Market maker or market taker?

Sara Fernandez2 Jul 2014Inside Hub Ventures

Sara Fernandez is Executive Director at Student Hubs. Sara is a recipient of the Cranfield Trust MBA Scholarship for the Voluntary Sector and is currently studying at Cranfield School of Management.

Published on Cranfield Trust blog, July 2014.

If you are a leader in a not-for-profit organisation you will probably have been given advice about ‘becoming more business-like’, ‘thinking about what your customers want’ or ‘understanding who pays for your services’. These concepts might seem foreign or just alienating when we are driven by values of social justice and supporting those who are in a position of disadvantage. However, given the challenges in the social sector, taking this advice is essential to build a sustainable organisation that can continue to deliver your social mission in the years to come.

In the process of trying to follow this advice you will no doubt get your business planning hat on and start trying to figure out how you are going to make your beneficiaries pay, set a pricing strategy or otherwise. However, before you even start thinking about where to extract the money from, it’s helpful to go to back to basics and start by asking yourself ‘does the market for my charity exist?’ If you are running an innovative charity or social enterprise, the answer is probably not.

When we started Student Hubs as a charity, we knew we had a repeatable business model. We had a Hub in Oxford that was engaging hundreds of student volunteers in the community and hosting over 2,000 students at conferences and events each year. There was a waiting list to volunteer with the food bank and to tutor in schools. We were filling up lecture theatres and the students wanted to host more training, invite more speakers and run more campaigns to take action on climate change and global development. All well and good; except that there were limited hours in the day of the one member of staff supporting Oxford Hub. Ask students to pay and you know what you get – not very much. In the midst of student loans, part time jobs and the party budget, the Hub was low on the shopping list. Asking students to pay to volunteer is also dubious ethically. By the end of Oxford Hub’s first year, students at three other universities had approached us to establish Hubs on their campuses, too. We gave them a logo, a website and a lot of cheerleading support.

However, with students coming and going, staff support was essential to maintain momentum and build a sustainable operation but we didn’t know who was going to pay for this. We received a few grants from trusts and foundations to support new Hubs, but that didn’t feel very sustainable either!

In retrospect, it might seem obvious that while students could not pay for the services, universities do have the budgets and (sometimes) the inclination to support volunteering and social action. However, back in 2007, the landscape was very different – we wanted to extract money from a market that didn’t exist, as universities were solely focusing on teaching and research, rather than the wider student experience or the communities where they operated.

So how do you pose a proposition for which there is no market? You go out and proactively make that market. That sometimes means focusing on activities beyond your core business of delivering social impact at the frontline:

Focus on evidence and research. You wouldn’t be doing what you do if you didn’t think it worked brilliantly. Proving your solution works to the rest of the world is essential to build a market around your product, and robust impact assessment is your best bet. Invest in capacity in this area of work internally, but also look for expertise externally – New Philanthropy Capital is a good place to start for training courses; if you have a member of staff in house working in this area, they may benefit from peer learning at the Social Impact Analyst Association.

Participate in policy discussions. This doesn’t mean you need to knock on the door of Number 10 and start talking to government – often an unrealistic option for small and medium-sized charities. Think creatively about who your stakeholders are and who holds power and influence in the wider sector were you operate. If there are others emerging in your field, or organisations that complement your services, think about working together as part of a coalition to deliver collective impact. At Student Hubs we have found that joining Generation Change has allowed us to have a voice in the youth social action sector and contribute to policy debates with both government and funders.

Communicate your solution to others. It’s well and good to do your homework on research and policy matters, but you need to make sure that you can articulate your vision, mission and values to a mass audience. Without clear messaging, you are less likely to inspire the funders, partners, employees and volunteers to work with your organisation and create greater impact. Historically, small and medium-sized non-profits are not great at shouting from the rooftops about how unique and impactful they are – so investigate pro-bono support from PR and brand agencies to support you with systems and frameworks which have worked for the big players.

Investing in the strategies above can seem impossible when funding is tight and your budget is focused on delivery. At Student Hubs it took us quite a few years to employ dedicated staff in research, policy or communications, but everyone in our team devoted significant headspace to these areas from day one. This more ‘abstract’ work is also a key concern for the senior management team and the board of trustees, as it is the best way to ensure the long-term sustainability of our work.

Creating a market for your charity sounds like hard work, but being a market-maker has some benefits too – you set the prices, you often have no competitors and you can get a lot of attention in the sector for your trailblazing. The bad news is that this doesn’t last forever, so make the most of it while you can and get ready to become a market-taker in the future.

Student Hubs is a national charity supporting 25,000+ students to make a difference during their time at university, building a new generation of active citizens who achieve positive change now and in the future.

Author: Sara Fernandez

Sara is the Executive Director of Student Hubs, supporting the development and growth of our Hubs and Programmes across the network and working to increase the impact of our work. Alongside her work at Student Hubs, Sara is studying for a part-time degree in Education and is particularly interested in citizenship education. She is also a trustee for Student Minds.