Children England, the umbrella group for children's charities just published results of a survey of small charities (under £250,000). Turns out 4 out of 10 are now in a vulnerable state and could be facing closure if their fundings don't come through. This is up from 1 in 10 in 2007, which is a clearly indictment of the current situation.
Unfortunately this is something I'd predicted a little while ago in my post "Will Charities Survive The Credit Crunch?"
The charities closer to this size are feeling it worst. It's a problem I'm seeing with BANG Edutainment too. The underlying issue that the funding needed directly reflects operating costs, which are based on contracted outputs or services. Raising funding in the quarter to half million bracket is very hard right now, because typically it relies on lots of small sources rather than one massive one. If even a small number of the sources of funding are impacted by the credit crunch it means that operating costs cannot be met and without the reserves of profit making organisations, debts pile up very fast.
Scaling down unfortunately is not as easy as you might imagine either. To do this in advance of a financial crisis requires significant strategic pessimism; which commercial organisations typically dont have, let alone charitable ones. If you haven't already anticipated problems, the tightly stretched capacity of charities means that there is little or no room to adapt, and their close knit nature means that letting staff go is an absolutely last ditch choice; one that is usually held off in the hope of new funding coming through and rarely made until its too late. The result is a pile up of salary, overheads and tax debts by this point, leaving the organisation little option but to close.
A survival strategy that is not being considered carefully enough by many small charities is partnerships. I'll discuss these in more detail in my next post.
Small Charities are Struggling to Survive The Crunch
Future Trends in Social Enterprise
In my previous post I talked about Social Enterprise Trends to expect in 2009. I outlined 5 key ones:
- Rise in social startups and skills available to the sector
- Higher expectations from funders
- More support for big ideas
- More partnerships and collectives
- Blurring of lines between Charities and Social Enterprises
Future Trends in Social Enterprise - 2009 onwards
- Disruptive innovations will continue to flourish as commercial sector skills are turned towards solving social problems.
- Social innovation from the developing world will begin to drive developed world commercial innovation. We are already seeing this in the way western banks are looking at micro-loans and telecoms firms are looking at mobile payment systems.
- Corporate Social Responsibility departments will have to adapt and revise their policies, because social enterprises are redefining the parameters of giving and support as they continue to effect major social change.
- Increasing pressure on social sector to become business viable will result in more social startups emerging as social enterprises rather than charities.
- Charities on the other hand will get smarter in their trading setups, further confusing the definition of Social Enterprise.
- As the Green movement embeds further into the global cultural psyche, both social enterprises and charities will face increasing expectation to be green just to be credible.
- Social Enterprise will mobilise more people to enter the social sector by making it more competitive, responsive and modernised.
- The CIC will start to come into its own, and will evolve into a more viable organisational definition.
- As more organisations begin to deliver both financial return and social change, a more practical measurements of Social Return On Investment will arise. Over time we should expect to see clear standardisations of SROI for comparative purposes.
- As SROI measurement standardises we should see increasing numbers of Social VC's, philanthropists or Trusts whose funding has social conditions. Some of these currently exist, but regardless of their mission statements, returns are still predominantly measured on financial profits or ability to repay these social loans and investments.
- New business models monetising social need will continue to arise, as social entrepreneurs look to innovate under pressure of financial difficulty and social demand.
- If social collaboration really does take off, we should also see an increase in collaborative shared services that let small social enterprises and charities focus on their core goals without worrying about peripheral activities like HR, accounting and fundraising.
- As the social sector evolves down the commercial route, and as more commercial sector staff enter the social space, the general quality of skills expected from CEO's and managers is going to increase.
- Consequently I'd expect a trend towards higher wages for nonprofit workers as demands cause skills profiles to increase.
- Finally we should also expect to see more courses and better training for social entrepreneurs, with something like the IOMBA specifically for social entrepreneurs.
