by Debra Allcock Tyler, Chief Executive, Directory of Social Change
We may have
robust financial management systems,
sophisticated strategic planning,
audited annual accounts, paid employees
and detailed organisational policies.
We may even generate our own income
through trading. But we're not
businesses.
We’re not businesses because the
Charities Act does not allow us to be,
because the rules on public benefit do
not allow us to be; because our
charitable objects do not allow us to
be.
There is one key fundamental difference.
The purpose
of a business is to make a profit.
However, that is not the purpose of
charity. For charities, money is only
ever the means and for around 150,000
charities (those with turnovers under
£100k pa), it’s not even that much of a
means. For us, money is a tool to
help us serve our beneficiaries or
deliver against our cause, and that is
all. And when we forget that then we
have not just lost the point – we’ve
lost the plot.
The differences between the two sectors
have nothing to do with the people and
everything to do with the legal
frameworks in which we operate.
It’s the law that keeps charities
charitable.
Interestingly, many people assume that
the business way of doing things is the
right or best way and that charities
aren’t good at running themselves.
We need to keep good records; have effective communication systems, have plans to help us meet our vision and charitable objects; have appropriate governance and monitoring systems. All with the purpose of meeting our charitable objects. We need to be constantly looking at how we can improve and do things better.
The business model doesn’t even work for businesses, why on earth would we genuinely believe it works for us?
To read the full article click here.