We’ve had a week of talking about growth. This is what the economy is finally doing, as the Chancellor pointed out in his Autumn Statement; but living standards aren’t growing at all, the opposition responded. The terms of reference are pretty clear, though: growth is good, and we need more of it.
Move into the charity sector, though, and the picture is more fuzzy. Growing your charity may be a good idea, but not if it makes your work less effective and less sustainable. There are other ways to scale up work, but these are under-explored.
In a perfect world we’d want to find a solution to a social problem, test that it works, and then scale it up in order to reach the widest number of beneficiaries possible. But it’s not that simple. If it was that easy, the UK charity sector wouldn’t be so lopsided: in 2012, 84 per cent of voluntary organizations had an annual income of less than £100,000, accounting for only 5.3 per cent of the sector’s total income.
But organizational growth is only one of several routes to scale. Perhaps the answer is to achieve scale through other routes, such as through replication (federated structures as adopted by charities such as Mind and Citizens Advice Bureau), or through licensing or franchising a specific initiative. Another option is to pilot an approach and then get government to mainstream it by delivering it as a public service – Macmillan’s ‘pump-priming’ of nurses, for example, where Macmillan funds the salary and training costs for three years, and then ensures that the NHS or a hospice takes them on as employees at the end of that period.
There are certainly some success stories, but they are still few and far between. So the intriguing point is what is holding back the voluntary sector from scaling more successfully? My colleagues at NPC, David Bull and others, have just published a report, Growing pains: getting past the complexities of scaling social impact, which examines some of these issues, and particularly aims to provide a framework for charities and funders to understand whether and how to scale if appropriate.
Scaling up is not always the answer. Trying to expand (especially too quickly or without the right skills and resources) may compromise effectiveness and quality, of either an approach or an organization. And the notion itself is being challenged within the sector. Joining a group of progressive UK grantmaking foundations last week, I heard much talk about this: some funders were actively helping organizations that had previously been reliant on government funding to become leaner and smaller as government streams dried up. Other funders were explicitly more interested in innovation than scaling. These two approaches don’t need to be diametrically opposed, but funders need to be transparent about where they sit on the funding spectrum: do they have a preference for funding new, growing or established approaches to creating social good?
One of the approaches that has taken hold as a way to encourage scaling in the social sector is venture philanthropy. The very essence of this approach is to provide both financial and high-engagement, non-financial support over a multi-year period to help organizations grow and scale. However Impetus-PEF, one of the UK’s leading venture philanthropy organizations, has had an interesting change of strategy in recent times, moving away from the classic venture philanthropy model. During an event held at NPC on scale this week, Jenny North from Impetus-PEF reflected on their shift in focus from building capacity to scale to concentrating first on building organizations’ ability to deliver and demonstrate impact. ‘Scale is still the crucial end goal, but let’s make sure we get impact right first,’ she said. ‘It’s a question of getting better, then bigger.’
This is a welcome approach to such a complex question, but Impetus-PEF remains in a minority. Most funders prefer to support specific items or projects, and generally over a short time period. If grantees wanted to scale up their most effective projects, they’d probably find little support.
Plum Lomax is deputy head of the Funders Team at NPC.