Social Enterprise Trends 2009
Every January people typically start to wonder what's coming up in the year ahead for their industries. The social enterprise and the non-profit sectors are no different. It's just that fewer people publish anything of value, mostly because these sectors are not awash with analysts in the way the private sector is. Anyway in case you're curious, here's my thoughts on where things might be headed for social enterprise.
Let's start with immediate trends to expect in 2009. Most of these are inevitably going to be defined by the impact of the credit crunch and the increasing ubiquity and impact of the social web.
5 Trends in Social Enterprise for 2009
- Rise in social startups and skills available to the sector.
Increasing numbers of highly skilled private sector employees are being made redundant, and many of these are looking for ways to keep their skills sharp and occupy themselves positively and productively. Some will join the existing wave of social and third sector enterprises, and others will take the entrepreneurial route. I'm seeing this trend already with one of the charities I'm involved with. - Higher expectations from funders
As the markets suffer and investments fail or continue to provide lower returns, many of the large trusts and social funders will rapidly find their liquid funds diminishing. While I doubt this will stop them continuing their missions, I would in turn expect them to become significantly more focused on quality and viability of financial and social return. - More support for big ideas
As social enterprises continue to leverage the web and mobile to effect social change, social funders like UnLtd will have to start catering for big ideas rather than simply grass roots start ups. Google has already upped the ante with its Project 10^100. - More partnerships and collectives
These should emerge as more forward thinking Social Entrepreneurs look for ways to partner together to stay afloat in the face of financial pressures. I'd expect to start seeing more collectives like the Hub bringing small startups together, and more web services dedicated to letting groups collaborate. - Blurring of lines between Charities and Social Enterprises
We already know social enterprise is blurring lines between the profit and not-for-profit sectors, but the rise in success of social enterprise in both social and financial terms is also increasing the pressure on more and more charities to become financially sustainable through commercial revenue streams. Conversely I'd expect to see a number of social enterprises abandon their financial goals under pressure of the credit crunch, and look to use their social impact to gain charitable status in order to survive.
(Note: I've explored some more trends in Social Enterprise in my post Future Trends in Social Enterprise, which covers developments to expect beyond 2009.)
Google Needs More Time For Project 10^100
Those of us who put in our ideas for the Google 10^100 funding project were hoping to hear back about the shortlist at the end of January. I hadn't heard anything so I assumed iVolntr.org didn't make the cut, but thought I'd better check anyway. Turns out it's not over yet :)
Here's the official word from Google...
"Thank you to everyone who submitted an idea. We received over 100,000!
Due to the enthusiastic response we received, it's taking us longer than we expected to review all the ideas. Come back on March 17th to help vote for your favorite idea."
If you want a reminder to go back and vote on the 17th, you can pop your email address in here http://www.project10tothe100.com/reminder.html
What's in Store For Social Enterprise in 2009?
As far as I can see, in the UK at least we're entering year two in the growth of social enterprise. Before 2008 I'm sure there were plenty of organisations doing good things sustainably, but the concept of social enterprise really seems to have become mainstream in 2008.
CICs are becoming more common, the concept of Social Return on Investment started to take hold, different models of Social Enterprise were identified, and we even saw the release of a new Self Assessment Framework for Social Enterprise. I no longer see discussions in the blogosphere around what Social Enterprise is and whether it is doing social things sustainably or making money with social or community benefits. I think that's been cleared up as closer to the former... "Enterprises effecting positive social change, independently and sustainably".
I reckon Social Enterprise will continue to embed as a way of life in 2009, and both new social startups and existing charities will feel increasing pressure to set up financially sustainable operations. I also reckon we're going to see more organisations leveraging the web to effect social change. In combination it feels like we're heading towards an exciting and dynamic future in the social space, where we're able to innovate without being dependent on hand-outs.
For me too, 2009 feels like it might be an interesting one. I got involved with a lot of different things in 2008, all of which have possibilities ahead. First and most importantly the Urban Survival Project, which evolved into iVolntr.org for which I'm still hoping to hear back from Google around the results of their 10^100 funding project. We hear back at the end of Jan, and even if iVolntr doesn't make the shortlist I will start a more dedicated effort to get the Google Foundation behind it, or maybe see if I can exploit the new networks available to me through the Fellowship to the RSA I was offered a couple of months ago.
