Managing priorities within charities
The conflict between beneficiary needs and finite charity resources
Whether you are part of the board of trustees or the senior management team, you will inevitably sometimes face a difficult decision about how to make resources stretch to meet demands. Perhaps one springs to mind? Was it a negative process, leaving a bitter taste, or were you able to embrace the conflict and end up in a better place?
As the demand for services increases, there is often a resource constraint – usually in terms of finance or staff availability. Whilst for most corporate businesses, profit is the driving force, for a charity, decisions will be more complex.
- As a charity, your driver has to be fulfilling your charitable purpose. However, when resources are limited and the choice is between one essential service and another, how do you begin to prioritise?
- Is it most important that a service is financially viable?
- Can you cut the staff time allocated and still deliver a safe and valuable service?
- Is what the service users want and need more important than whether you can afford to run the service?
The challenge is how to measure the contribution of one activity compared to that of another.
- For trustees, you have a legal obligation to act in the best interests of the charity. So, does that mean if an activity makes a loss it should be cut? Not necessarily.
- For the senior management team much closer to the ground, if an activity is oversubscribed, does this mean that it should be expanded? Not necessarily.
One of the benefits of the governance structure of charities is that it can deliver an opportunity for clear thinking. Many people, whether staff or trustees, are involved in their charities because they have a real heart for their charitable cause. That can make decisions that have an impact on the ultimate beneficiaries are much harder to make.
The senior management team who are at the front line dealing with the demands of beneficiary needs and delivering operational activity may be much closer to service users and feel more keenly the potential impact of a cut to services. The trustees in their strategic role may be more detached from the day to day delivery and may be able to take a more objective approach. The role of the trustees here might be to ask searching questions and to help refresh the approach to the conflict.
On the other hand, trustees, particularly those comprised of service users, may have a particular affinity for a service and be passionate about trying to retain it. The senior management team who are more involved in the process can recognise how a service requires a disproportionate investment of time or money for the impact it makes on delivery of the charitable purposes.
Where there is good organisational governance, then trustees and senior management would be anticipating resource constraints ahead. They might already be reflected in the organisational risk register. Whether expected or unforeseen, trustees and senior management need to respect the different roles and use them as a resource to help reflect on how to manage the conflicts for the best outcome for the charity.
Charity A, as part of its work, was managing a supported housing facility which benefited its client group. The Housing Association for whom they were doing this funded the staff costs, but only to the extent of net pay. Charity A was subsidising the cost of providing supported housing. The charity was not monitoring the costs associated with this aspect of its work because they could see the value to their clients, but it was gradually eating into its reserves. Eventually Charity A ran out of reserves and had to look carefully at each area of its work. Prioritising the service without understanding how it was draining financial resource eventually put the whole existence of the charity at risk. Once Charity A understood the conflicts and the need to understand the factors at play, they challenged the funder to either meet the cost or they would walk away. They recognised that failure to act would mean that there would potentially be no services at all for their clients.
Charity B consulted with its service users about how they could support them in a different way that would be self-financing. The service users thought this was an even better idea and the volunteers were able to re-engage. That hard, but informed decision required the charity to rethink. Recognising the competing priorities and understanding the facts, Charity B ended up with a positive outcome from conflict. Conflict is good when decisions are not made in isolation but as part of the wider offering and solution.
What to do when faced with a conflict
Don’t make an uninformed decision. Get all your facts straight and weigh up the different scenarios.
- What impact does the service have?
- How many service users does it reach?
- What is the financial cost?
- What staff resources does it require?
Charity B delivered an outreach service as part of its suites of activities for its service users. Funding ceased for this service and the trustees and senior management team recognised that either they
ran the service and cut back in other areas or they cut the service. A difficult decision was taken to close the service, as to run with no funding would compromise the ability to deliver other essential services. The service had been running for a long time with the support of long serving volunteers who felt disappointed that they would no longer have a value.
You will need to reflect on which is the limited resource. If you release resource from one area, does this have sufficient impact to add value to other areas?
How we can help
If you would like assistance in assessing the full cost of services or would like us to facilitate discussion on how to assess service values and priorities, please get in touch with Not for Profit Director, Helen Blundell or a member of our Not for Profit sector team.