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When has a charity lost its way?
Tips to know what to look for…
Charities can run off the rails. They can lose sight of their mission. They can make bad decisions. They may adopt questionable fundraising methods. They may act deceitfully.
If it looks like the charity you donate to has lost its way, do you stop donating to them?
1. Stable charities are predictable
A charity is stable if there is a high degree of predictability over their vision, mission and the activities they undertake to achieve their goals.
If it is not clear what a charity’s goals are, or if their goals are constantly changing, or if the types of activities they are undertaking are unpredictable: steer clear!
It is extremely disappointing to donate thinking that your funds will be used for one activity, and they end up being used for something else entirely. Remember how upset everyone was when they donated to Celeste Barber’s bushfire campaign thinking it would be used to help bushfires victims and injured animals only to later find out that this was out of scope?
When a charity is not stable, you face the same risk: that your donation won’t be used as you expected.
2. How do you know if a charity is stable?
There is no one indicator for stability. However, when you look at multiple factors across the themes of governance, financial integrity and strategy, charities that are off the rails can be easily identified. Look for:
- Poor financial results. When a charity consistently spends more than it earns, this is usually an indicator that there will be change in the future. They may be forced to adopt a different strategy, sell assets, reduce staff and cut programs to avoid declaring insolvency.
- Large board turnover. When there is a significant change in leadership, this is a sign that things are in flux. There are a few reasons board members jump ship. Director’s may leave a board if a new chair is appointed, and their style/goals/vision is incompatible with the status quo. Or, it could be that a new CEO and executive team have been appointed and their skills base is culturally very different from what existed previously. Finally, it could indicate something more serious, like that there has been a “direction” by the regulator, the ACNC.
- Lack of strategic direction. When a charity cannot clearly and consistently describe what they are doing and why, this can signal several things, all of which indicate intermittent instability. It may indicate there is no strategy, it may indicate a strategy is currently under development, or it may indicate there isn’t wide scale organisational buy-in for their strategy.
3. Instability can lead to necessary changes
When a charity is experiencing a period of instability, keep a close eye on them. They may be evolving. In some cases, this period of tension will lead to phenomenal breakthroughs.
An example of what we would call an evolving charity is AIME. Over the past 3 years they have been through a significant transformation. They were founded as a charity that mentored young indigenous Australians. They did a fantastic job and delivered great outcomes. Shortly after that, they seemed to go off the rails. They completely changed their focus by expanding their charity globally. They lost donors and huge amounts of funding.
They seemed to have lost their way.
However, after a period of 12 months, a new strategy emerged.
This strategy is one of the most innovative and exciting expressions of what charity can be. They’ve abandoned normal ways of doing things and are trying something completely different. Take a look at it here.
Charities can go off the rails. By closely examining a charity’s finances, key personnel and strategy (or lack thereof) you can make sure there won’t be any drastic changes to the way they operate. If things are unstable, keep a close eye on the charity. They may be evolving.
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