Fresh business approach for non-profits

Non-profit and for-profit organisations may have differing intentions and outcomes driving their operations, but both require a sound business plan to succeed.

For not-for-profit groups, the freedom to be innovative with their service delivery invariably relies on the adoption of an effective business strategy.

Business News reached out to three not for profits – Chorus Australia, Anglicare WA and Lifeline Australia – to discuss the importance of running a charity like a business.

For Chorus chief executive Dan Minchin, applying strong business principles as an NFP organisation is necessary.

“There’s an old-school idea that says not for profits are badly run businesses doing good things and businesses are well-run businesses doing bad things,” Mr Minchin told Business News.

“I don’t buy that at all. I actually think the two things can be – and should be – completely aligned.”

Chorus provides aged care, disability and mental health services from 18 locations across the Perth metropolitan area, one location in Bunbury and one in Albany.

Chorus was formed in 2017 following the merger of Community First, Volunteer Taskforce and Care Options.

The three groups were of equal size when the merger took place: Community First had annual revenue of $10.1 million, Volunteer Taskforce $10.2 million and Care Options $9.8 million.

Chorus’s annual revenue for the 2022 financial year was $41.9 million and it currently sits 15th on Data & Insights’ list of largest charitable foundations in WA.

Mr Minchin was appointed as Chorus’s inaugural chief executive with a mission to look at how services could be delivered differently to cut through in an increasingly regulated environment.

“Chorus was a not-for-profit community service provider, but in the past few years we’ve started to create a model that should make it possible for us to foster and replicate community businesses,” Mr Minchin said.

The practice of what Chorus labelled its ‘fresh approach’ was simple: whittle the big locations into smaller, autonomous teams focused on a local segment of the WA community, each serving between 200 and 500 customers.

Mr Minchin said redesigning the old business model had helped create more beneficial relationships and forged better outcomes for people involved, not just customers and staff but the wider community.

“The first step was to create those local teams,” he said.

“All frontline staff and administrative support staff ended up localised in an area close to where they live, and we realigned our service delivery model so all our customers in that area were matched up to that local team.”

Chorus started trials of its ‘fresh approach’ in 2020 and has since introduced it across the entire organisation due to its success.

Mr Minchin said this structural change had the potential to provide Chorus with protection from future federal government reforms, including the new Support at Home Program expected to be activated in July 2024.

“This Commonwealth reform will shift the big entry-level program called Commonwealth Home Support Programme from a grant funded system to an individualised system where each individual gets a package,” Mr Minchin said.

“That has a massive impact on the financial viability of organisations across the system and many of the 1,300 CHSP providers are going to really struggle with that transition.

“We can see our path to achieving this change, but it’s going to be a big challenge for us. We need to get ourselves to a point where we can operate efficiently in this environment.”

Mr Minchin said the next 12 to 18 months would be spent consolidating the local teams and assembling a replicable case for broader application.

When the ‘fresh approach’ business model was implemented, Chorus removed its traditional head office and replaced it with a central hub working to support the local teams.

Mr Minchin said this hub needed to become a platform to work on the business components of Chorus, making it easier for local teams to focus on their community and services.

“We need to create a main platform that takes on all the administrative complexity, compliance, HR systems, customer systems and so on, so the ‘locals’ can just go on and build good quality relationships at that local level,” Mr Minchin told Business News.

“For that to be possible, the platform has to be built.”

All business

Chorus is one example of the way NFPs are adapting to the sector’s ongoing challenges.

In essence, Chorus dissected its traditional organisational structure, service delivery and employee hierarchy and completely redesigned it.

A solid business strategy was an essential part of this rebuild.

“I don’t think being a not for profit means you’re a badly run business,” Mr Minchin said.

“An NFP should be doing well financially because of the good it’s doing in society, and that’s what we’re trying to do at Chorus.

“Our new way of thinking and this unique operating model should have a bigger impact on communities and should be more financially sustainable for all the same reasons because good relationships, good services and good support are all driving business outcomes.”

Mark Glasson has been Anglicare WA chief executive since 2019. Photo: David Henry

Anglicare WA chief executive Mark Glasson said without business strategies, non-profits were unable to make beneficial impacts, especially organisations dealing with people’s lives.

“People in the community services sector, organisations like Anglicare WA, we work with people who are vulnerable and facing disadvantage, often with experiences of trauma,” Mr Glasson told Business News.

“We’re obliged to do that work in a way we know supports them to achieve better outcomes, but also prevents any further harm being done.

“You can’t do that without having really sound business systems around you to manage risk, ensure service quality and ensure you’re financially stable to be there for these people.”

Forty-seven years after Anglicare WA was established, it ranks as the 11th biggest charity in WA as per Data & Insights.

Mr Glasson said the demand was no less now than it was in 1976, so the organisation must use business principles to continue to support those in need.

In its early days, the community service sector was comprised of people with strong determination to provide for a need.

These days, however, providers relied more on sophisticated business strategies help to achieve outcomes.

“A strong business model is as important as really good people on the ground and great relationships with community,” Mr Glasson said.

“Those things are essential to our work, but we’d be here a very short time if we didn’t pay attention to our operations and how we deliver services.”

Anglicare’s immediate focus will be tackling disadvantage amidst the housing crisis and rising cost of living.

“We’re starting to look at new solutions, other ways we can deliver services to make them better, and we want to engage more closely with local communities because we believe the answers for a lot of the challenges people are facing are in the community where they live,” Mr Glasson said.

Colin Seery says balancing business and purpose is a healthy tension. Photo: Lifeline Australia

National crisis support provider Lifeline Australia has proved the sustainability of its business model on a national scale, having celebrated its 60th anniversary in early 2023.

Chief executive of Sydney-based Lifeline, Colin Seery, said that, aside from the 11,000 dedicated staff and volunteers, the organisation’s longevity had relied on effective business tactics.

“I think one of the interesting challenges is applying that business model in an organisation that serves the community,” Mr Seery told Business News.

“Lifeline Australia is only one part of Lifeline; there’s a whole range of other organisations within, but we’re the national body and we need to generate over $90 million a year to pay the bills.”

According to Mr Seery, the majority of senior management employees at Lifeline Australia have some degree of business experience, ensuring the organisation is guided by business-minded leaders.

“There’s definitely a perception that most not for profits are operating week to week or month to month; and while that may be the case for small organisations, here at Lifeline we’re very careful with our financial planning,” Mr Seery said.

“We’ve just developed a new strategy for the 2024 to 2027 period, and a huge part of designing that is thinking outside the box to plan how we can work more effectively within the sector.”

The business model under which it operates allows Lifeline Australia to be innovative and consider how to further its agenda efficiently and effectively.

Mr Seery said one challenge for providers once they had established their contemporary business model was to move forward while continuing to deliver their original purpose.

“It’s a challenge to move forward with business thinking without compromising the DNA of the organisation’s history,” he said.

“We have a lofty vision of an Australia free of suicide and a substantial component of our workforce – and our reason for being – is our volunteers.

“You can dive into that business perspective as a not for profit, but if we compromised the volunteer experience of Lifeline, it goes against the DNA of our organisation.

“It’s a healthy tension: making sure we move forward with innovation without spoiling the past and what’s important to the core of the organisation.”