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Horizon scanning (or NOISE as I describe it) is an essential part of the work of a CEO. It is also important for trustees to be aware of the wider context within which we operate.

Horizon scanning is made up of:

Notable events – local, regional, national – this could be service changes (cuts, eligibility, u-turns), events / crises (flood, crime, terrorism) or other ‘things’ that could impact upon the organisation or its people

Opportunities – tenders, contracts, grants, partnerships, collaborations – all about developing new work for the organisation to better meet the needs of its people

Issues – what are people telling us about the problems that need addressing

Strategic developments – big picture stuff– anticipating and assessing how it may trickle down to impact on the organisation and/or its people, positively or negatively

Emerging themes – What are our people seeing and saying? What are others organisations with similar aims to our seeing and saying? What commonalities are there?

I spend a lot of my time, both in working hours and outside, engaging in this NOISE, making sense of it, talking about it, interrogating it further. It is essential to the success or otherwise of our organisation. If we want to stay agile, innovative and responsive to need, whilst maintaining our independence and credibility, we need to be aware of the bigger picture and plan (or not plan) accordingly.

For a CEO, all this NOISE is what helps to guide and focus the organisation. It helps with resource planning and allocation. It helps us to know how best to deliver our mission, our charitable purpose. Without that NOISE how do we know that what we do is still relevant, meeting needs, and valued? How do we know where best to apply our efforts and resources? How do we plan ahead, predicting emerging needs and issues?

Understanding the context in which we are working is critical to financial and delivery planning. It will help our sustainability and resilience.

Now, they are interesting words aren’t they? Along with independence, they are often used in relation to our sector, but possibly often misunderstood.

Sustainability is an interesting concept, and one which we often apply in terms of financial sustainability – but is that actually about ensuring we continue to deliver our mission, or more about ensuring the survival of the organisation? The outgoing CEO of the Charity Commission has said that ‘too many charities focus on their own growth’. (http://www.telegraph.co.uk/news/2018/01/29/charities-obsessed-chasing-celebrity-patrons-rather-helping/) Whilst much of his article laments the lack of leadership in the sector, and focuses on poor fundraising practice, that individual comment does hold some water – is (financial) growth an indicator of sustainability, or are there other factors that need to be considered in a charity’s planning processes? Some charities are undoubtedly being driven, due to the changing funding environment and ongoing austerity measures, to focus on sustaining and growing the organisation, over sustaining the organisation’s mission. The Institute of Voluntary Action Research (https://www.ivar.org.uk/research-report/thinking-about-sustainability/) is one of several bodies which have considered sustainability in the context of the third sector, and states that ‘while financial aspects are prominent….the term sustainability can cover a range of equally or even more important additional, complementary or conflicting meanings’. According the IVAR, three of the most important themes around sustainability are:

  • The risks of diversification (‘mission creep’)
  • The importance of non-financial resources (money isn’t everything – human resources, physical resources, intellectual, relationships and so on are vital)
  • The need for unrestricted funding (independent income)

In my view, conversations about financial sustainability and organisational resilience have become confused. Resilience is about the ability to cope with changes and shocks, without making any long-term assumptions, it is about understanding your purpose and ability to deliver, and it is about knowing when shrinking is more important than growth.

The focus needs to be on the work of the organisation and not on the organisation itself, in any case. Isn’t the reason we strive for sustainability, that we still exist to deliver charitable benefit into the future?

According to IVAR ‘in the context of a rapidly changing social economy, sustainability too often carries unhelpful and unrealistic assumptions about the degree to which any VCO can plot and plan a route to long term continuation.’ And in the words of Julian Corner of Lankelly Chase Foundation ‘you can’t have a settled understanding of what sustainability is...some organisations can become self-perpetuating and lose their sense of wider systemic challenge. If you are obsessed with sustainability you will not disrupt. Creativity needs disruption.’

