McCracken Consultancy
Strategic Consultancy for charities and third sector organisations


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McCracken Consultancy

Will your plans to Diversify Income Streams come to a Dead-End?

The desire to diversify income streams is one of the top reasons I’m asked to come into a charity as a consultant.   In real terms mostly that means that they want to ‘sell stuff’, with the hope of achieving a steady flow of income that is unrestricted (not tied up into particular projects).

Funding from good enterprise activities or a developed trading arm does help smooth over the panic situation many charities regularly find themselves in, as short-term contracts tied in to grants or contracts come to an end and replacement funding needs to be sought.  But where it really comes into its own is generating income that can be invested back into the organisation to strengthen core functions and sometimes in ways that can represent a 'game-changer'.  Game-changers would include investing in the tools and marketing to engage in public fundraising on a serious scale, and investing in processes that will increase efficiency, releasing cash for further investment creating a virtuous circle of financial strength.

So what’s involved in ‘selling stuff’ successfully? The first necessaries to tick off are pretty generic to any organisation selling stuff......what products or services could it best develop? What would they be good at? Do they have a Unique Selling Point? Is there any need or overt demand for the product/service?  Do they know the market better than anyone else? Would it be easy to sell and distribute e.g. to current stakeholders, through current service or communication channels? Where is the value in their brand? Could they develop a product that leverages the brand but sells to a different (and potentially more affluent) market than their current stakeholders?

Then clients want to talk about pricing, a roll-out and marketing campaign.  Which is all very sensible. Obviously.

But all that, above, is the easy bit.  If this is your organisation’s first serious foray into commercial enterprise and the above is all that's considered you will almost certainly fail.  You will hit a dead-end.

I think a better useful term to focus on than diversification to start with should be ‘commercialisation’.  That signifies there needs to be a significant shift in thinking for trustees and staff to a more ‘commercial’ way of thinking that will underpin their behaviour which will make the enterprise work. However, the natural tension is commercialisation can be defined as ‘the process of managing or running something principally for financial gain’, and that is absolutely not what is the draw for people working in most charities, even as it is some people’s job to facilitate operations by raising funds. 

It follows that whilst staff will generally go above and beyond to fulfil the needs of service-users, returning a business call as soon as possible - conceptualising a paying business client as a ‘customer’ also, to those staff, mere habit aside, feels comparatively trivial.  And actually, compared to the often severely, needy service-users they are focused on, who can blame them? Who are the sane ones here? Before judging, who’s got things in perspective? 

However, bottom line, everyone wants the charity to flourish.  But it’s vital and a big task to ensure staff understand and are bought into the commercial strategy, have confidence, and agree the behaviours and standards that will fit commercial customer expectations and their own working lives.  There needs to be space for workplace emotions to be aired.  Typical feelings might include: are those customer expectations “unreasonable given how busy we are”? “Aren’t those customers supportive of the charity – don’t they think service-user needs come first?” Before you know it, your staff might start finding your new customer / supporters quite irritating and want things to go back to just the way they were........mmm some complex issues here.  The whole concept of goals can be introduced but at an early stage not to threaten but to calibrate resourcing and training.  This is a significant change project.

What about the trustees and change? Well the biggest problem with trustees is usually wanting a ‘softly, softly’ approach and not committing.  There is a big difference between pilots, which are usually always a good idea, and a ‘let’s see how it goes’, where nothing is properly resourced; in the latter scenario conclusions about a product's success drawn over time cannot be "that's going really well" or "that's not going anywhere" – both useful findings………but a "not really sure....doesn't seem to be going anywhere fast" - that is not a useful finding!  Board room behaviour may well need to change.  Better decision-making processes, faster reactions to external change, and commitment to innovation. 

The other thing to remember is that just as any new business you won’t be making any profit for quite a while. Plan for that and commit. ‘Selling stuff’ isn’t the easy option.  You will have to transform the organisation to make it work.

For a no-obligations chat about how I could help with transformational change and diversification in your organisation, call me on 007792 503 815.

Natasha McCracken