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How effective partnerships can open new avenues to raising funds for charities

Raising much-needed funds is a perennial issue for the third sector. And never more so than today. Departure from the European Union, an uncertain economy, the threat of more legislative pressure and over-stretched and under-budgeted local authorities are all contributing to a dramatically changing (and challenging) charity landscape.

Effective fundraising is without doubt, the single, most difficult challenge facing the sector. An openly hostile media stoked up by stories of aggressive sales tactics and the lengths so-called ‘chuggers’ and door-to-door fundraisers go to get you to sign on the dotted line haven’t helped the cause, putting charities under more intense scrutiny than ever before.

Commercial partnerships can play a key role in helping charitable organisations to raise the cash they need but they need to be handled carefully.

Charities choosing to raise funds through strategic commercial partnerships need to recognise that it carries inherent risks.

A case in point is the huge amount of negative press Age UK received with its deal with the energy company E.ON, when customers felt they were being misled and short-changed.

The answer is to get the strategy right and to make sure you manage the risks effectively. In the words of the Charity Commission: “A successful partnership can raise both a charity’s income and profile. An unsuccessful one, where stakeholders perceive the charity to have ‘sold out’, can damage income and profile.”

The rewards are significant if charities get their strategic partnerships right. There is big money to be made from well thought out, mutually beneficial deals. For example, it has been reported[i] that Age UK raised around £40m from a range of deals including home and travel insurance in 2014/15, while Cancer Research UK raised £13.5m through a partnership with TK Maxx.

Of course, strategic partnerships are not all about generating cash.  In addition to revenue generation other benefits include: gifts in kind, expansion of the donor base, influence within the partner company, improving in-house offering, increasing the charity’s brand profile and professional development opportunities for employees and volunteers.

It is certainly the case that when it comes to strategic partnerships, the rewards outweigh the risks.

But the key to mitigating any of the risks associated with strategic corporate partnerships – whether that’s reputational risks, commercial or legal – is to fully understand those risks. If you are aware of any potential issues that could arise, you can put the appropriate controls, measures and contractual protection in place.

The very real danger is that insufficient resources and time are given to understanding the potential issues before embarking on the relationship.

And that’s where good governance comes to the fore. It is vital to have robust policies and procedures in place before entering into a partnership agreement. In other words, you need to know what you are getting into. These processes need to be reviewed on a regular basis to ensure they remain relevant.

Planning and preparation is everything and it is important that part of the selection process for a partner is that they have the ability to support the charity in the monitoring and mitigation of risks.

The key is applying due diligence and then once the strategic partnership has begun charities should monitor and review its performance at regular intervals. This will help manage the expectations of the charity and the commercial partner and ensure they are being met on both sides. Significantly, any benefits gained from the agreement should not be outweighed by the costs to the charity’s reputation or otherwise.

An effective partnership governance framework should be designed to mitigate the potential risks of engaging with organisations while optimising the commercial gains.

Good governance will provide significant benefits including:

  • Greater clarity on the opportunities as well as the risks that face the charity currently and in the future
  • Ability to make better, more informed, robust decisions based on the facts to deliver the charity’s mission
  • Clearly defined, measured outputs and outcomes which can be used to improve performance and more effectively meet the needs of beneficiaries
  • An enhanced reputation to external audiences
  • Improved relationships internally and with key stakeholders outside the charity

Gone are the days when charity partnerships were solely about making money. Yes, fundraising through commercial partnerships is an important source of income for many charities, opening up new avenues for raising funds for good causes.

But it is about more than this – it’s about exploring new and innovative ways of promoting a charity’s cause that not only deliver value in the short term but also creating sustainable, long-term relationships that provide a win-win strategy for all parties involved.

i ref: https://www.theguardian.com/voluntary-sector-network/2016/feb/24/corporate-charity-partnerships-age-uk-eon

Why financial services firms need to change their modus operandi

If you had a time machine and were able to go back 20 years, or even 10 years, you’d soon see that the thought processes behind business strategy for most companies were very different to how they are today (or at least, how they should be today).

Back then, business rivals were seen as the arch enemy that needed to be outsmarted and outmanoeuvred every which way.

Fast forward to now and it’s clear that viewing our competitors as the ultimate enemy that should never be fraternised with is, in fact, quite obsolete and could significantly hold businesses back and even result in their demise. If you have a shared goal with a rival to change a market or an industry don’t completely dismiss the idea of working together.

Businesses need to embrace the concept of partnerships and selective collaboration if they are to survive and thrive in this fast-moving brave new world where meeting the evolving needs of the consumer is business critical.

The risk is no longer that a perceived competitor will steal your innovative business idea. The very real danger is that you take too long from idea to launch and the market will have moved on by the time you get there. In a world where ideas are free it is only execution that counts.

Don’t miss the boat because you’ve compromised yourself with a range of self-imposed limitations of systems, resources and capabilities, such that your innovation is a dead duck anyway…

Financial services companies have a bad rep for being somewhat risk averse, resistant to change and pretty slow off the mark. In my opinion, this is justified. I used to work for a large, household name insurance firm and you could literally spend hundreds of thousands just getting a quote for the cost of implementing an innovative new way of doing things. That’s bordering on the ridiculous!

How many of us have witnessed significant expenditure on projects that we know a smaller, nimbler, more flexible external organisation could have launched in half the time for a tenth of the cost?

In 2018/19 and beyond, financial services companies need to think with greater clarity about who they are and what they want to achieve.

What is it that you are really good at? Now, if you’ve invented an amazing new method to turn rock into gold or water into wine, then you should definitely keep that under wraps until it is patented! But if you have an innovative financial services-related idea that could change the market or bring real innovation to a space you are already in; then prepare to compromise confidentiality for the sake of speed to market.

The pace of change is the real threat here not the originality of the idea. Even if that means working with a business that you might see as a competitor. A great example of this is Apple and Samsung. While both companies currently have a whole range of lawsuits against each other, believe it or not, they also collaborate.

Samsung makes about $110 for every iPhone X sold because it provides the display and some of the chips inside. Apple doesn’t care – all they care about is that they have the best constituent parts for their end product.

Samsung realises that most Apple customers are not Samsung customers. So why not sell their screens to Apple and increase their profits? Apple knows they can’t make screens as well as Samsung, so why not buy theirs? It’s a business win-win.

And it’s about time we started thinking the same way in the financial services sector.

Companies need to work out what they are truly great at and build from there. If they are average at something or worse, they need to shut it down and move on or quickly get better at it!

Today’s consumers will no longer accept mediocrity. This requires some serious self-reflection and honesty. I see lots of businesses who think they’re good at stuff that they, quite frankly, are not and that kills their propositions.

Large companies with big system legacy issues have gone from having all the advantages of scale and resources to being at a major disadvantage in today’s market. However, this is still largely due to poor ways of thinking.

Instead, financial services firms need to shift gears and change their modus operandi.  The trick is to not feel threatened by new entrants and new innovations anymore but to seek ways to collaborate with them.

Start with the dream and whenever you find yourself compromising, ask yourself – would collaboration improve the proposition for the customer or increase your speed to market?

If the answer is yes, you know what you need to do.