Investing for impact

In this regular column we invite influential individuals to contribute their ‘top five tips’ for giving. This issue Philanthropy UK is delighted to welcome Lord Adebowale, chief executive of the social care charity Turning Point, who argues that charities should be judged on their added social value – regardless of size.

Charities that have accepted philanthropic donations have in the past been subject to criticism, on the grounds that their benefactors have wielded power over organisational decisions and contributed to ‘mission drift’. Charities that deliver public services have been open to a similar complaint: that they run the danger of becoming government vehicles which lose their independence ‘toeing the line’. Often these same critics bemoan the recent ‘professionalisation’ of the sector at the expense of a more traditional perspective of charitable work: the classic picture of local projects staffed by volunteers doing the best they can. These arguments are often bound up also with size: suggesting that big, business-like organisations squeeze out more ‘credible’, smaller ones.

Firstly, in my opinion precisely the best way to keep an organisation’s values right at the heart of decision-making is to be professional, and to ensure resolute governance arrangements which will prevent losing sight of the ‘mission’ and keep funders in their rightful place.

Secondly, size does not equal professionalism – yet the two are often conflated. Turning Point, though a large-ish charity, is not the biggest in every one of its business sectors, but has nevertheless come in for criticism as a ‘super-charity’ out of touch with local concerns. This misconception is I believe largely because we run a smooth, professional operation. We do not fundraise, and the vast majority of our income is from government contracts for public services.

Social enterprise – the combination of business sense with social values – is a pragmatic approach which enables us to deliver services to those who need them. I argue that it allows us to do so more effectively than if I as a chief executive were scrabbling around for short-term funding and piecemeal donations. It also means that my staff have job security and a decent pension scheme, in return for the difficult and excellent work they do. Recent comments by the Chief Executive of Kids Company, Camila Batmanghelidjh, are a case in point: “…much of my work nowadays is filling in endless applications for funding, trying to figure out endless imaginative projects because the grant system means I can't just say I want permanent salaries for the workers”.

One of the problems as I see it is that the emphasis on small local projects run by volunteers has resulted in a postcode lottery which is reliant on local enthusiasm. We do use our (modest) surplus to invest in and innovate new services – and our Connected Care programme is a good example of this – but there are limits on the amount of funds that we can plough back for the good of our service users. There are few suitable investment funds for organisations the size of Turning Point, yet with our reach and experience we have the potential to make a real difference for the most disadvantaged. These circumstances mean that innovation is stifled in bigger organisations which want to remain financially viable. In fact, while there are numerous funds which offer financial investment to smaller projects, the only fund that has sufficient capital to back adventurous, large-scale projects is the Futurebuilders programme (who recently awarded us their biggest investment to date).

For these reasons, I am going to use this opportunity unashamedly as a platform to invite interested philanthropists to create a social investment fund that could back larger projects which are nationally scalable. There is a great deal to be said, of course, for funding small, local, well-run projects, and many of these are invaluable. A large fund could and should invest in these, but it could at the same time cope with approaches from national charities like Turning Point which also have good, exciting ideas for better services. Projects would be judged on their added social value, regardless of size.

And so, having digressed significantly from the task at hand, I now offer my five tips for giving:

1. Invest rather than give. Take a long-term attitude to your contribution, and make sure any conditions are mutually agreed, and not opaque and overly demanding on the organisation.
2. Size doesn’t matter! Judge projects in which you are investing on their added value to whichever community they serve (national, local or both) and not on the size of their turnover. Small organisations are not always more credible. Big ones are not always more professional.
3. Professional investment. Invest in professional projects. Your money will be used more wisely if the organisation in which you invest is well run.
4. Big isn’t necessarily bad. Although being locally sensitive is crucial, if you can reach more people and maintain quality of service, then this is surely a good thing.
5. Club together. This will enable you to fund bigger projects which might be nationally scalable. I would like to see a social investment fund of around £200 - £300m – any offers?!

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