In the words of a senior colleague at my organisation, ‘I hate the term not-for-profit. Profit is a good thing. I don’t care if Persil makes a profit – all its profit goes to shareholders; I care greatly if our members make a profit because every penny goes towards providing more housing and support for people in need’.
Those people in need are our shareholders. Commercialism and efficiency therefore need not compromise social values but rather enable social change.
As Charityworks trainees, we are encouraged to ‘live our values’ and it is this which is key to ensuring that commercial behaviour delivers social change. The specifics of these values will vary according to organisation and individual, but the common thread linking them all will be a commitment to improving people’s lives for the better. If this is the aim at the heart of making decisions then commercial behaviour can help to deliver more effective social change.
Firstly, it’s important to highlight that when I think of charities and housing associations as businesses I think of commercial behaviour, not necessarily corporate behaviour. This is an important distinction. Corporate behaviour, with its overuse of jargon and its tendency to stifle creativity, is not necessarily something to aspire to, but characteristics that the private and commercial sector prides itself on, such as innovation, efficiency, training, dynamism, and professionalism, are effective aids to maximise the output of an organisation and thus something to aim for.
Housing associations, indeed charities as a whole, can learn a lot from the positive aspects of private businesses without losing their soul, and again values are at the heart of this. When your organisation’s ‘output’ is changing people’s lives for the better then combining these tools with a commitment to social purpose is a powerful engine for social change.
The current policy environment in which housing associations are operating is tough, and the demands of the Government’s efficiency drive has required the sector to think in a more commercial way. There are of course political issues involved in this retreat of the state and the demand for cost-cutting, but wasteful use of resources is difficult to justify in a society with so many in need. The initial demands for the sector to be more efficient means that for every £1 invested by the government, housing associations invest £6 through private finance. That private investors are looking to invest in ethical organisations shows that charities behaving more commercially can have a knock-on effect in the wider economy by providing productive and ethical investment opportunities for private finance.
Raising revenue in a commercial way has another benefit: independence from Government. Governments come and go, and policies do much the same, but there will always be people in need who require housing associations’ support, and the less the sector is dependent on Government, the more it is insulated from politics. How far the Government should support the vulnerable is a separate debate, but there is no denying that different governments have different views about how this is done. As independent, commercial businesses, housing associations can arguably better weather the political storms by thinking of other ways to raise revenue, which protect their core social purpose and provide for the people who need them. Some may see housing associations’ market-priced accommodation for sale and for let as a betrayal of their social purpose. But consider this: by raising revenue from private rents from people who can afford it, housing associations can then better protect their social rented stock and community outreach programmes from the withdrawal of public funding.
Of course, this argument may lead to the argument that if housing associations need to be so commercial then what makes them different from private developers? The answer again is values. I recently visited a housing association’s estate in South London and it was clear that commitment to the social values of the organisation – to house and support people in need and build communities – was at the core of every decision they made. The estate itself had been regenerated with the goal of creating a safe and pleasant environment in mind and the housing officer who showed us round had been working there for almost 50 years adapting to change but always delivering the same great service. On top of the housing they provide, this organisation also has a well-established community development section which offers schemes to support tenants into employment or training which fulfils their aspirations.
One tenant and former participant of their employment skills scheme spoke of how the initiative had built her confidence, encouraged her to go travelling and then supported her to apply for jobs which matched her aspiration to help people. Hearing her describe how this scheme helped her achieve her potential, when she would have otherwise, in her words, ‘gone down the wrong path’ was an important reminder of why we all do what we do in the third sector.
Remembering the why helps us to focus on our positive social values, even when the structure and operating environment of our third sector businesses are changing. We can be commercial, we can generate profit, and if it is driven by values to deliver more effective social change it can only be a positive thing.