, capacity and determination of civil society will be tested as never before. New forms of collaborative, integrated, collegiate, cross sector working are needed, based more than ever on local initiatives; the state may still need to coordinate but the routes to results are not paved with gold. We’ll never again go back to the halcyon days of even ten years ago…