The business of giving: the challenge of running a charity amidst a crisis

Business leaders say they have never seen times this difficult. Running a charity is barely any easier, especially if it relies on donations from businesses themselves feeling the squeeze.

The Evening Standard here speaks to Amanda Mackenzie, the chief executive of Business in the Community, the Prince of Wales’s Responsible Business Network, about the challenges she faces.

What has it been like running a charity for the past 5 months?

I’ve been around the block by now. So one way or another I have dealt with a lot. But nothing comes close to five months running a charity in a pandemic.

As everyone will tell you, running a charity is tough. A couple of main reasons. You are in the business of discretionary giving. You rely on people or companies wanting to help you financially. Secondly you employ people who, as the root of the word charity suggests, want to give love and compassion.

In a pandemic that is a heady cocktail of funders keeping their discretionary generosity to themselves and your employees being acutely sensitised to the needs of the world around them. The injustices, the long-term impacts and indeed their own anxieties. In other words, just at the point demand is greatest your supply is being well and truly cut off.

Have firms kept on paying or not?

In the beginning when any accountancy firm worth its salt was advising companies to conserve cash at all costs, we received phone calls saying ‘yes i know we committed to you for three years but we are just not paying’. And of course as I have limitless resources I begin cost recovery proceedings…er not. We are hostage to companies ethical and moral compasses.

Conversely we have had companies who recognised what was happening and expedited funds, helped in magnificent ways, and found time to support those supporting our communities.

We are now seeing companies on the brink of survival who can’t pay and feel very bad not doing so. Of course, we will go to the end of the earth to help them as we know soon as they are back they will be helping us again.

How is your own balance sheet?

A going concern calculation for a charity is quite simple. You have to have enough reserves (or obvious cash flow) that you can wind up the charity and pay your debts. That’s lease Costs, redundancies and any other liabilities. Charities by definition are not-for-profit but they are not-for-loss! We have to see enough future cash flow that our reserves will not be so stressed as to breach the magic number. If companies don't pay us, we also have to make people redundant which means the very work society needs right now more than ever is less likely to happen. Furthermore the cost of redundancies has to come out of that reserve amount but unlike a classic balance sheet where it can be treated as a exceptional item, below the line, a charity has to know (and prove) where the build back of its reserves is coming from. The end of year results don't wipe the slate clean. You live with your decisions basically forever.

Aren’t companies focussing on mental well-being these days?

There has been a profound shift to giving attention to well-being and mental health in companies in the past few years. Rightly so. Infact BITC (and so many brilliant organisations ) have campaigned for it. The irony of course is we have been so busy campaigning for it we risk neglecting our own. We don't always have the resources either that large well capitalised companies have to dedicate to it. We struggle to find the time. And yet the bar is probably set at the very highest for charities. If you spend everyday helping the most vulnerable and their needs you are probably a tough advocate for what good looks like and what you should rightly expect. But your employer doesn’t have the resources to help you to that same degree. Walk the talk is a fine idea but most charities are usually on crutches in this regard.

How have you reacted to Black Lives Matter?

To add to the febrile conditions of late, events in the US, the disproportionate death rate of Covid-19 and what we know to be a worse economic impact in recessions on the BAME community means we must give our attention to everything Black Lives Matter means. I am very much an ally in training. I am learning every day the best thing to do or the best support to give. So to my earlier point about the bar being very high in charities for doing the right thing when the resource bar is very low, on this one there can be no compromise. Make it fair, make it legal, above all make it right and go out of your way to think about how much black lives, or indeed black livelihoods matter.

What is the future of charities?

Many far wiser than me will be better qualified to opine on this subject, but I have long felt that there are too many charities in the UK. We have c.166,000 of them and 80% of them have an income of less than £100,000 and half of all charities an income less than £10,000. This cannot be right. I know some people say they should help the smaller charities as the bigger ones are expensive bureaucracies but surely there is a size below which the overheads are disproportionate to the amount that is spent on benefitting the charitable cause? I know the charities commission does challenge whether a new charity couldn't combine with an existing one at the point of registering, but everyday of the week we hear of a new foundation, a new something. Each needs premises, back office help, finance, reserves (all being tiny budgets) . Surely as so many charities face extinction there could be a mass of M&A? Not sure about acquisitions...but definitely merges.

So having started by saying this has probably been the toughest period of my career I didn’t write this for sympathy. I love my job. It is of course beyond a job it’s a cause. I wrote it to say really think of the impact on the charitable organisations you support and see if there is anything else you can do to help. How can you make some of your resources available to them? Think about the people working in your charity partners...just because they have dedicated their life to working for a cause doesn’t mean they have given up being human with all the frailties that brings. Take more than a few moments to think about all your BAME colleagues. Are you doing enough? Are you feeling uncomfortable or conflicted yet? If not, you are not doing enough. And finally maybe help your charity partners to combine resources so everything goes further to benefit our communities.