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Sharing back office services
 

Sharing back office services

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Patrick Nash, Connect Assist, at Engage - the collaborative working conference 2013.

Patrick Nash, Connect Assist, at Engage - the collaborative working conference 2013.

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    Sharing back office services Sharing back office services Presentation Transcript

    • Shared Services and Outsourcing
    • www.connectassist.co.uk Are charities efficient? “With honourable exceptions, charities are generally terrible at explaining what they do and proving it works—and they need to improve “As the cuts continue…. they are having to explain to the public that their money is being well spent” Dan Corry, CEO, New Philanthropy Capital 2
    • www.connectassist.co.uk What donors think 53% believe that charities are inefficient in managing donations. Efficiency, and the amount spent on administration are cited as the most important factors when selecting a charity to support (89% and 88% respectively) Philanthropy: Barriers to Growth. Barclays Wealth 3
    • www.connectassist.co.uk This morning’s session 1. Background 2. Charitable purpose 3. Comfort factors 4. Shared services 5. Sharing versus outsourcing 6. Finance 7. IT and data 8. HR and legal 9. Supporter and customer care 10. Cost benefit 4
    • www.connectassist.co.uk About Connect Assist Connect Assist is a social business created by a charity. Our purpose is to provide support, services and technology to the Third Sector and to create jobs and growth opportunities for people in the Welsh Valleys Company background 5
    • www.connectassist.co.uk Organisations we work with Some of the charity and public sector organisations we work with 6
    • www.connectassist.co.uk Charitable purpose The starting point is charitable purpose. Are you clear what is your charitable purpose, as opposed from your activities in support of the purpose? Many charities are providing services to the public sector. Are you convinced that these are core to your charitable purpose or are they ways in which you (hopefully) fund part of your organisation?
    • www.connectassist.co.uk Charitable purpose What is your charitable (or social) purpose? Participation Activity % of annual expenditure Core purpose Supports purpose Finance and accounts 5% X
    • www.connectassist.co.uk Shared services What are shared services? • Lots said about the value of shared back office services in the charity sector • ‘Back office’ can include a whole range of activities, including: - Accounts and finance - IT and infrastructure - Human resources, training and development - Customer services, supporter care, helplines • There are some successful examples of charities who have set up shared service operations (e.g. Charityshare) • The reality is that the majority of charities are not sharing services
    • www.connectassist.co.uk Charityshare 10 Successful example
    • www.connectassist.co.uk ELFS Shared Services 11 NHS shared services
    • www.connectassist.co.uk Comfort factor Why charities don’t share services. • Much of this is down to a fear of loss of control • Decisions often taken on non-commercial grounds • But how much time and energy is being spent on activities that are non- core to charitable purpose Participation • Write down 5 reasons why your charity would not consider shared services 12
    • www.connectassist.co.uk Why don’t charities adopt shared services 13 Reasons why not! We don’t want anyone else to know our business No one can do the work better than us We are unique no one else would understand us We don’t have the money Our trustees and staff wouldn’t agree
    • www.connectassist.co.uk Counter arguments Now look at your 5 reasons and write how you would address this issue internally 14 Participation Reason why not How to prepare a counter argument Our trustees wont agree Prepare cost and benefit analysis
    • www.connectassist.co.uk What services are or could be shared? Financial management Book –keeping and accounting PAYE and payroll Investment management Grant administration Contract management Human resources Training, coaching and development Quality assurance and standards Recruitment services Customer services Supporter care Helpline Triage services Appointment setting Outbound fundraising IT infrastructure Procurement and leasing IT support Hosting CRM and data
    • www.connectassist.co.uk VAT and shared services Charities can benefit from a relatively new HMRC exemption on VAT for shared services. The effect of the new legislation is that the supply of services between organisations which have exempt or non-business activities will be exempt from VAT by setting up a cost sharing group (CSG). A CSG is an independent group of persons who work together with a common purpose. The CSG is however legally separate from its members. It is established, owned and operated by the members for their cooperative benefit and is independent of any ownership, control or influence outside of the membership. Ordinarily the supply of services between two independent organisations would be liable (in the main) to VAT at the standard rate (20%) and as such this can create a VAT efficiency. 16
