Founder Interview with Paul Shang – Lessons from the Private and Charity Sectors

by Paul Shang, Co-founder and Managing Director of SoGood

In over 25 years of navigating the intricate landscapes of both the private and charity sectors, I’ve gleaned invaluable insights that underscore the need for synergy between these seemingly disparate worlds. 

Charity isn’t a recent professional pursuit for me. Long before the pandemic, I dedicated my time to volunteering, engaging with various destitution services, from food banks to assisting as a qualified Citizens Advice assessor. These hands-on experiences have been instrumental in helping me identify practical solutions to challenges within the charity sector, giving me invaluable insights into cost-effective approaches that circumvent the need for extensive budgets typical in the private sector.

As the Co-founder and Managing Director of SoGood, a non-profit aimed at revolutionising the charity sector through technology, I’ve distilled 10 lessons that bridge the knowledge and experience gap between sectors:

1. The premise of charity is not the same as private business — but in most cases, it should be

The essence of charity differs from that of private business, yet in many instances, it should align more closely with business principles. While frontline charities often prioritise outcome-based assessments, they may overlook the importance of “profit and loss” and “return on investment” considerations and digital innovation. Drawing from my experience, I advocate for adapting some of these private sector priorities into charitable endeavours.

Enhanced digital strategies, for instance, can effectively showcase the impactful work of charitable organisations within local communities. Fact-based communications akin to “shareholder updates” crafted for donors will have a much greater impact than generic emotional appeals commonly employed by many charities.

2. Quantifiable outcomes create loyalty

Clear and tangible outcomes are pivotal in fostering donor loyalty. Take, for instance, the strategic positioning of companies like John Lewis over the past decade. Through effective communication of a value exchange, customers are inclined to become loyal patrons as they can discern quantifiable and measurable benefits.

However, in the charity sector, there exists a prevalent assumption that merely soliciting donations suffices to inspire loyalty. While this approach may resonate with certain individuals, particularly those guided by religious traditions of giving, it fails to sustain donors with diverse motivations.

To cultivate enduring support, charities must craft compelling narratives around the outcomes of their initiatives. At SoGood, our primary focus revolves around this principle. When discussing the convergence between the charity and private sectors, our “profit and loss” emphasis is based on fostering reciprocal value exchanges and circularity.

In essence, if charities seek consistent donations, they must offer donors a compelling justification for their contributions, albeit without delving into exhaustive detail or betraying confidentiality. By articulating how donations are used to effect positive change, charities can enhance the likelihood of recurring donations. In my professional journey, I’ve realised that my role transcends mere transactional interactions; it entails cultivating initiatives that nurture donor loyalty and foster loyalty loops. My current efforts involve integrating this strategic thinking into the fabric of the charity sector, fostering a culture of sustained support and meaningful impact.

3. Make charities “sticky”

To ensure sustained engagement, charities must strive to make their presence enduringly compelling. Just as in any digital context, there will inevitably be donors who disengage over time. However, the challenge lies in mitigating this attrition by creating a digital infrastructure that retains donors—a “sticky” product, so to speak.

Achieving this involves optimising the digital funnel to minimise leaks and maximise retention. While achieving a hundred percent conversion rate may be unattainable, raising awareness about the organisation’s existence and mission is crucial. By consistently communicating the organisation’s purpose and impact, charities can bolster their visibility and appeal, thereby increasing the likelihood that donors will remain engaged for the long haul.

4. The ‘third’ sector is not third by size (or importance)

The term “third sector” often carries with it misconceptions and biases that undermine the significance of charitable organisations. By positioning charities as subordinate to the private and public sectors, this designation inadvertently perpetuates a derogatory perception. Contrary to this misconception, however, the charity sector boasts substantial scale and importance. With over a million active employees and four million volunteers, it surpasses the public sector in terms of sheer involvement. It’s time to reframe the narrative surrounding the charity sector, recognising its immense contributions and vital role in societal welfare.

5. The growth of the charity sector is proportionate to the decline of the public sector

The expansion of the charity sector correlates with the contraction of the public sector. Over the past four decades, the rise of the middle class and a population increase of over 10 million have coincided with a surge in destitution among the lower working classes. Despite significant societal changes, the fundamental need for charitable organisations remains unchanged. Unfortunately, the approach to addressing this need has not evolved in tandem with shifting demographics and economic realities.

7. The charity sector has things to teach the private sector

The charity sector possesses valuable lessons that can benefit the private sector. The advent of digital technology has transformed consumer dynamics, with individuals often becoming commodities in the eyes of businesses. This shift has led many companies to prioritise solving customer problems through digital means. However, unlike the often impersonal nature of digital interactions, the charity sector remains deeply rooted in human connection. While charities may not always employ the most efficient solutions, their emphasis on personal interaction sets them apart. Digital technology, while powerful, often lacks the human touch inherent in charitable endeavours. Integrating elements of the charity sector’s humanity into digital strategies can enhance the private sector’s approach to customer engagement and problem-solving.

8. Successful levelling up can’t come from the top

Achieving meaningful societal progress cannot solely originate from top-down initiatives. Effecting change at a macro level is inherently intricate, often relying on governmental action as a protracted process. Moreover, the conventional approach of institutions generating academic research to influence governmental policy often exacerbates rather than alleviates issues. The rhetoric surrounding “levelling up” typically emanates from top-tier authorities, inadvertently perpetuating a sense of hierarchy and exacerbating disparities. In reality, this approach amounts to “levelling down,” as it fails to address systemic inequities from the grassroots level where genuine change originates. True progress requires bottom-up initiatives that empower communities and individuals to drive transformative change from within.

9. Without change, the charity sector will become more a survival of the richest than of the fittest

In the absence of adaptation, the charity sector risks devolving into a contest of financial resources rather than genuine efficacy. Smaller charities, in particular, must embrace technological advancements to remain competitive. Failure to do so may result in these organisations being overshadowed by larger counterparts with greater financial means. Consequently, funding allocation may favour those with the resources to craft compelling narratives rather than those delivering the most substantive impact. To prevent this scenario, smaller charities must leverage technology to enhance their communication and operational efficiency, ensuring that resources are allocated based on merit rather than storytelling prowess alone.

10. Donors don’t want to pay for an overhead, but charities can’t exist without one

Donors often express a preference for their contributions to directly benefit those in need rather than cover administrative expenses. However, it’s important to recognise that charities require overhead costs to function effectively. In the UK, there’s a prevalent belief that every donated pound should directly impact individuals in need. Yet, the reality is that channelling funds to their intended destination involves various associated costs.

This presents a particular challenge for charities like cancer research organisations, where a significant portion of their operating budget is allocated to overhead expenses. Despite the noble cause, these charities may face criticism for their expenditure, with comments suggesting that significant funding has not resulted in a cure. However, it’s crucial to understand that supporting overhead costs is essential for charities to operate efficiently and achieve their long-term objectives.

In conclusion, the insights I have gleaned from navigating the intersection of the private and charity sectors underscore the imperative for collaboration, innovation, and empathy. From reimagining priorities to embracing digital transformation and fostering genuine human connections, the lessons learned illuminate pathways towards a more equitable and impactful future.

Our goal at SoGood is to leverage the collective wisdom garnered from both sectors, so we can forge a path towards a brighter tomorrow, where the needs of all individuals and communities are met with dignity, respect, and unwavering commitment.