COVER STORY: Feed the need

by Real Business - Thursday, 30th August 2007

This is the page

April 02 From the outside, Cityside Regeneration looks like a local organic food shop, or perhaps a purveyor of hand-made furniture. Just around the corner from London's Spitalfield market, you wouldn't be surprised to sniff the peanut tang of Indonesian food wafting from its green wooden shopfront.

The UK's fastest-growing not-for-profit organisation (measured by average annual growth in revenues over the past four years*) is very much rooted in the Tower Hamlets borough. Indeed, the urban regeneration agency's success - it has raised some £30m from a variety of sources in five years - is inextricable from its relationship with the area.

"People are popping in here the whole time," says Cityside's director, Andrew Bramidge, a lifetime public-sector man. Sometimes they're tourists after directions; at other times, local people looking for advice on setting up their own business.

Bramidge welcomes this unofficial tourist agency role - although it can occasionally be a bit distracting. "This office was a very deliberate choice," he says. "We wanted people to feel comfortable walking in - and they do. We're not just about administering programmes, we are driven by the needs of local people."

The best not-for-profit organisations don't have to create demand. They have that in spades. Tower Hamlets, for example, is one of the poorest boroughs in Britain, even though it's flanked by the City of London, perhaps the most prosperous square mile in the world. Their job is to meet that need as effectively as possible, deploying the best that the commercial sector can offer - management, financial controls, marketing - alongside their own unique qualities of customer service and employee enthusiasm.

"One of the joys of working in the not-for-profits sector is the customer service," says Chris Robinson, chief executive of our number-two organisation, Chase Children's Hospice Service, and, the former coach of Cheltenham Town Football Club. "Our organisations are usually driven by a community need - in our case, the 600 families in our area with children who aren't expected to reach their 19th birthday. This means that we're relevant. We have no shortage of demand, which is a very good start for any business."

Any self-respecting commercial outfir could usefully ask the question: is there a clear market "need" for our product or service? And do we clearly articulate our answer to that need?

The voluntary sector is notorious for its committees and indecisive management. Our ten each has a large executive or advisory board (Cityside has 15 directors; Katherine House Hospice has a board of 13 for an organisation with £1m turnover).

Bramidge insists that such a structure brings strength. "Our non-exec board hails from the community, the public and private sectors, funding agencies etc," he says. "Such input is invaluable. It would be very difficult for not-for-profits to operate without that professionalism."

Robinson disagrees. He only arrived as CEO of Chase in November 2001 and is already ruffling feathers at the children's hospice - as delicately as possible, you understand. His first target is the board, which he's trimming from 15 to nine. It will, in future, meet quarterly rather than monthly. All standing committees will go, to be replaced by an annual advisory council meeting and a "task-based" management approach.

In November 2001, Chase opened Christopher's, a £3.8m children's hospice in Guildford. The completion of this project moves Chase on from a one-off capital appeal to a revenue operation, which needs to raise £2.3m a year ("that's five grand a day and not a penny from government," says Robinson).

"The whole game has changed," he says. "Our fund-raising effort has moved from, 'will you buy a brick?' to 'will you pay a nurse's wages?' In the voluntary sector, this is generally seen as more difficult."

Robinson was drafted in to manage this transition. But, as he wryly puts it, "when you get onto the practical from the theoretical, things get a bit more difficult. The consensus on the board is that it's the right thing to do to change the governance structure. But when it comes to selecting who's got to go...

"As one trustee said, 'we've gone out to get a guy to run the business, and he wants to run the business." Robinson's management skills will be put to the test.

New business thinking is at work across our Top Ten. Cityside's Bramidge is tackling the not-for-profit sector's sacred cow by trying to develop its own solid, long-term income streams - aside from grant income.

Since its formation in 1997, Cityside has ploughed enormous energy into boosting small businesses in Tower Hamlets. One of the major issues is a shortage of affordable rental workspace (the borough borders the City, one of the most expensive bits of real estate in the world) for those firms. Having developed workspace projects, Bramidge is beginning to wonder whether Cityside couldn't use the rental income to cover its running costs, rather than constantly having to reinvest profits ("surplus" in the sector's vernacular) and return to public money for income. "Surely it's in the government's interests to allow us to cover our running costs from earned income rather than grant support?" he asks. "It is not an effective way of running a business for organisations such as ours to be constantly looking for grant support."

The objections are obvious: that such an income model would allow not-for-profits to use taxpayers' money to fund directly their own activities, without the "market check" of proving themselves to funders each time they needed cash. The opportunities for waste and long-term mismanagement of public money are clear.

But Bramidge is determined to confront the relevant Treasury regulations. "It's a grey area," he says. "It's not legally prohibited, but I don't think it's been done before."