Having managed to raise the funding needed to stave off insolvency, I'm also expecting to be heavily involved with the development of BANG Edutainment and BANG Radio for the next couple of months. Finally if things get worse with the credit crunch and I get signed off, there's always the possibility of getting involved with the development of social enterprise in Thailand or maybe even India with Trn Labs or UnLtd India.
So all in all, the future's looking bright, and here's to a top year ahead. Hope you're having a good start to 2009 wherever you are!!
Will Charities Survive The Credit Crunch?
I recently wrote a post on whether or not social enterprises would survive the credit crunch, where I suggested that many would pull through as I believe the crunch will only help drive social innovation faster. It will embed the recognition that we have to be able to help each other, and create not just environmentally sustainable businesses, but also financially sustainable ones.
Unfortunately I'm not sure this ability to survive will extend to charities that are entirely dependent on individual, organisational or governmental funding.
Charities often start small and very community focused. Their goal is clear and staff voluntarily make it happen. They have a small number of funders, if any. At this stage they are agile and able to cope with change easily.
But as they get recognised, other people and bodies become interested and the charity starts raising more funds to increase the scale and quality of their impact. The organisation thus solidifies and formalises, and their ability to adapt and control their own destiny decreases – in a large part due to the way they have to be set up.
In the UK, Charities differ from commercial organisations in that they are exempt from all taxes except VAT. However, the tax structures for charities means that they cannot engage in any overtly commercial activity as profits made will become taxable and, at worst, the organisation may lose its charitable status altogether.
Members also cannot take any benefits and no dividends can be paid to them. Any funds must be applied for charitable purposes only, and if it is wound up, the funds must be transferred to another charity.
In small charities, this classically drives organisational and human structures that do not look to create or exploit commercial revenue streams even though they often have a range of intellectual and physical assets that can be monetised. At some point in the growth cycle, incoming funds stop adequately covering operational cost, and from then on it becomes an ongoing battle to raise money to survive. The social imperative of the organisation starts becoming secondary to the need to raise money.
What the organisation achieves starts becoming driven by what likely funders are looking for, rather than the core social impact it was set up to make. Over a period of time this often results in a dispersion of activity and diminished quality of outcomes - lots of small impacts rather than any major core difference. The diminished quality of outcomes then adversely affects the ability to raise funding, and alongside growing operational costs, forces the charity further into the spiral of doing whatever it can to raise money to survive.
Now that we're faced with environmental recession, the negative impact on grants and funds available might just mean that a lot of medium sized charities will simply go under as their funding dries up and they run out of revenue streams.
The sad part is that this does not have to happen. There are ways that charities can commercially generate their own revenue through the use of trading subsidiaries. I’ll explore this further in my next post, along with some thoughts on the need for new charitable structures that automatically work this way, rather than being designed to exploit structural loopholes.
The 15 Best Free Tools for Bloggers in 2008
After a year of blogging, I've come across some fantastic free add-ons that really add richness to your blog. Also after having set up a couple of wordpress blogs, I think I can now safely recommend Blogger as the better bet for novices with ambition. Wordpress is probably more customisable, but only if you install software on your machine and know how to code. For anyone who wants it easy and painless, Blogger is the way forward!
Anyway here's my favourite applications. There's a couple more than 15, but I'm sure you can forgive that! They're all very easy to add, and you can see them all in action on this blog if you look hard enough :)
Best Free Add-Ons
- Disqus - really improves the way your comments are displayed, managed and tracked. The best part is that it allows people to reply to specific comments in a thread, rather than the terrible linear approach that all standard blog platforms use. They also give you a cute "recent comments" widget you can use. Click on the comments link below this post to check out Disqus in action.
