Welcome to the third way

Does the biggest threat to fundraising come from regulation, loss of trust and persecution from the Daily Mail?

It might feel like it does at the moment.

But I’d argue that a bigger threat arrived on our shores, largely unnoticed, during September.

A new way of doing business that threatens to eclipse charity budgets, talk directly to audiences that charities struggle to reach, and offer effective social change strategies that charities can’t match.

This terrifying threat to our survival is actually rather nice. It’s called the B Corp.

The B Corp is a new legal definition of business that puts social purpose alongside profit. As they put it, B Corps “use the power of business to solve social and environmental problems”. B Corps sell products and services, make profits, reduce impacts and tackle issues. There are already over 1,400 of them, and growing, in every sector you can imagine. Kickstarter is one. As arePatagonia, Warby Parker and Etsy.

Should B Corps worry you? Only if you put yourselves in the shoes of the average millennial – someone who has time and money, has a developed conscience, but who has grown up without charitable giving in their DNA and in a world where trust in charities has only fallen. Someone who finds it more natural to turn to a business to help them achieve their social and environmental goals than a charity.

But B Corps are the least of your worries, because B Corps are just a sign of the times.

They’re a sign that the business world has woken up to properties that the charity sector has monopolised for over a hundred years. Compassion. Purpose. Authenticity. Hunger for change. Anger at the status quo.

The era of CSR is over. Businesses large and small are now embracing these values and beliefs at board level. It’s the only way they can attract younger customers and advocates and, increasingly importantly, talented graduates. Bunging a few grand at a charity partnership, or putting anorangutan on a poster for cheap gas won’t cut it any more. In the age of transparency, companies have to deliver.

And the worry is, these companies have bigger budgets and teams, a bigger share of voice, and a profitable range of products to sell.

I know this might sound like a litany of doom. But really, it’s not. It’s a call to arms.

B Corps are a fundamental challenge to the notion of what business is for (and one that’s clearly long overdue).

In other words, this ‘third way’ has emerged because business wanted and needed to change. So the question is, how will can charities change in response? How can some of the UK’s most respected and venerable institutions — organisations that save and change lives, cure diseases, fight for justice — be part of this ‘third way’ too?

The signs are already emerging. More and more charities are embracing value exchange — acknowledging that they can’t just extract value from supporters any more. They’re looking at business-style models for both service delivery and fundraising. They’re offering supporters positive brand experiences, for example though events. They’re embracing technology by investing in social and content and innovation.

There are pockets of change emerging all over the sector. Will they emerge fast enough? Will they help charities be part of the ‘third way’ between old-style business and old-style charity? Or will we be too late?

I guess that’s up to us.