There's a feeling among our Top Ten that nothing is out of bounds in the administration of their organisations. Cityside has delegated the management of budgets to the local communities that are operating its schemes. It's also trying to conquer bureaucracy in the way projects are launched. Rather than sticking an ad in a local paper to advertise grant opportunities, the 27 Cityside staff are working with those communities to set up their own projects, via initiatives such as open community meetings. It's "bottom-up" management, to use the jargon. One recent IT training project would, says Bramidge, never have got off the ground unless it had been devised by local residents who understood the peculiar dynamics of the area. As a result, people are training in computers who might never have done so otherwise.

Such modern business thinking can only benefit not-for-profit organisations. Especially if you combine it with unusual levels of enthusiasm among staff in the sector. "From the start, we recruited people who weren't necessarily the best qualified but who had a strong personal commitment and belief in what we're doing," says Bramidge. For Robinson, who was also the founder of the homeless charity Off The Streets and Into Work, the commitment runs deep. "I did know what I was talking about," he says, "because I was homeless as a child."

The not-for-profit way
- Unusually committed people
. - A market that really needs you.
- A really strong connection with your locality.
- The ability to draw on a wealth of varied advisers.

Where did the others come?

2 - Chase Children’s Hospice Service
What it does: Set up in 1994, Chase is a children’s hospice and “supportive respite care centre” for south-west London, Surrey and West Sussex.
Growth rate: 87.2
Current-year turnover: £2.8m
On the board: 15

3 - Training & Development Resources (TDR)
What it does: Operating in the north-east, TDR brings together engineering/manufacturing companies and representatives from education, training, trade unions, regional engineering federations and the Tyne & Wear Learning & Skills Council. It provides modern apprenticeships, workforce development, and promotes engineering as an exciting career option for young people.
Growth rate: 76.2
Current-year turnover: £3.7m
On the board: Ten

4 - Focus on Blindness
What it does: Founded in 1997, and also known as Birmingham Focus. Provides services for blind or partially sighted people to enhance their quality of life. Has developed “SIGHT-LINK”, a telephone support network system for people in Birmingham.
Growth rate: 69.9
Current-year turnover: £1.9m
On the board: Nine

5 - Daycare Trust
What it does: Daycare Trust is a national childcare charity. Established in 1980 to promote high-quality affordable childcare for all, it advises childcare-providers, employers, trade unions and policy-makers on childcare. The trust operates under the name "National Childcare Campaign."
Growth rate: 68.6
Current-year turnover: £1.2m
On the board: Nine

6 - Pecan
What it does: Pecan was set up in 1989 by Peckham churches from different denominations to reduce unemployment. Pecan was intended to be an example of excellent Christian social action and not to be evangelistic. The main objective is to help people overcome the barriers to employment and to find, get and hold satisfying jobs. Growth rate: 62.3
Current-year turnover: £2.3m
On the board: Eight

7 - Royal Artillery Museums
What it does: The Royal Artillery Museum contains a selection of artillery pieces from a 15th-century bombard to World War II Howitzers. Branded as “Firepower”, the museum tells the story of artillery, of the Royal Regiment of Artillery, and the history of the ordnance manufacturing which dominated the Royal Arsenal at Woolwich for 300 years. It is a memorial to Gunners “everywhere”, displaying medals, poignant personal artefacts, photographs and documents that tell the stories of the men and women who served the guns.
Growth rate: 56.5
Current-year turnover: £5.5m
On the board: 12

8 - Afghanaid
What it does: Afghanaid assists rural communities who lack the ability or means to secure their basic needs into the future. It specifically helps such people if they are committed to helping themselves and are ready to contribute what they can from their own local resource. With HQ based in Peshawar, Pakistan, our fast-grower is the London registered office.
Growth rate: 55.1
Current-year turnover: £2.3m
On the board: Eight

9 - Katharine House Hospice
What it does: A 15-place nursing hospice in Stafford. Built less than ten years ago in 1993, the hospice is run by the registered charity Katherine House Stafford Hospice at Home. The hospice philosophy is to maintain an optimal quality of life by providing a homely, caring environment. The emphasis is on providing relief from physical, emotional, social and spiritual suffering and encompasses all aspects of a patient’s life while respecting their wishes and individuality.
Growth rate: 50.8
Current-year turnover: £1m
On the board: 13

10 - Satrosphere
What it does: An interactive exhibition of Science and Technology, the first one in Scotland. It offers visitors the opportunity to make science come alive through stimulating "hands-on" experiments.
Growth rate: 42.7
Current-year turnover: £800,000
On the board: Six

* Our top ten not-for-profits were measured by average annual growth in turnover over a four-year period, alongside our D&B "Hot 100" research in March. The other criteria were the same as those applied to the "Hot 100", apart from corporate structure.