Don Macdonald, a trainer, trustee and former charity CEO, is writing a series of New to Management blogs for us. His new book, Twenty First Century Skills for Nonprofit Managers, published by BEP, is available to buy now.

As charity leaders and managers, we have all received rejection letters or emails from funding agencies or trusts, some of which in turn threatened the future of our organisations. The first duty of a charity is to survive, and according to management consultant Peter Drucker, management is obviously instrumental in leading the organisation through difficult times and ensuring survival.

There are recent lessons from the private sector about this. Provident Financial radically changed its business model, switching over sales staff and customers to Internet use, and changing from local part-time staff to full-timers. Debts rose and profits fell drastically because traditional customers were averse to this approach. The shares crashed out of the FTSE 100 and the CEO had to leave.

Why do charities collapse?

There are numerous reasons why charities collapse or close down, some of which overlap.

• The need which they were set up to overcome no longer exists, or never really existed in the first place;
• The need still exists but the funding disappears e.g. training charities after the introduction of the UK Work Programme;
• The business model is all wrong;
• Malpractice or mismanagement.

One of the most destructive cases is when a founding CEO directs the organisation on the wrong track. An example was Novas Scarman, founded in 1998 as a care and homeless charity, which crashed from a 2008 turnover of £21 million to closure in 2012, with redundancy for 300 staff.

However this also happens to long-established organisations. The English YWCA, set up in 1855, has virtually disappeared, yet the YW pioneered really interesting youth work in the 1950/60s, including outreach work with young women and men. The YW also provided 4,000 beds for young woman, centrally managed in 1996. After this, the YW was hit with a huge demand to install essential fire precautions in its hostels; it had not saved sufficient funds for these, so they sold all their hostels and carried on with youth work, rebranding as Platform 51 in 2010. Two years later, as Civil Society reported, ‘Platform 51’s spending ... (had) outstripped its income by more than £1m each year since 2008.’ So in 2014, it transferred its remaining youth work to another charity and became a small research and lobbying organisation.

Yet if you take the right action at the right time, it is possible to rescue an organisation from severe deficits. The UK Outward Bound Trust had a deficit of £3 million on a turnover of £8/9 million in the 1990s and was ‘close to insolvency’ according to its current director. It was turned round by an interim CEO, who had run the Duke of Edinburgh Awards, through a process of restructuring and offering shorter courses.

Do’s and Don’ts

So what should a manager or leader do to prevent such issues?

• Show leadership, be resilient, don’t panic and seek help and advice;
• Always keep on top of the finances;
• Think long-term, stay well-informed to predict trends, and produce a realistic work plan which should be regularly updated to look ahead for at least three years;
• Do not put all your eggs in one funding basket - diversify so that if one fund winds up, you have other options;
• Do keep evolving, but change a winning formula gradually - not so radically that success is destroyed;
• Carry out a regular risk analysis and save for emergencies.
  
  

Please share your views and comments below, or join the conversation on Twitter.

We all lead such “Helter-Skelter” lifestyles sometimes you just feel that life is passing you by at an alarming rate and you never have time to just stop and reflect on what’s actually going on! Today I was temporarily brought to halt after being asked to chat to British Council’s European Diversity Team at their annual meet-up in Belfast about my leadership journey and what I considered are the traits of “Inclusive Leadership”.

When preparing for my session, and as a recent Clore Social Fellow, my first port of call was to re-look at what underpins the whole Fellowship, their Leadership Development Framework and Social Leaders’ Capabilities Framework. In principle I agree that these are all critical to being an effective leader, but what other traits are needed to be an inclusive leader?

I believe that there are eight key traits, some that overlap with Clore Social, so here are mine;

1. Awareness: Being aware of what is going on around you is essential. But being aware of the people around you is more important. How can you lead if you are not in tune with your colleagues, partners and appreciating the diversity of thinking as well as life?
2. Curiosity: Michael Dell stated that curiosity is the most important trait of inclusive leaders, and a few years ago I read a book by Alan Greenspan the former Head of the US Treasury who set aside one hour every day to read. I’ve tried to follow his lead by setting aside time early in the morning or at night to read, monitor websites and trawl Twitter – yes, my email inbox is overloaded with links to fascinating articles on literally everything, you never know where that next big idea can and will come from.
3. Passion: All I have to say here is – if you’re not passionate about what you do, why do it. I’ve sat on numerous panels and listened to pitches when the presenter is just going through the motions and you just want to scream in a Jerry Maguire voice “PLEASE SHOW ME THE PASSION!” Recently I had the honor of being on the selection panel to interview the next wave of Ashoka Fellows for the UK and Ireland. One of the interviewees was an outstanding guy called Mark Swift with an unbelievable back-story who runs his own social enterprise called Wellbeing Enterprises CIC – truly inspirational and oozing passion!
4. Courage: Without courage, you won’t be able to move forward. It’s not all about being able to take a risk, it’s also about having the courage to defend your colleagues, defending your values admitting when you’re wrong.
5. Collaboration: Here I mean true collaboration and not “glorified cooperation” when organisations pay lip service to each other just to download information and use it for their own means. Trust me over many years of observing our esteemed third sector, and from painful personal experience, I’ve fallen for the “lets collaborate” routine only to find out a few days later that they’ve set up meetings with your partners; what I term death by a thousand cuts culture. Coming from a private sector background you know who your competitors are and you’re always on guard, in the third sector it’s more difficult to work out who your competitors are. A sad reflection on the third sector and if we want to create a truly collaborative environment we need a mix of transparency, trust and inclusive leadership.
6. Values: Don’t think I have to say much more here, to me these are most important traits to becoming an inclusive leader: honesty, trust and a militant transparency. Enough said.
7. Perseverance/Commitment (Never Quit): If values are the most important trait of a highly inclusive leader then perseverance comes a close second. Highly inclusive leaders are fully committed to diversity and inclusion because they align their values to their objectives and persevere no matter what. But like values, perseverance comes from the core - as a boy from the country and a family steeped in traditional farming values, the foundation blocks to everything I do are honesty and integrity, passed down by my parents and grandparents, and with that a determination to not quit come what may. In the world that many of us live in working in social enterprise and social innovation, quitting is not option. As Douglas McArthur once said, “Age wrinkles the body, quitting wrinkles the soul.”
8. Authenticity: Along the same lines as passion, if you can’t be yourself and come across as authentic, other people will see through you.
   

So, thank-you British Council for allowing me to reflect on inclusive leadership and tell my story. On a final action point, never stop learning and set aside that one hour a day to take a breath, find new interesting articles to read and as Clore Social taught me, know yourself, be yourself and look after yourself.