Changing the rules of the game for charities

Reuben‘s call to change how charities approach fundraising to think more about engagement over efficiency and flourishing over formulas must strike a chord with so many people who work in charities and feel torn between wanting to do good work and wanting to do good for the cause. We might like to think that these two are one and the same but more often than not they feel like very different things.

Reuben talks about how fundraising is approached in a mechanistic way with a focus on maximising efficiency and the outputting of fundraising collateral, and suggests a better approach:

My view is that engagement, for want of a better word, isn’t just a more palatable word for acquisition, but an opportunity to prize human flourishing. It’s an opportunity for us, as agents of change, to bring more of our selves to work. To think beyond the optimised formulas of fundraising and access our empathy, our ingenuity, our humanity.

Reuben Turner

I’ve seen a similar situation in Product Management. The product-isation of production of product. What John Cutler calls the feature factory. Developing new features knowing that they will not make any difference to the success of the product, not increase the value the customer gets out of the product, and not increase the revenue the organisation gets from the product, all continued and repeated because that’s the way its always been done.

It is that way because every organisation, whether a commercial business or a charity, is built on the same paradigm. If Taylor is the grandfather of maximising efficient production, Friedman is the father of maximising profit.

Friedman said “there is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Friedman’s opinion has been a guiding principle for almost every organisation, whether for-profit or not-for-profit since he expressed it more than fifty years ago. The leaders of the organisation believe that their purpose is to maximum profit for shareholders in the case of a business and for the cause in the case of charities.

It’s hard to argue with that. If you’re a charity, why wouldn’t you want to increase profits for the cause?

The answer is, that you would and should, but of course there is a bigger picture. That question does not exist in isolation. There are lots of other things to consider, lines not to be crossed, decisions to be made about how, moral choices about the right and wrong way to increase profits. These are the ‘rules of game’, as Friedman put it. And those rules affect our thinking without us even being aware of them. Standard business logic says that profit is maximised by increasing revenue and reducing costs, often through efficiency measures (back to Reuben’s point about approaching fundraising as though it was manufacturing).

The profit a charity makes; how much money is left over for the cause after costs, should be a measure of success for a charity. But following Goodhart’s law, “when a measure becomes a target, it ceases to be a good measure” we realise where we went wrong. Profit has become the target. Targets drive behaviours, and often those behaviours have unintended consequences. The Taylor & Friedman -inspired mechanistic mindset drives organisational behaviours that cause people to feel like feel like “a cog in a fundraising machine designed for optimisation”, to quote Reuben again, rather than human beings doing good work that makes them feel like they are bringing value to those who engage with the charity.

Perhaps more ‘charitable’ targets are human-centred things like ‘how many lives touched’, and ‘how deeply affected’ over financial targets like ‘cost-to-serve’ and ‘revenue-per-visitor’. Of course charities will have to have uncomfortable discussions with themselves about the value of their impact on a human life, and how many human lives affected is sufficient for them to justify their size, funding and even existence. Such is nature of changing the rules of the game.