In the new normal is it possible for a small to medium social purpose organisation to say that it is truly sustainable? Financially? In the long-term? No, of course not. The best we can hope for is resilience – having the resources needed to deliver what is needed now, having the innovation and reach to remain relevant and responsive to need, and having the financial, physical and human resources to weather the storm, withstand shock and know when enough is enough!

Effective financial decision making to support sustainability is not simply about ensuring a break even or surplus position at the end of the year – it is about appropriate investment of resources, appropriate designating of reserves, understanding the context in which we are working and applying those resources to meeting beneficiary needs (fulfilling organisational purpose). That means we have to listen to and engage with the NOISE. If we don’t fulfil our organisational purpose, there is little point in being financially sustainable.

In my view, independence is critical to sustainability of organisation, values, mission and purpose. As such, the means by which we demonstrate our independence needs to be considered in every step of the planning process, including financial planning / budget setting. A balanced scorecard approach enables us to look at the key factors needed to demonstrate accountability and effectiveness in terms of charitable assets (people, money and physical assets), and charitable purpose / impact. Demonstrating how our money, assets and people provide charitable benefit / impact is crucial. And the ability to demonstrate true independence in the planning and decision making processes underpinning this is fundamental to building confidence and credibility – which are needed for sustainability of organisation, values, mission and purpose.

In ‘A Shared Society? The Independence of the Voluntary Sector in 2017’ (http://www.civilexchange.org.uk/a-shared-society-the-independence-of-the-voluntary-sector-in-2017) the authors talk of the current threats to the independence of the sector, including:

  • The independent voice being ‘frozen out’ by the cumulative impact of a variety of measures from the Lobbying Act to the Charity Commission guidance on charity campaigning during the EU Referendum: this has led to barriers to expression of that voice and a ‘profound muddiness about what constitutes legitimate campaigning’ leading to a ‘growing and deeply concerning self-censorship’.
  • Poor commissioning practice and new grant standards threatening independent action – and further, whilst we can see that contracts can be a useful mechanism as they should in theory allow Charities to develop their reserves, recent research by the Charity Finance Group 2016 (http://cfg.org.uk/news/press-releases/2016/march/charities-struggling-to-recover-their-costs-when-delivering-public-services.aspx) showed that the average income per contract was c.£170k, but the median surplus (income less total costs) on service agreements or contracts was 0%!! The Social Value Act should be another useful mechanism for the sector, however just a third of councils in England routinely consider social value in their procurement and commissioning (Social Enterprise UK 2016 https://www.socialenterprise.org.uk/procuring-for-good). Additionally, the procurement and commissioning approaches applied have ‘resulted in a purchaser / provider split that has undermined the sense of common purpose that informed traditional partnership approaches between the two sectors’ [public and voluntary]
  • And this one is particularly important in the context of the above discussion on sustainability and resilience – there is a need for ‘a sharper focus on causes and people served...ultimately it is a focus on their independent mission – or independent purpose – that ensures that voluntary organisations put the people and causes they serve first, not money, organisational survival or a good relationship with government at any price’

But please don’t get me wrong, independence of voice and action is not about disengaging from the State, it is about rebalancing the power to provide an equitable foundation for appropriate and meaningful cross-sector collaboration about social challenges and changes needed, putting people and purpose before policy.

I’d like to end with quoting Paul Streets OBE, Chief Executive of the Lloyds Foundation, as his words support the statements that many of my colleagues have heard me say, that the sector is at risk of being hijacked by a purely public service agenda:

Our role as social changers has never been more crucial. Yet in the headlong rush for growth some of us have bought into a state vision of social change as articulated in the contracts it would have us take. Swapping the voices of those we reach – for the voices of those who commission us to reach them and determining need on the basis of what they are prepared to pay…in doing so we have effectively become co-opted – as delivery agents of the state – rather than agents of social change. It feels like dangerous territory.

It does, and for us our independence was hard won but gives us resilience and sustainability of values, mission and purpose, and the credibility to act and speak as agents of social change, even if it does not (yet) give us the financial sustainability that some would expect us to demonstrate.