There is much charities can learn from the way the private sector is run

It’s true to say that mentality and culture in the third sector are very different from those in the corporate sector. It’s more difficult, however, to define exactly what that difference is. Some see the corporate sector as shrewd, canny, and businesslike. The very purpose of a corporate entity is to provide a return for its shareholders. Although there may be some aspects of the corporate sector that we in the voluntary one don’t like, there is much that chief executives of charities can learn from the way the private sector is run.

The raison d’être of a charitable organisation is not the requirement to make money, but it does have a form of investor in the shape of donors, and a responsibility to those donors to spend their money wisely. Charities may not be answerable to shareholders, but their relationship with their donors is just as important. Just in the same way that shareholders must be communicated with regularly, donors should be regularly updated about the charity’s progress and achievements.

Charities can also learn from the private sector in order to attract, recruit and keep the best people. Voluntary organisations must take seriously the procedures they put in place to train staff, and additional benefits such as pension schemes and health care provision should be considered in order to compete with the private  sector.

Charities have in the main become efficient, businesslike and level-headed in their approach to the services which they offer. Yet, notwithstanding this, new staff who come from the corporate sector to work in the third sector always appear to notice at an early stage a different mentality, or dare I say, culture.

So how can we define this difference? We in the charity sector must not lose sight of one important thing. We exist to help others, often by providing a service, as we do at Nightingale  in caring for older people. Our residents, who are often physically very frail, are living in our care home because they need us to care for them. This is what we do. That’s why we’re here.

What happens if a resident for whatever reason stops paying their bills? If a home is run for profit (such as Southern Cross or other private providers), what will happen to a similar group of older people? Would they be removed from the home and made homeless? I do know that our own charitable ethos at Nightingale is one of compassion and care. Ultimately we would not ask somebody to leave purely on the grounds of  finance. In fact, we never turn people away on these grounds. We exist to provide care – not to throw people out onto the street if they run out of money. This is the difference to me.

Inevitably, the private and voluntary sectors face different pressures and have different stakeholders they are accountable to. There are lessons we can learn from the private sector in how we run our organisations, but we must not lose sight of what makes us different.

Leon Smith is chief executive of Nightingale, a care home in London for older Jewish people