Is 'bigger is better' mantra killing charities?

If you keep talking about models that shrink the charity I will leave – I don’t want to be the CEO that presided over cuts and closures.?

This delivered with tears and passion by a CEO facing the very real need to reduce the charity to ensure solvency. And of course sympathy. Hard place to be. But the result was all future strategy modelling was pushed into denial of any cut back model and senior staff had to whisper in corners about the risks.

Charity closures are coming daily. One of the highest profile recently at House of St Barnabas. Now at some other point we might compare the sector's support here to that offered to the late Camila Batmanghelidjh when Kids Company closed - but that perhaps is for another blog.

The reality is that many charities are just one large bill away from collapse.

The reasons for closure are complex. But my research across the sector is suggesting a culture where the celebration of growth - and a belief that bigger might be better - may prevent leaders looking at options that scale back or shrink. This CEO story was just one of several where leaders struggled to consider cut back models. While scaling back options wouldn't save all charities they may save some.

Have we got a culture where charities could be saved if their leadership was more comfortable considering shrinking as an option?

• Organisations in denial of their financial reality can close overnight.
• Charities that don’t consider how they might cut rather than grow might miss opportunities.
• For users it can mean fear as they lose their support without a managed transfer.
• For staff it can be not just about their job but also their notice period and additional benefits.
• The position where leadership talks about investment in growth but then asks for cuts - or denies the potential risks - is highly stressful.
• For trustees of course it could lead to accusations that they haven’t fulfilled their role.
• For the sector it can lead to lack of public trust.

I understand the position that charity CEO was in. I have had to end one of my own companies in a difficult and painful way and have posted advice and guidance for people in a similar situation here. I know every time I post about it I get many messages from people facing the same situation who are too frightened to talk about in public.

But to say. This lived experience has been a significant help for me over recent years. Helping organisations to face up to hard questions about whether they need to cut back and/or close.

Is 'Big' beautiful?

It is hard. We do love ‘big’ in the charity sector. It is well rehearsed that the combined income of the biggest few charities?get more funding than the next few thousand put together.

CEOs talk a lot about growth and expansion?- bigger and better. Impact reports have six figure reach numbers in pride of place.?

Sidenote: there is a?separate but related question about whether these uberbeast charities are the answer to society's problems - evidence is suggesting small and local is the way forward for many issues. Maybe a cultural shift that better values cutting back might also feed into a position where we might better value small.

So how?might we create a culture where CEOs feel comfortable - indeed celebrate a model - that looks at reduction? That’s not to limit ambition or to stop shouting the need/resources gap. Rather is it about creating a context when we face up to the reality of what is now - and next - rather than the memory of what was?

Because we need that culture to be able to imagine new futures – for the sector and for each organisation. We need to accept that a reduction in size isn’t a failure or backwards step but rather an adjustment of approach. That no one charity can meet all need - and that doing the best we can with what we have can be enough.

So what might we do to create a culture where smaller is celebrated?

Make talk of closure or shrinking normal. Share the stories of those who have done it well. With forethought. With clear plans on supporting users. With proper treatment of staff. With consideration to a managed transfer of organisational capital – physical assets, people and intellectual property.

Let’s have a Third Sector Award for Best Closure. And another for Best Shrinkage.

Consider career pathways. There is an assumption that going to a smaller organisation or role is not career progressing. I have been asked several times since moving to current role why I have moved to smaller organisation. How do we uncouple perception of career success with scale?

Within the charity sector we have as our guiding principle our charitable objects, our purposes and our duties. Encourage debates on how objects can be met in different ways. It could be selling assets and setting up an endowment fund to support other charities. It could be merger. It could be passing on intellectual property to those who could use it better. Once the debate becomes about object rather than organisation it can liberate new ideas.

?Skill trustees and staff. How to do liquidity modelling? How to monitor cashflow? How do look properly at risks? How to pass on assets legally? And how to protect – indeed encourage – staff who raise concerns? That is not about a negative or non-growth mindset?- because sometimes growth may indeed be the answer – but rather it is about being open to the whole range of possibilities, not just the ones we feel good about.

Allow mourning - indeed encourage a process of grieving with closure or shrinking. Whether colleagues leaving. Assets being sold. Brands changing with mergers. Stopping serving a particular region or group.

These are all real losses and shouldn’t be glossed over.

Give permissions to think the unthinkable. That CEO in the opening paragraph continued to struggle. So staff went to the Board. And the Treasurer stepped in and tasked the CEO to look at all options including reductions. This permission - indeed this directive - forced the discussion into the right place. It was still painful. The CEO still struggled. But it allowed him to think difficult stuff without fear that trustees would 'blame' him. To think beyond reputation.

And as a result better decisions were made. Cuts were made. New models were developed. Not easy. Not without loss. But the charity is still there and onto its next chapter.

So. As we move forward can we stop seeing smaller as going backwards?

Because maybe positively smaller can be the next big thing.