    • www.connectassist.co.uk Can a CSG be a charity? To be a charity an organisation must be, among other requirements, established for charitable purposes. So, subject to meeting that test a CSG might be able to be a charity. However, in a charity context a CSG could also be a non-charitable company limited by shares owned by a number of charities and, in practice, this model may be the more likely one. If a CSG was able to acquire charity status there are particular direct tax rules attached to the trading activities of charities that a charity CSG would have to consider. 17
    • www.connectassist.co.uk What are 'qualifying supplies'? Qualifying supplies are services which are ‘directly necessary’ to enable a member of the CSG to engage in the exempt and/or non-business activity for which the services are supplied. The 5% test: An organisation can be a member of a cost sharing group if it has a minimum of 5% exempt or non-business activities. In addition, the supply of services to it can only be exempt if the services are directly necessary to those exempt or non-business activities. Professional advise is recommended. And as CSG’s must be independent, there will be costs associated with running a CSG, so these must be weighed against the potential savings. 18
    • www.connectassist.co.uk Sharing versus outsourcing Increasing numbers of charities are outsourcing support services. Although setting up a CSG has the advantage of saving VAT, there are potential benefits of outsourcing • There are a number of specialist outsource organisations for the charity sector, including: - Finance and accounting - IT and technical infrastructure - Contact centre (helplines, supporter care, etc.) - HR, training and legal • No requirement to set up a CSG • Cost savings – should be in the region of 20% - 40% • The charity has to manage the contract (using SLAs and KPIs) but does not need to manage or delivery the activity 19
    • www.connectassist.co.uk Key issues There are key issues to consider which apply for sharing services or outsourcing General ones to consider: • How efficient is our current provision of office services? • How much management time is engaged in office services rather than the core mission of the charity? • What of our culture must we maintain and what needs to change? • Staffing issues – will TUPE apply, redundancy, living wage, etc. • Need to do a full-cost assessment of the costs and benefits of sharing or outsourcing • What is our leadership’s appetite for change? What are the key drivers? 20
    • www.connectassist.co.uk Finance Many charities already outsource much of their financial operations. Typical elements that are shared or outsourced • Book keeping and ledger preparation • Payroll • Debtors and debt management • Financial director Things to look for • Qualifications • Service level agreements • Existing charity customers Example: The Leadership Trust
    • www.connectassist.co.uk IT and Data IT is an obvious area for sharing or outsourcing. IT managers in the charity sector are typically out of date and this can present significant problems Typical elements that are shared or outsourced • Hosting, maintenance and support • Telephony • CRM and database Things to look for • Cloud or on-premise • Service level agreements/uptime Examples: • Charity Share (shared services) • Certus (outsourcing) • CTT (advice and services)
    • www.connectassist.co.uk Contact centre Surprising numbers of charities are sharing or more often outsourcing into contact centre operations Despite the BBC’s depiction of the industry locally Typical elements that are shared or outsourced • Supporter care • Fundraising • Helplines and service user contact Things to look for • Charity specialism • Cultural fit • Quality standards – ISO9001, ISO 27001, IoF, Helplines Partnership, etc • Service level agreements
    • www.connectassist.co.uk Examples Examples of providers of charity contact centres • Helplines and Supporter/Donor Care • Outbound fundraising
    • www.connectassist.co.uk Examples Charities using outsourced contact centres - helplines Charities using outsourced contact centres - fundraising
    • www.connectassist.co.uk Cost benefit Vital to assess costs and benefits of either sharing services or outsourcing Good procurement will be important Key things to look for in procurement • Price • Quality • Partnership • Sustainability However, its best to find examples of what other organisations have achieved
    • www.connectassist.co.uk Quality standards Green Dragon – environmental standard 27 Quality marks ISO 9001 – quality of services and business processes ISO 27001 – data security standards Investors in people– Bronze
    • www.connectassist.co.uk Growth in 11 months 28 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Old helpline Multi-channel service Numberofenquiries Enquiries per annum Digital service Adviser contacts
    • www.connectassist.co.uk Immediate cost savings 29 £0 £200,000 £400,000 £600,000 £800,000 £1,000,000 Old helpline Multi-channel service And satisfaction levels have remained the same at 92% Cost per annum
    • www.connectassist.co.uk NCVO member helpdesk Service use year one 0 1000 2000 3000 4000 5000 6000 7000 2010/11 2011/12 Online channels Phone 50% increase on the previous year Doubled opening hours Over 50% cost reduction 30
    • www.connectassist.co.uk NCVO member helpdesk Service use year one £0 £20,000 £40,000 £60,000 £80,000 £100,000 £120,000 Before After Annual cost 31
    • Shared Services and Outsourcing Unit 9, Cefn Coed Parc, Nantgarw, RCT, CF15 7QQ 01443 827600 patrick.nash@connectassist.co.uk www.connectassist.co.uk @pnashconnect