Ignoring the top line: how to do more with less
Back in 2017, I asked what has proven to be a transformative question for Integrity Action: can a business model accelerate a charity’s progress towards its mission, while making operations cheaper? How can we apply the business principle of efficiency to a charity?
At Integrity Action we work with citizens to monitor vital projects and services where they live (health, education), ensuring money is spent well, so financial efficacy is an imperative in what we do as well as how we do it. But at times we have found ourselves too focused on increasing the top line. The urge to build steep top-line growth, giving reassurance to funders that we are a ‘rising star’ was at times hard to resist. Or was it a fear of what happens if the income slips that was the key driver?
If the answer to the question “can business principles help us reach our mission and make our operations cheaper?” was yes, we would be able to stop obsessing about income and stop chasing funders. Integrity Action would be able to focus the better part of its energy and brains on the needs of and getting results for the citizens we serve. We would be able to walk away from grants for projects that cost more to deliver than the funding we receive for them. It would mean that we could choose to work only with funders who are passionate about outcomes for citizens, as we are. We would be able to prioritise building partnerships rather than thinking about competitors. To borrow a colleague’s quote, we could focus both on doing the right thing and on doing it right.
But it’s easier said than done, and inevitably we faced challenges. The first was getting to know more about and discussing business modelling. The majority of funders we reached out to assumed we wanted to talk about money and funding modelling upfront. They were wrong, as we firstly wanted to clarify what needed to be done, and why. It was only later that we would be actively applying for funding, as only then would we be prepared to precisely calculate the costs. I learned, borrowed and stole ideas from multiple authors and people willing to talk – mainly from the business sector – about value propositions, value chains and value-based management. The new model had to enable Integrity Action to focus management decision-making on the key drivers of value that we are creating for citizens.
In practice, this meant unpacking our theory of change and scrutinising every assumption and piece of evidence we had. We binned everything that was wishful thinking and things that we couldn’t find evidence for, and we stopped doing all the things that others are doing better. That left us with what seemed a tiny space focused on real-time citizen monitoring and appraisal of services and works delivered to them. And it got even smaller and more niche when we recognised that the only way we can create value at the grass roots level is to be a source of learning, rather than duplicating what’s already there. Without consultants, the whole team (and we count our Trustees as a part of it) achieved this in just over 18 months, with priceless input from community monitors, partners, funders and peers.
The insight that emerged was that to achieve our mission, we should do less but be better and more focused in what we do.
This focus is starkly different to our old approach, which welcomed such vague sentiments as ‘citizen awareness raised’ and ‘encouraging transparency’ in our reports. Our new theory of change – resting on measurable, focused outputs – informed our new strategy. We reconstructed our technology tool so it can be used in rural areas in Afghanistan, DR Congo, and Kenya (for example) by women and men, young and old holding a smart phone/tablet in their hands for the first time. We built a new way of valuing and thinking about partnerships. We learned to be humble and find ways to enhance others’ expertise by bringing ours to the table. We closed overseas offices and realised we don’t need to be a large team. Operations became cheaper.
And then we got to the money. The truth is we need a lot less than I thought we would. Our current strategy set a target of £2.8m income by 2023 – and based on that number, some people accused us of lacking ambition. But we strongly believe the ambition should live within our intended impact, and if we can ramp up impact without a similar increase in the top line then that is quite an achievement.
One thing that has helped with this is our decision to increasingly act as a sub-grantee, rather than a lead, within programmes. It means we can play a specialised role, providing tools, methodologies and training, without needing the operational capacity to run large programmes. This pitches us rather like a “B2B” provider in the development space.
For Integrity Action, the ability to add value in this way has a lot of advantages; but then there is always the top line. Being a sub-grantee generates less revenue than being the lead. Does it matter? Do funders, and our peers, care if the top line doesn’t show impressive growth – even if impact continues to increase? Will the difficulties introduced by COVID-19 mean that, for a time, everyone will care less about the top line anyway?
I guess we’re going to find out.
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Read more about our citizen monitoring approach, enabling people to demand that services and projects are delivered as promised.
And explore our unique tech tool we use to do this, DevelopmentCheck.