Profit with Purpose in a Non-Profit World

“Well, yes … but I still don’t see what the attraction is – and I’m not sure where my skills fit in. I’m about making money – making a profit: they’re about Not-for-Profit.”

That’s an (almost) verbatim quote from a recent candidate I interviewed for a non-exec job with a major charity. It’s not untypical, revealing both the generalised lack of understanding of the sector and a more specific lack of awareness about the way senior-level experience, gained at the coal-face of business, is actually what many Third Sector organisations really need, especially given the increasing financial challenges that they – like many in the private sector – are facing. So, why should you consider a job in a Not-for-Profit (NFP) organisation?

Let’s start by looking at the size of the sector. While we’ve all heard of the multi-national charities, the likes of Unicef and the Red Cross, did you know that the Third Sector directly employs the same numbers (around 1.1 million) as the construction industry in England and Wales? Moreover, these direct employees are supplemented by a staggering 4.3 million regular volunteers, equivalent to another 190,000 full-time employees. That takes a lot of management…

Not only do charities employ a lot of people, but they are frequently at the forefront of diversity hiring. Since 2019, the percentage of women Chairs has increased from 43 to 46 per cent, while Chairs with disabilities have increased from 9 to 12 per cent. Black, Asian and other minority ethnic chairs have risen from 6 to 8 per cent.  Women are well-represented in managerial roles, with 62 per cent of Chief Officers being female and the percentage of Chief Officers with disabilities has risen from 7 to 10 per cent. The proportion of Black, Asian and other ethnic minority group Chief Officers has also risen, from 8 to 9 per cent.

There are around 200,000 registered voluntary and community organisations and social enterprises in England and Wales. At a micro-level, these range from co-operatives and community benefit societies to community amateur sport clubs and other NFP registered societies and businesses. These small players (comprising nearly two-thirds of all charities) have a combined income of over £48million and an estimated expenditure of around £46million.

At the other end of the charity scale, the big players are very big indeed, with £multi-million incomes and commensurate numbers of staff. To take just one example, Oxfam’s retail operation in the UK alone generated over £90million in 2021-22, and the most recent Charity Commission report (2022-23) notes that overall income (covering every level/size of charity) across the Third Sector was £88billion, with expenditure of £85billion.  The biggest organisations – those with incomes from £1million to £25million+ receive 72% of sector income but comprise just 5% of all organisations in the sector.

Moreover, it’s a sector that, unlike some others, is experiencing a rising demand for its myriad services. In the aftermath of the global pandemic, the continuing cost-of-living crisis and the growing suspicion that a mild recession is creeping up on us, the charity sector has had to pivot from challenge to challenge in recent years. And as the country’s economic woes lead to increasing societal problems, a rise in demand for the Third Sector’s services has been inevitable. Concomitant with this, as individual and corporate donors struggle against rising inflationary and recessionary tides, concerns about fundraising at many NFPs are growing as donor circumstances change. At a time of challenge, good people are required to steady the Third Sector ship and set a course to calmer waters. In particular, maintaining service delivery during these difficult times is of the utmost importance. I think the challenge of raising money against the backdrop of the current economic situation, coupled with the rising demand for services, will be the key areas of focus in 2024. The NFP sector needs real talent in its Chairs and on its boards and in my next blog I’ll explain how and why that could (perhaps should!) be you…”