What charities desperately need to understand about austerity…
Austerity is a bit like bloodletting or mercury, a harsh medicine that will either kill you, or… well… kill you. But apparently, it’s been so successful it looks like we’re going to do it all over again.
Most charity leaders will be rightfully alarmed at that prospect, but ironically, it’s only what much of the sector has been doing to itself for years.
It was April 2009 that “the age of austerity” appeared in David Cameron’s Conservative Party Forum speech, and when it became formal government policy after his election in 2010, some thought it an appropriate response, since UK Government debt had just leapt from its fairly steady £500bn between 1999 and 2008, to around £1tn on the back of the global financial crash.
The idea was that an ongoing programme of caps and cuts would save money to pay it down, and thus avoid future generations being saddled with the huge interest payments on that £1tn of debt.
And the strategy has been so successful that now, just twelve years later, the debt is up to £2.5tn. Whatever political beliefs you may hold, it’s hard to keep ignoring the old adage that you can’t cut your way to success.
On top of that, charity leaders, of all people, should understand the damaging long-term impact of an austerity mindset.
We’ve seen close-up the hollowing out public services, and how, when we underpay and overload their people, and increasingly trade on their generosity and good will to keep services running, we permanently corrode the culture, capability, and commitment in the organisation, and the resulting exodus of experience, skills, and expertise, can be nigh on impossible to replace.
We’ve also witnessed first-hand the impact that chronic emotional and financial stress has on our beneficiaries, their physical and mental health, their prospects and future potential, and yet we’re now starting to see those same effects happen not only to our public sector colleagues, but to our own front-line employees, under our watch.
And we know that, whether in the legal profession, or nursing, or as of this month, here in our own charity sector, even the most committed, mission-driven people will eventually call time and down-tools because they feel they have no choice.
All around us right now, we can see how reducing investment and increasing pressures debilitates organisations and whole systems alike. They become increasingly fragmented, inefficient, and vulnerable in the face of crisis as the people left inside them spend more and more of their energy putting out fires and simply trying to hold everything together.
And we’re seeing it now in our sector, because we too have sailed for decades under the banner of austerity, internalised in our thinking of what it means to be a charity. We too entered this escalating series of crises on the back of chronic underinvestment: in our infrastructure, in our people and their development, and in our potential to genuinely innovate and evolve.
Let the public sector be a lesson to us all. Cutting costs cannot solve efficiency problems; it will only compound them.
The government says it has no choice but to go cost-cutting once again, but we don’t have to follow suit, and if we want to see a different outcome, we have no choice but to chart a different course. Austerity cannot be an appropriate response to the situation charities now face.
Many of the people in my community, my clients, friends and colleagues across the sector, are already talking to me about dramatically refocusing their organisations and about fundamentally redesigning their services.
Some, potentially the more farsighted, are rethinking the whole idea of services as they work backwards from the people who will need support, and the outcomes and they believe are required. But all of them are having to think creatively and transformationally, innovatively and collaboratively, about what they will be doing and how they will be doing it in a couple of years from now.
All of that requires investment. For some it might be redeploying resources, for others it will mean raising money or tapping reserves. But none of it will succeed if our thinking starts and ends with capping or cutting costs.
The future has never been less certain, but one thing is for sure, anyone who intends to come out the other side of this next recession with a strong, sustainable organisation making genuinely meaningful impact, should be thinking right now about the innovation, people, and infrastructure into which they will be most heavily investing over the next two years.