When profit is not the goal
Ruining all future restaurant experiences...
Welcome to the Nest Egg!
Whether you’ve been reading our stuff since 2019, or are new here - you are welcome!
Today’s article…
…is about not sacrificing your core purpose in favour of profit.
A stark reminder in a week where we’ve heard from more than three separate colleagues who are feeling very nervous about income.
The costs of running most charities have increased.
However, NCVO’s Civil Society Almanac 2023 reports for the first time in 10 years, charity sector income fell by 6%.
So if you’re budgeting for growth in your fundraising this year (or you’re being given a silly target…) - know that you’re bucking a wider sector trend (and be sure you have evidence to back up why you think that growth is possible).
As always, we value your feedback so do drop Tony a line directly to let him know your thoughts - tony@larkowl.uk
Do you have a new Trust Fundraiser in your team and want to give them a headstart in learning the basics?
Or maybe you’ve decided that it’s finally time to bite the bullet and get stuck into Major Donor work?
If this is you, please do check out our online, self led training courses. They’re only £240 each and contain Caroline’s years of experience poured into two very practical, step by step programmes.
You can learn more about Trust the Process and Major Gifts Made Simple by clicking on the links!
When profit is not the goal
by Tony Richardson
Picture description - Tony wearing a grey jacket and white shirt smiling.
In my role there is a clear expectation, from clients (and me), that I can make them more profitable through current or new commercial/business opportunities.
There are times though where, through some apprehension, I encourage people to not pursue profit.
It might feel strange that someone in my role might be making recommendations like that. Allow me to elaborate.
Imagine I’ve taken my car to the garage and my mechanic could do as I say and fix my old car. Additionally, he could also say, “in my opinion, you’re now going to be spending more on fixing this than it’s worth”.
In this instance, I had a clear idea of what I wanted, but my mechanic had the experience and insight to see an alternative (even though he didn’t benefit).
A very enjoyable chat with a colleague recently covered the often-spouted line that “charities should be more like a business”.
We’ve all had this chat right?
#eyeroll
However, he had a different, slightly more nuanced take. To quote him:
“Charities should be run more like a business – ‘like’ being the key word. Similar but not the same. We should be strategic, have business plans in place, develop people and have a Board who are invested in the work.”
As someone who has run many businesses in the past, I can assure you that contrary to the stereotype, not every decision comes down to profit.
You don’t look at every component and ask how to maximise the profitability of everything (well, actually some do, and they rarely last - there’s a risk that the aggressive pursuit of short term profit can lead to you losing your entire customer base in the long term).
Your business needs to balance how to make money, stay true to its brand by living its values and ultimately, serve the people who benefit.
So too does your charity.
Maybe this example is too much of a stretch, but when I was in hospitality, we would offer the most delicious, home-made Florentine with your coffee.
It was free and it blew people’s minds.
We also served complimentary bread (again home-made) and a small bowl of (yep, home-made again) curried parsnip crisps (use your peeler to shave an entire parsnip, deep fry, leave to cool and shower with mild curry powder and a pinch of salt).
I was never in any doubt about the impact these touches (combined with phenomenal service) had on my guests.
Now, I doubt it’ll be too hard to imagine seeing these items on the menu with a price beside them.
Maybe I’m ruining your next restaurant experience because you’ll start to notice items which would previously have been complimentary but now have a price tag (who else thinks dough balls should be free?)
I’ll bet you that these places hired a fancy Management Consultant who opened up a spreadsheet and said that 10,000 baskets of bread at £2 per head (assuming 20% of people don’t have them because of the charge) will make an ‘easy’ £16k.
That’s got to be worth more than good-will, right?
I despair at the lack of understanding of the power of the homemade bread:
the people with young kids who can relax with the menu because the children aren’t complaining about how hungry they are, they’ve got something they can munch on so the adults can peruse at leisure.
the kitchen staff feeling the pressure who are given a few extra minutes, knowing that their customers are unlikely to be hangry
the delicious and unexpected gift which makes people feel good and want to return
It is, in its basic form, simple, effective hospitality.
(It is obviously rubbish if you have an allergy to wheat – please note that gluten free breads are welcome here too!)
So, yes charities should run like really effective businesses, and by that, I mean businesses who have a clear understanding of what their customers need, sometimes when the customer doesn’t necessarily know it themselves.
Because for many people, we don’t always stop to analyse why we feel the way we do at our favourite place. We just go back because it feels good.
Now, in the context of charities, a more relatable example.
A client wanted me to explore how an area of their operation could be profitable. Some of their members (people who had a disability) were volunteering in a kitchen and were cooking lunches for the wider community (members, staff and volunteers).
Could they open to the wider public?
Could they make produce and have a small retail offer?
Could they host support clubs in the evening? Coffee and baked goods in the morning?
Here’s the truth, if I had stayed in the office and produced a nice spreadsheet, I could have mapped out these options and more. On paper, they’d have been rolling in it.
Instead, I visited the client and witnessed first hand the magical things which were happening.
This charity supports people who may very well be unseen by wider society. People who have experienced unimaginable challenge and who are often excluded from employment, hobbies and social activities. I spent a day in the kitchen and could see with absolute clarity the impact.
Those preparing the food were motivated by a sense of kindness, hospitality and a deep rooted sense of purpose. They weren’t “working” there, they were making lunch for their friends, who they were then sitting down with as equals, and enjoying the food together.
To financially capitalise on this, you’d be ignoring the very purpose of why people were there and the benefits it brought them (and everyone who got to enjoy the fruits of their labour”).
Sharing this with Caroline, it was obvious that this activity was worthy of shouting about to funders, not turning into a profit-making business. For me this is one of the joys in what we do, bouncing ideas about, between whether something can be funded externally, whether it has the potential to generate income or indeed if it’s a mix of both (because often there’s a spectrum).
What do you think?
Is there a chance that by removing the pressure for profit from one of your activities it might be even more successful (in terms of its human impact)?
Where could you make some gentle shifts in your commercial activities to generate even more money for your cause?
Email me to tell me your reflections – I’d love to hear from you tony@larkowl.uk and if you make the parsnips crisps - let me know how they turn out!