2 March 2016

Measuring and improving the charity sector’s sustainability

With an increasing focus on sustainability throughout public life, we discuss the implications on charities and how they can measure their effectiveness.

What is sustainability?

Sustainability concerns an organisation’s ability to continue to operate, thrive and grow. It follows then, that thinking about sustainability means thinking about all aspects of your business. This could cover external factors, such as environmental and social impact, as well as internal factors including leadership, adaptability and management style.

Why it matters

There is an increasing focus on sustainability throughout public life, which has direct implications for the charities sector. For example, the Scottish Government has set goals to help Scotland become a more successful and sustainable country as a whole, including targets on carbon reduction and creating a healthy living environment. These priorities are now being built into their public procurement processes and the government has established a clear desire to work with third sector parties to achieve these. In addition, the squeeze on public funding has meant an increasing need to ‘do more with less’ – challenging organisations to adapt and to work more efficiently and effectively. This creates both a pressure and an incentive for charitable organisations to demonstrate effective sustainability to help them bid successfully for both public sector contracts and funding.

There are also wider implications of sustainability for the sector. Social sustainability, for example, considers charities’ ability to form and bond relationships – a key factor for a successful third sector organisation. The ability to form long lasting relationships with both supporters and funders can lead to organisational support over the longer term, which will help organisations navigate their way through a challenging and changing landscape.

Features of a sustainable organisation

The TCC Group, a US based advisory firm to non-profit bodies including charities and public sector, has identified some key features of sustainable organisations. These centre around having:

  • Decisive, strategic and accountable leadership;
  • Financial and programmatic adaptability; and
  • The resources to deliver core programmes. 

A sustainable organisation includes effective leadership that encourages all individuals towards the same goal. Leaders and board members should aim to forge long lasting relationships with stakeholders, which will not only help to increase the availability of funding for the organisation, but will also help to engage key partners in achieving its goals. There should also be a strong focus on performance, ensuring that the organisation is not only being efficient in its spending but is being effective using those resources to deliver its objectives. This begins with a clear view of what success looks like, and ongoing accountability is ensured through regular monitoring, both of its financial position and of wider organisational performance.

In order to deliver the best activities to achieve those objectives, the organisation must gather and analyse sufficient, timely and reliable data. Adapting timeously to changes in its external environment will help organisations in continuing to be sustainable; regularly analysing that environment is key to this, but must be followed with an appropriately implemented response. 

Ways to improve sustainability

The TCC Group has developed the 'Core Capacity Assessment Tool', which can be used to determine the effectiveness of non-profit bodies. The tool concentrates on four areas of activity:

  • Adaptive capacity – the ability to monitor and adapt to changes;
  • Leadership capacity – the overall capability for leaders to create a vision and provide direction to all in order to achieve an organisation’s mission;
  • Management capacity – to use resources in a successful and effective manner; 
  • Technical capacity – the resources, such as skills, knowledge and tools, to implement strategies.

The tool contains a set of questions about organisational behaviour that allows the organisation to be placed on a three-stage lifecycle continuum, and provides them with the capacity to see both the strengths and weaknesses of their current operations. The tool also allows charitable bodies to analyse their policies and procedures and to re-evaluate those that are not in line with the overall goals of the organisation. The findings can then be used as a starting point for changes that will create a more effective organisation.

ACOSVO has teamed up with the TCC Group to pilot its CCAT as part of a campaign to assess and improve the sector’s sustainability – we await with interest the results of this pilot and further developments. In an environment where these capacities are crucial but time is short, a mechanism to assess and give target areas for improvement will only be welcome.

Further information on the Path to Impact is available from ACOSVO. If you’d like to discuss how your charity might do this, please get in touch with your usual contact or Elizabeth Young.