Royal National Lifeboat Institution (RNLI) — Written submission (CHA0153)
1. RNLI definition of ‘sustainability’. The RNLI has been saving lives since 1824 and is committed to delivering a lifesaving service indefinitely. We believe that to do this we need to remain relevant, efficient and aware of our impact on the environment and local communities whilst maintaining our operational effectiveness. For us, organisational sustainability means the continued ability to deliver our purpose, and is achieved through awareness of the “triple bottom line”, understanding how we can balance risk and value creation between our social responsibilities, the effect of our economic choices and our environmental impacts. To ensure continued sustainability, the RNLI is currently delivering an organisation-wide transformation that embraces innovation, continuous improvement and new ways of working, including a clear ethical focus in decision-making. We are also developing sustainability elements of our corporate reporting and increasing transparency and believe that all sectors that embrace sustainable thinking will have a greater chance of appropriate growth and organisational success.
Q1: Purpose of Charities
2. Charities are distinct from businesses as they are purpose not profit driven, their mission being to do good locally, nationally, or globally in a social and environmental context. By championing what is morally and ethically right, charities can support community cohesion/civic action. If we fully embrace the wider sustainability context and societal challenges, in some cases charities may be better positioned to drive social change than commercial entities.
3. The sector benefits from volunteering in terms of reduced costs and increased ownership of the charitable purpose in society. This in turn promotes strong ethical values within charities and ensures they continue to focus on their charitable purpose.
4. Challenges. Many charities now have to comply with the same legislation as business and meet associated costs, e.g. the Energy Savings Opportunity Scheme, and so must have governance and compliance structures and processes in place similar to a commercial organisation. Balancing the need to achieve this using funds for the delivery of the charity’s stated aims is not always easy.
Q2: Pressures and Opportunities
5. Pressures. The need to spend donors’ money on non-charitable functions such as legislative compliance - corporate governance, transparency, ethical fundraising also present key pressures, at times in conflict with the need to raise money to deliver essential services.
6. Opportunities. Charities offer society a different perspective and voice on community views. Notwithstanding charity agendas, they can be seen as an independent voice in many areas. There is also a real opportunity to see how charities and the Government can work more closely and efficiently on shared objectives to benefit society as a whole. For example, the Government have given the RNLI a section 33 VAT rebate in recognition of how closely we work with the Coastguard.
Q3. Innovation
7. It is important for charities to innovate, not just for the sake of it, but in such a way that bolsters their sustainability. The world is changing and charities must future-proof themselves in terms of funding sources, ways of working and ambition. Vigilance is necessary in our horizon-scanning so that we can anticipate changes before they take us by surprise. And we should be more agile and flexible in our thinking and our internal structures so that we can innovate and adapt to new influences as we spot them.
8. Innovating in the digital space is about capitalising, testing and playing with emerging technologies, but most importantly it is about listening to users and giving them opportunities to engage with us in new and fun ways. Historically charities have struggled to strike a balance between organisational and supporters needs.
9. User centric design and understanding of user needs and motivations are essential criteria when developing new digital products or campaigns. Digital channels continually generate rich, insightful data, which can help inform and identify opportunities, previously not possible through more traditional methods of engagement. By interrogating this data in the right way it is now possible to get to know our existing and prospective supporters better than ever before.
10. There are examples of where charities look to gain inspiration and form partnerships to develop new products, e.g. gamification has changed the charity landscape by creating opportunities to raise awareness, educate and fundraise in new and innovative ways. However, before charities can truly leap into designing world class leading digital products, it is important to get the basics right, e.g. personalisation, real time marketing and mobile optimised channels. Consumers are more digitally savvy than ever before and so expect truly omni-channel experiences.
11. How do charities seek to innovate? Some charities may attempt to define what innovation means to them and translate it to stakeholders. In defining it, innovation may be aligned to business strategy with the aim of maximising the benefits for a sustainable future. The RNLI is achieving this by extending the remit of innovation across the whole organisation to encompass and demonstrate its worth through tackling strategic challenges and presenting future possibilities to influence planning decisions.
12. What more could be done to promote innovation and by whom? Within the RNLI a supportive Executive Team (ET) has given innovation space and time to develop and find its appropriate place. Promotion of innovation to the sector would be useful via education programmes for trustees and ETs to help understand what innovation can do for their specific organisation, which will allow for management of expectations and realistic investment returns.
13. What barriers are there to being innovative? Barriers to innovation can often have a root cause of not being aligned to longer term strategy. This misalignment can cause a lack of common understanding as to what constitutes successful innovation and how long it might take, creating mistrust for new thinking and a low appetite for risk.
