Purpose and impact in the charitable sector

The dawn of a new year is a perfect time to reflect on where we’ve been and look forward to the year ahead. A time to take stock and plan to make positive strides forward in the coming months. And with the Charity Accountants’ Conference having recently taken place, we had plenty of food for thought to digest over the festive period and so we start 2024 with renewed vigour and enthusiasm.

We’ll share plenty of the learnings from the conference in due course, but for now, I wanted to consider two words that sat at the heart of the keynotes that bookended the conference: impact and purpose!

It’s easy to assume what’s meant by each of these terms, after all we’re working in the charitable sector – why wouldn’t we be purpose-driven with the aim of delivering impact?

Fozia Irfan OBE of BBC Children in Need kicked off the conference with a keynote titled “Driving impact through all you do”, whilst in her closing speech Debra Allcock Tyler from the Directory of Social Change, homed in on “lead, impact and inspire”. Indeed, together they serve as the inspiration for much of this article and we were fortunate to have their expertise and insight wrapped around the conference. In fact, the word ‘impact’ featured in several other sessions over the two days, and we’ll look at those in closer detail in due course.

If anyone reading this in a financial role believes this is all about how much money is raised and, therefore, how much impact is supposedly delivered, be prepared to think again!

Impact and purpose are inherently interrelated but to fully understand their relevance in today’s context, there’s a need to review the charitable sector of the past few decades.

If we cast our minds back to the 90s, the charitable sector was undoubtedly in a good place. Social, technological, and political change combined to create an environment where charities were viewed as trusted partners. The introduction of Gift Aid undoubtedly encouraged greater levels of giving and the third sector became increasingly commercially savvy.

Fast forward to the latter part of the 2000s and the sector was challenged with austerity, recession and, significantly, reputation-denting scandal. Trust was weakened as the public began questioning the ‘purpose’ of the charitable sector.

Just as the sector was getting through all of this, along came the pandemic and the double whammy of increased demand on charitable services, coupled with an inevitable decline in funding. Around the same time, we started to witness significant social change with the mobilisation of often youth-driven movements with laser-sharp focuses on specific issues – Black Lives Matter, #MeToo and Climate Action are all indelibly engrained in the modern common vernacular. Even at a corporate level, businesses are becoming more ‘purposeful’ with clearly defined statements on climate change, sustainability, diversity, equality and inclusion amongst others.

So, where does that leave charities? Simply, we can no longer take our role for granted.

It’s here that ‘purpose’ is so critical. Don’t dilute it. Don’t tweak it depending on who you’re talking to. Don’t allow it to be anything other than crystal clear. It is the reason for your organisation’s existence and, simply, it drives the impact that you’ll deliver.

‘Impact’, meanwhile, is all about whether you’ve achieved your key purpose so be very careful how you define that. If you state your core purpose as ‘fundraising’, what happens when times are tough, and donations decline? It will damage not only your internal culture, but your external reputation too.

So, why is this this relevant to those of us in financial roles within the third sector? Simply, because when defined properly, purpose not only drives impact, but it increases it – in countless ways! And if you’re not effectively reporting on this impact, then what are you reporting on?

Financial reporting is, of course, a statutory requirement. Great financial reporting will provide a far richer view into the purpose and impact of your organisation. The importance of strong financial leadership in charities cannot be stressed strongly enough, so as we look to the year ahead, I’d encourage you to consider for yourselves whether the purpose and impact of your own organisation is being effectively reported.