From collaboration to competition? moving to social enterprise models

By Jane Arnott, General Manager, Consulting and Business Services

Not for profits have always been competing with each other – we compete for donors, for talent, for profile, for grants – but we often deny it. We like to think that we have a very collaborative culture – and we often do when it comes to sharing information, supporting our peers and advocating for our cause.

We’re great at uniting against a common enemy and, if we’re really joined up, we work together to provide seamless service packages for clients with complex care needs. So whilst there has always been an undercurrent of competition, for many years the surface dialogue has been one of collaboration.

This is beginning to change as the sector moves to more commercial models. For some, this approach is being forced upon them by changes to funding arrangements – NDIS being the most obvious, but it’s far from the only pressure. The scope and scale of not for profits as service providers in regulated environments, with fee-for-service funding models, means that the modus operandi has to change. We are becoming social enterprises – at least in part, if not completely. In the past few months I’ve had a number of conversations with sector executives about this and there are five key themes that emerge:

  • Stakeholder relationships
    Not for profits are having to rethink how they engage with each other in an era of competition. The sector has traditionally been good at providing peer support networks in which we can share our successes and our woes. We’re less keen to expose our vulnerabilities or share our intellectual capital if we feel that there’s a risk of undermining our competitive position.
  • Change in customer
    Many service providers are having to change their focus in terms of the purchasers of their services from government agencies to individuals. This requires a big shift in how we cost, resource and operate services, and how we communicate externally and how we gather intelligence, which leads us on to some of the other themes.
  • Point of difference
    Being a not for profit is no longer enough in its own right. Purchasers are looking for value and quality and the fact that you’re a ‘for purpose’ organisation is likely to only be a swing factor if all other criteria are equal. Not for profits are recognising that they need to communicate their points of difference if they want to attract the best employees, committed donors and, most importantly now, those individual customers.
  • Skill set
    Not for profits may have the cream of the crop when it comes to social care, educators and health care professionals. They may have highly talented and committed managers and leaders, but many still lack the commercial skills required to operate organisations that are effectively becoming social enterprises, in practice if not in name. This is a challenge at a governance and executive level.
  • Culture change
    Many not for profits have a loyal, long-serving workforce who have been committed to the sector for much of their career. The transition to a more commercial model, involving individuals paying for their own supports, tightly managing costs and learning to say ‘no’ is difficult. The reluctance of any key influencers within the organisation – be they on the board or on the frontline – to move to more commercial approaches is at best a lot of work to manage, at worst a brake on the organisation’s progress and a risk to long-term sustainability.

There’s probably no option for organisations but to get with the program (unless you have some brilliant, radical alternative!). We need to adapt to survive in a fast-paced environment where consumers are driving the change. This means building or reviewing your strategic plan, bringing in new skills and experience, upskilling existing personnel and actively driving culture change.

But that doesn’t mean we have to throw our values out of the window and adopt the worst examples of corporate behaviour. Yes, we do need to redefine our external relationships and recalibrate our culture – but that shouldn’t stop us from collaborating, from sharing our learning and from treating our staff and our customers with care and respect.

We might need to be more discrete in deciding what to share and with whom, but all of these factors are critical to being an employer of choice and delivering quality services. They underpin, not undermine, your performance.

We need to have a stronger eye on the commercials, but we still need a laser focus on delivering our mission.

Do you want to explore how a social enterprise model could work for your NFP? Contact CBB’s General Manager, Consulting and Business Services Jane Arnott via:

Phone: 1300 284 364
Mobile: 0423 204 704

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