Governance and leadership
Q4. What skills are required to lead and manage a charity?
14. As the driving force of a charity’s purpose and ambition, the Chief Executive represents the charity and all it stands for. This requires energy, dynamism and an authentic and influential leadership style to inspire teams and people, connect and engage with diverse stakeholder groups and harness their networks. With increasing public and political scrutiny, charity leaders increasingly need to optimise productivity while maintaining a charity ethos in a complex environment with competing objectives and ever-growing regulatory landscape. They require self-belief and resilience to lead change and direct the Executive Team in strategy which not only maintains delivery of existing services, but enables growth, responds to recipient and community needs while being agile enough to embrace new technologies and achieve a sustainable future for the charity. Working closely with and reporting to the Trustee Board, the Chief Executive must recognise and instil robust compliance and governance to ensure that all legal and regulatory requirements are in place, with clarity of roles and responsibilities.
How can these skills be gained?
What support exists to develop these skills within the charitable sector?
Q5. What role should trustees play in the performance and effectiveness of a charity?
15. Carrying the ultimate legal and moral responsibility, Trustees must ensure their organisation delivers effectively, efficiently and sustainably. As a collective, Trustees agree, support and approve strategy and set goals and deliverables to realise the charitable purpose. This should sit alongside a clear risk management framework at all levels. To achieve it all, trustees should ensure clarity of their roles, responsibilities and that of any reporting staff, including the division of delegated authorities and powers. They should be alert to conflicts of interest, ensure the charity’s policies are clearly understood by all, and that a regular process of review is in place.
- How can trustees be best equipped, enabled and supported to fulfil their responsibilities?
(*An extended version of the below can be found in Appendix 1).
What, if any, changes might this mean for current arrangements?
16. Simpler, clearer guidance/training on how to measure and monitor charity performance. The delivery of a charitable purpose is different to the bottom line profit of a commercial company, although of course financial performance is an important element of charity performance. This could be supported by increased sector collaboration on best practice.
Accountability
Q6. How can charities ensure that they are properly accountable to their beneficiaries, their donors, and the general public?
17. The RNLI is keen to understand its place in the world: where we have impact, what impacts upon us, both now and in the future. While the core focus remains the charity’s own mission, it should not be at the expense of the environment or its people. This should be supported by transparency; working towards integrated reporting, long term viability & sustainability targets and objectives with KPIs. Using sustainability criteria such as the 5 Capitals (Social, Human, Financial, Environmental, Manufactured), charities can understand what and how they increase, decrease or transform the value (quantitative & qualitative measures) they create beyond their charitable outputs. Further assessment of impacts at local, national and global levels can be assessed through measuring use of resources (renewable and non-renewable) and contribution to UN 17 Sustainable Development Goals.
Resource Management
Q7. What are the current challenges to financial sustainability, as well as efficient resource and risk management for the sector? How can these challenges be overcome?
18. We see efficient resource and risk management in the broadest context, including financial, human, environmental and other factors. Many charities do not measure, monitor or report on their resource use or real risks to their sustainability at a strategic level, and may be further behind in terms of improving efficiency and risk management than businesses. The work carried out by the Charity SORP Committee to improve financial reporting is key to this and there must be robust sanction where charities fail to adhere to such rules to ensure a healthy charity sector.
19. Financial Resources. 2015 was a tumultuous year for fundraising and as a result the sector has to take an innovative approach to how it is funded in the future. It is vital that we start to assess not only the methods for raising income and their acceptability to supporters but perhaps more importantly how, where and when we spend money, both funding and operationally, to achieve our goals. The future leaders of the sector will likely be those that are the most efficient and transparent rather than those with the greatest scale.
20. With this in mind, we understand it is critical that individual organisations start to consider their expenditure as a key element of their future sustainability and importantly that they justify that to their supporters. Clarity of reporting, transparency of messaging and a holistic approach to service delivery will become critical factors in overcoming the challenges of financial stability in the future.
21. The fundraising environment is increasingly competitive with reliance on traditional fundraising methods representing a financial sustainability risk. Donors are rightly demanding more transparency and integrity from the charities they support. With this in mind, the RNLI is the first charity to announce a move to an opt-in approach to its communications with supporters. This means that from 1 January 2017, we will only contact individuals by post, email and phone if they have given their express permission. While the response to our opt-in campaign has been encouraging so far, the charity risks losing touch with 500,000 existing supporters, which in turn could impact its ability to raise the £168M it costs to run our lifesaving service each year. The challenge from 2017 will be to maintain strong relationships with existing supporters and attract new ones, which is necessary to secure the RNLI’s future.
