Executive Director of a national professional association, Richard Cantillon works with senior leaders, boards and industry stakeholders to shape strategy, drive growth and deliver public benefit, drawing on a varied career spanning education, journalism, film and television.
What are the most significant leadership challenges facing third-sector organisations, particularly when balancing social purpose, financial sustainability and organisational performance?
The third sector is obliged to take account of various factors which are over and above the simple requirement to make profit. They must adhere to additional rules from the Charity Commission governing how they are managed and how trustees are qualified, and to ensure they fulfil their charitable purposes – they must state their intention to bring a benefit to their constituents directly or indirectly, and provide measurable impact statements to justify their charitable status. For leaders in the sector, this brings additional responsibilities and a different mindset to commercial managers.
Third-sector organisations may or may not receive financial support from Government in the form of grants or awards to cover their core costs, and thus are required to ensure they can employ sufficient staff to deliver their social purposes as well as cover day-to-day business requirements. Their performance is measured differently from commercial organisations also – they are required to make efforts to cover their core and project costs but not necessarily to generate profits. Any that are generated can be reinvested of course, but similar financial pressures in statutory bookkeeping, annual returns and financial probity apply as they do in the for-profit sector. Managers must therefore think differently and be constantly aware of limited resources, the often vital need for parts of the business to be run or aided by unpaid volunteers who are nonetheless entitled to various legal protections, and the need to demonstrate the social impact of their activities, which do not apply to standard businesses.
How can experienced leaders work effectively with boards, employees, volunteers and external stakeholders to shape strategy, support growth and deliver meaningful public benefit?
In any charity or social enterprise, leaders must be inspirational and have a strong vision for their organisation, which justifies their delivery of services and provision and can be seen to be integral to the existence of the charity. For-profit businesses can exist without these requirements; they are in business simply to make money and/or returns for shareholders. They also serve the perceived need for their services, but differ from charities in that most charities provide services or support not available to their service users through traditional avenues. Leaders must therefore be constantly aware of their social responsibilities and the need to demonstrate that their activities are both of benefit to constituents and cannot be easily accessed elsewhere. This vision runs throughout the relationships with Trustees, volunteers and staff, and shapes the activity the leadership promotes.
Charity Trustees often work with management in a different way to commercial firms. Charity trustees are, like many for-profit Boards, voluntary and unpaid. They join because they share the values, goals and ideals of the charitable purpose of the organisation, and often bring expertise in particular fields relevant to the charity’s activities. This helps shape strategy and operational attitudes. Because the aim is not to generate profits in the first place, charity Boards have the additional need to ensure this activity is delivered both responsibly and with financial probity, and to oversee the same statutory reporting and good governance requirements as any other business.
Leaders often work more closely with them on a personal level than commercial Boards do. This more informal working relationship likewise carries through to volunteers and staff, and requires leaders to ensure they achieve strategic and business outcomes in formal as well as informal terms. This means leaders in. the third sector have to be more flexible, more open to personality management needs, and more aware of how valuable voluntary service is to achieving their outcomes.
What lessons from your career across the charity, education and media sectors have most influenced your leadership approach, and what advice would you offer to those developing their own sense of purpose as leaders?
What has most influenced me in the charity field is the vision needed to achieve change in any aspect of need. Charities exist to serve social needs which are falling short via traditional routes. Often, their constituents are those in the most deprived and limited sections of society. They have real needs which must be addressed by a vision which defines and allows service delivery in the most effective and responsible ways. Leaders in the field must therefore be constantly aware that their mission is service, not profit generation. This mindset is often difficult to adopt for leaders whose experience is from commercial backgrounds, where priorities are different. I have learned that the charity sector is much more dependent on people skills, interrelations between individuals, suppliers and legislators, and a real sense of purpose about developing their charity and its services. The KPIs may vary from commercial ones, but responsible levels of financial management, good governance and HR management apply equally to both sectors. I have combined commercial experience approaches with a much more focused vision and mission statement which must be the yardstick against which strategic decisions are made and justified. In every case, ongoing learning is vital. Every experience we have as managers (and managed) can be adapted to third-sector priorities, or inform and illuminate how managers approach achieving their charitable aims. In some ways, the job of charities is always to help educate society about its own shortcomings – the very reason those charities exist and provide services and support that society does not.
Read more about Purpose Under Pressure: Rethinking Leadership in the Third Sector