Are charities and companies really that different?

Why do we think that charities and companies are so different?  Why do we have the  (cartoonish) stereotype that people working in the private sector are professional, ego-centric, hard-nosed, money grabbing, selfish individuals?  And the equally cartoonish impression of people working in the charity sector being amateur, do-gooding, selfless, friendly people?  Why does business sit towards the evil end of the good/evil pendulum, whereas charities are towards the other end?

Are charities and companies really all that different?

stereotype

Having worked for many years across both the private and third sectors I can attest that there are plenty of hard-nosed, ego-centric individuals in the charity sector, just as there are plenty of friendly, ethical individuals working for companies. Individuals. People.

And that’s the thing.  Companies and Charities are made up of people.  Are the people working for companies inherently bad and the people working for charities inherently good?  No, of course not.  So let’s look at why companies and charities exist:

To solve an issue.

It might be the issue of wanting the next smart phone, it might the issue of needing a nice car to travel to work in, it might be cancer.  But organisations exist to solve an issue.

And how do they go about solving the issue?

By selling and delivering something to a consumer.

It might be a product, it might be a service, it might be an idea.  But organisations, charities and businesses alike, sell and deliver something.

Some organisations make and sell products (Age UK make and sell products for elderly people, Apple make and sell phones).  Some organisations sell a service (PwC provide accounting services, CLIC Sargent support young cancer sufferers).  Whilst yet other organisations sell products/services that others produce/provide (Amazon sell the products of others online and Comic Relief sells, through fundraising, the services of other NGOs).

Indeed, the sales department in a company really isn’t all that different from a fundraising department in a charity.   Both will have income targets to achieve.  Both will have ‘market segments’ they are targeting.  And both will have marketing or communication departments creating awareness in the target markets.

So why do we persist in thinking that charities and companies are so different?

When you really look at it, there are only two differences:

1)    Who pays for the products/services that are consumed:

The charity fundraiser is (generally) not selling to the consumer of the products/services they provide – instead they ‘sell’ the cause (or the great work they are doing to address the cause) to their donors, and someone else (the beneficiary) then consumes the products/services – whereas a sales person in a business will (generally) be selling to the direct consumer of that organisations’ products or services.

2)    The way success is measured:

The second difference is the fact that the guardians of the organisations (be they shareholders or trustees) choose to measure success in different ways.  For some, the ultimate measure of success is how much money they have made.  Whereas others measure success in how many lives they have improved.

Now, I’m simplifying things, I know.  And it’s not always a clear distinction.  Indeed, Richard Branson believes that “the only mission worth pursuing in business is to make people’s lives better” (which is easy to say when you are a billionaire, but let’s take the sentiment at face value for the purpose of this argument).  And try telling a finance director in a charity that the main objective of the year is to help people, and to ignore whether the organisation has made enough money to be financially sustainable.

So there is a clear blurring of the sectors and, if we just think about the basic reason for being – companies and charities exist to solve an issue by selling and delivering something to a consumer – then the essence is the same.

Perhaps, then, charities and companies are not as different as we think.  Perhaps people in both sectors can relate.  Perhaps we even have some shared ideas, some shared objectives.  Perhaps those similarities can form the basis of partnerships that can benefit both sectors, and society as a whole.  Perhaps they will contribute to the success measures that both sectors have – and if more lives can be helped whilst more money can be made, surely that’s a win-win?

So why don’t we stop talking about the differences between companies and charities, and start recognising the similarities.  Let’s call ourselves organisations.  Organisations that are made up of people.  People that have knowledge, ideas and skills that can be pooled to benefit all.

 


Blog written by Rick Benfield, CEO of thirdbridge

rickbenfield_bw