I listened to a charity trustee the other day, saying how we shouldn’t talk about charities being competitors. They should be in collaboration. I often hear people say there are too many charities. More charities should merge. Why are charities in competition?
I disagree with all of those statements. Competition between charities is a good thing. I want more charities (to do more amazing work). I don’t want charities to merge, I want them to offer new and better services. I want them to innovate and try and do continuously better. I think competition is not just good for charities, but it’s a critical force for making charities get better.
Competition is the foundation for improvement
Competition is good, because it’s the most effective way for organisations to improve. Competition is what drives organisations to adapt and improve. Watching what other organisations do, is a driver of innovation, and provides a benchmark against which an organisation can measure its’ success or failure. As tennis legend Roger Federer says, ‘When you play against great players, you have to raise your level to beat them’.
It’s easy to imagine that competition is all due to two charities pointlessly fighting it out for supremacy. In fact what competition should help an organisation do is working out what the organisation is really good at and improve their approach. One of the best examples of productive competition is between Macmillan and CRUK on fundraising events. Race for Life and World’s Greatest Coffee Morning, have raised more money for cancer, and produced more engaging events, because of the competition between the two organisations.
Benefits of competition in charities
Here are the main areas where I think competition is good for charities.
Innovation drives new services and new ways of doing things
Competition and the pressure from other organisations makes charities improve the work they do, their fundraising and their communications. There is nothing more sobering than to see another organisation delivering something better, and no greater spur to innovate and improve.
Choice is good for donors and service users
If two organisations do things in different ways, if they have different approaches, they give donors and service users choice. If there was just a single organisation who did all the cancer care or all the work with homelessness people, where would the choice come from? Nobody says all supermarkets should become one, so why do they say all homelessness or cancer charities should merge?
The weak and complacent fail
One of the main reasons why people say they don’t like competition is because it means charities go bust. It’s sad when a great charity delivering great services disappears. In my experience this is rarely due to competition, but more often because the trustees and management of the organisation didn’t adapt quickly or decisively to the forces of change. Is competition such a bad thing if it makes weak or complacent organisations fail?
Where does competition go wrong in charities?
Yes, competition is different in charities, and it doesn’t always go right. Here are two main ways that competition doesn’t work as well as it should. Of these the first is the most important.
When the quality of income generation and the quality of mission delivery are different. In the commercial world what companies sell, and their source of income are one and the same. In charities, they are often completely dislocated. The quality of a charity shop chain, or a fundraising operation, don’t necessarily have any relation to the quality of the services or activities that are delivered. So a charity can be brilliant at fundraising and have mediocre services, or it can have brilliant services and poor fundraising. When competition is fierce a charity doing great work can fail, if its income generation is poor. This dislocation wouldn’t happen in commercial situations, and it’s a major weakness of the power of competition.
Small (national) charities can fail in a world made for big charities. Small charities struggle in a big charity world. Companies prefer to support big brand charities (think Omaze). Government contracts often favour big charities or companies by demanding huge financial resilience or the geographic size of a contract. The economies of scale of setting up and running a face to face operation, or creating a powerful brand, favour big charities.
Its competition but not as we know it.
Charities are in competition. They may not like it, but they are. Competition with each other. Competition with the alternatives that donors have to spending their money. Competition with companies for delivering government services. Competition with the other ways that volunteers can use their time.
For me, competition is a force for improving how things are done. Its one of the powers that can deliver better services for beneficiaries, donors, and volunteers. Charities can either embrace the benefits of competition or lose out. People may not like it, but competition in charities is here to stay, and for me that is a good thing.
Comments