22. The role of the new Regulator and other sector bodies should be to start to assess the positive actions already being undertaken, not only in the sector but beyond, and then start to create expert advice and guidance on how these might be implemented for greater sustainability. There is already a significant degree of informal sharing within the community that should be encouraged and leveraged for further benefit.
23. People Resources. Long term planning for key skills requirements is critical. It will benefit the whole sector to share mechanisms and learning for the development of key skills specific to the voluntary sector, e.g.as volunteer management & development as well as supporter care and the more innovative skills around enabling technology and future funding models. As an example, the RNLI have successfully worked with Charity Works, which as a third party, collectively represents charity postgraduate placements, enabling identification of future talent within the sector.
24. Other Resources. Charities may benefit from increased best practice sharing and working together for common objectives, e.g. reducing carbon impact. We may be in competition for donors/supporters etc. but there are also big issues we all need to overcome. The social good of charities in general would be enhanced through more partnership working on common issues.
- How can best practice and information be shared across the sector?
25. Forums and conferences focussed on future horizon planning for skills would be helpful.
- What are the benefits/challenges of funding for charities from commercial contracts?
26. While many organisations can derive significant benefits from commercial contracts and activity, (increased income, broader engagement, higher profile, etc.), the critical challenges are in managing and aligning this activity in such a way as to manage the risks. Commercial approaches to funding require specific skill sets and governance to ensure that they succeed, do not damage the organisations reputation and add value to the overall purpose. The methods, structures and operational styles of commercial arms will need to be carefully structured to meet both the needs of the organisation but also the high standards of our supporters and donors.
27. Again the holistic nature of the organisational approach cannot be underestimated. If the reporting and transparency of the organisation is insufficient it is very likely that organisations that suddenly start generating commercial income streams may find support waning as donors find ‘better’ uses for the time/money based on perceptions drawn from scant or incomplete materials.
Social investment
Q8. What is the potential of social investment and social impact bonds? What are barriers to fulfilling their potential?
28. There is some potential for the use and increase of these methods of funding charitable purposes. Indeed there is some evidence to suggest that this will become a preferred method for many high net worth individuals/organisations. However, the ability to build sufficiently robust models that can genuinely succeed over time, the approaches required to monitor/demonstrate value and the longer term commitment to projects will prove challenging for many organisations.
29. As an organisation, we have found that the challenges of entering this market, sourcing required skills to make it effective and identifying workable projects have proven significant hurdles to undertaking this activity. Further, although social impact bonds could force charities to have to better demonstrate their impact, it is possible that many charities may struggle with the systems, processes, competencies and acumen to deliver them.
30. There is a case for exploring further the opportunities around social investment (Environment Social Governance). An increased focus in this area could address the dilemma of balancing sustainability against optimising assets. Whilst the Charity Commission suggests that funds are not invested in areas that conflict with the charities aims it does not appear to encourage consideration of the potential synergistic impacts that could be gained by proactive social investment. Robust sustainability criteria for investments and a deeper investigation into procurement and supply chain impacts is needed and firmly on the RNLI’s agenda.
Q9. What should the role of Government be within the Sector?
31. Charities play a key role in supporting the public benefit and so it is in the Government’s interest to support a healthy charity sector. A big challenge in the last 20 years has been increased regulation and compliance work required of charities, which increases cost and administration. In introducing new initiatives, the Government should ensure that input is sought from the sector itself and that impact is measured. The main pressures are around ensuring compliance in an increasing regulatory environment.
32. It is important for charities to show impact in order to demonstrate to their supporters the value of their contributions. This should not spell more regulation, but there should be better review of compliance and formal sanctions where compliance is lacking, e.g. if accounts are not SORP (Statement of Recommended Practice) compliant then action needs to be taken.
33. Government should encourage charities and promote good practice within the sector, and therefore actively discourage bad practice. The governance role of the Charity Commission is vitally important and it is therefore important that it is effectively funded to carry out this role to ensure the reputation of the sector is not tarnished by charities that are not operating correctly.
12 September 2016
APPENDIX A
Amplification of Qu5: Role of Trustees - RNLI Practice
In order to achieve this the Trustees must:
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| Central policies covered in Matters Reserved for the Board as part of RNLI Regulations |
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- How can trustees be best equipped, enabled and supported to fulfil their responsibilities?
Key enablers for Trustees | How does the RNLI achieve this? |
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