- Dipity - creates you a visual timeline of all your blog posts and lets users read and flick through them within the timeline. Very cool. If you scroll to the bottom of this page you can see it in action.
- Odiogo - automatically converts your blog posts into audio podcasts and lets readers listen to your posts, download them as MP3 or subscribe via their iPods. American accent aside, the speech conversion is unexpectedly good and convincing. You can try it out using the link just below the title of this post, or from the subscription links on the right.
- Lijit - provides a very useful search box for your blog with a better display of results and suggestions for alternatives than the standard search provided on most free blogs. It also allows you to track and monitor what people have been searching for on your site. You can test it out in the box on the right of this post.
- Feedburner - is easily the best blog support out there. It is the best way to manage and track all your subscribers and ensures that you never lose your audience if you decide to change your blog address. It also allows your readers to subscribe via email, and add your posts to social bookmarking sites. Finally and most importantly it gives you all the stats you need to monitor your blog's development. See the 'Subscribe via Email' box on the right, and all the sharing links below this post for Feedburner in action.
- Blogcatalog - provides a 'News Feed' widget that allows you to highlight all your shared web activity, including posts from multiple blogs, dugg items, delicious items etc. Check it out in action about halfway down the right column of this blog.
- Sharethis - gives you that cool drop down with links to bookmarking sites that your users can use to share your content with their friends or networks. Check it out just below this post.
Best Free Platforms and Services
- Facebook Notes - allows you to import your RSS feed into Facebook, which not only lets your friends read your blog from your profile, but also allows you to tag specific people that you'd like to share different posts with.
- Twitterfeed - automatically tweets your post titles on twitter, letting your followers know when you've posted new content. It's pretty cool because it basically keeps your Twitter account active even if you never bother to sign in or update it yourself. Check it out in action here http://www.twitter.com/rizwantayabali
- Slideshare - is one of my favourite sites, and contains fantastic presentations on anything you ever wanted to know. For bloggers though it is the best place to upload your own presentations so that others can embed and share the content wherever they please. Here's an example of a presentation on Socialising Intelligence shared on this blog taken from my Slideshare space.
- Scribd - allows you to upload documents you want to share, and then embed them wherever you want in a way that allows readers to scroll through the document directly through your blog. Here's an example of Scribd in action on my work blog.
- Youtube - allows you to create your own public channels for your videos, and then provides you with the code to post, embed and share the videos wherever you want. Like with docs and presentations, uploading directly to your blog means that others outside your blog cannot find or share your content. Here's an example on my blog -
iVolntr.org - Concept Video streamed from the Urban Survival Project Youtube Channel. - Feed Analysis 1.1 - is a very cool online application that graphically displays all your traffic and usage results, using your feedburner URL. You don't need to sign up or anything, just pop your feed into the box provided and away you go.
- The Blog Readability Test - is a great way of checking and monitoring the readability of your blog. All you have to do is pop your URL in and it figures it out for you. Unlike all the other tests and tools, it actually tells you the level of comprehension your audience will need to stay engaged. High school levels of readability are the way forward if you want people to easily get what you're blogging about. I must admit it's not easy though! If your post's readability is too high, here's an online test that will help you identify the sentences that are too complicated.
Best Free Bits of Code For Your Template
- Related Posts - lists the last few articles that have the same category tags to the post being read, and is really useful for driving traffic to older posts. Here's an example of how it looks, below my last post.
- Tag Clouds - are a cool way to display the tags on your blog. Frankly I doubt they really get used much, but they're a nice alternative to a list of categories, and make your blog look that little bit more Web 2.0! You can see this bit of code in action in the right column, just below the subscribe links.
Best Free Installable Software and Plug-Ins
- Blogger Backup Utility - is the best backup software I've seen for free online blog platforms. You just input your blog username and password and it downloads every single post individually into a folder on your PC. You'll never have to worry about your blog crashing or migrating to a new platform. Get the latest release here.
- Zemanta - is a cool browser add-on that automatically analyses your words as you write a post, and then provides you with linked articles and related images that might be helpful.
