“The next time you’re looking at a charity, don’t ask about the rate of their overhead; ask about the scale of their dreams…and what resources they need to make them come true.” – Dan Pallotta

Canada’s charitable sector desperately needs to build capacity and capability. What does that mean? Anyone who has operated a business knows that there are capacity thresholds that determine its viability. For example, an auto repair shop with three mechanics cannot serve as many people as a similar facility with thirty mechanics. Capacity matters. Similarly, a restaurant with a terrific chef needs well-trained, capable staff at the front of the house to ensure that the overall customer experience is outstanding. Capability matters.

“Most charities have become accustomed to living in a starvation cycle, unable to marshal the resources to adequately respond to emerging needs.”

Within the charitable sector very little attention is paid to developing capacity and capability. Leaders of charities, particularly those that address complex social issues, will argue that their energies need to be devoted to the compelling concerns that are facing them day-to-day. It is a classic case of the tyranny of the urgent.  More crucially, many leaders in the sector are consumed by legitimate fears about the survival of their organizations.

Results in the charitable sector are usually driven by the well-targeted efforts of capable organizations. This is not limited to larger charities.  Small is sometimes good. There are numerous examples of extremely well run smaller charitable organizations. Still, if one examines the charitable sector broadly, it is clear that most organizations lack the foundational structures that are essential to allow them to operate at an optimal scale. In fact, most charities have become accustomed to living in a starvation cycle, unable to marshal the resources to adequately respond to emerging needs. At the same time, Canadians have come to expect that the dedicated organizations in the charitable sector will continue to respond to society’s pressing social concerns even though many teeter on the brink of insolvency.

What can be done to address this? Let’s consider how financing works in the business world. There is an entire sector called venture capital that seeks out emerging opportunities and funds them. If a charitable organization can address a particular cause effectively then why not act the way a venture capitalist might?  Why not inject significant funding that will exponentially boost its capacity? What if a form of “social capital funding” existed for the capability and capacity building efforts of charitable organizations? The return on this capital could be evaluated by accounting for cost savings achieved as a result. We know, for example, that it is far less costly to house people than to build up the infrastructure required to care for people who struggle in homelessness. The barrier to fixing the problem is that massive upfront investments are required. However, housing people isn’t merely the right thing to do – it also lowers the cost of healthcare in the medium term and raises productivity in the longer term.

“If a charitable organization can address a particular cause effectively then why not act the way a venture capitalist might?  Why not inject significant funding that will exponentially boost its capacity?”

A strategic capital infusion might prove to be far more impactful than merely providing money to support a charity’s ongoing projects and activities. Well resourced charitable organizations with institutional capacity will be able to produce sustainable results that will benefit society well beyond the scale of our dreams.

Sam Watts serves as the CEO of Welcome Hall Mission  www.welcomehallmission.com  He serves on several non-profit boards and is an appointed member of the National Housing Council of Canada.  He is the author of Good Work…Done Better www.goodworkdonebetter.com

Related Posts