Surviving the cuts, by Rashid Iqbal

Rashid Iqbal is Deputy Director for Operations at the Children’s Society. He will be launching his research with a round-table conversation in September 2011.

Rashid Iqbal, a Clore Social Leadership Fellow supported by PHF, is studying the effects of crisis on leadership behaviours in the social sector. Here, he shares some of his observations on how organisations have adapted to the testing circumstances surrounding reduced government funding for the third and cultural sectors.

In October 2009, I was appointed a Clore Social Fellow, one of an initial cohort of 15 Fellows on the Clore Social Leadership Programme (CSLP). With backing from funders including PHF, CSLP aims to identify, connect and develop aspiring leaders in the social sector.

The Fellowship offers a package of personalised development, learning and support, with the overarching aim of developing leadership capacity within the sector as a whole and thereby enhancing the sector’s effectiveness in delivering social benefit. Alongside a host of assessment and coaching activities, each Fellow undertakes a research exercise, which the CSLP team hopes will be of use to the sector. I am examining how charities have responded to the Comprehensive Spending Review (CSR) of October 2010 and the ensuing ‘crisis’, exploring what lessons for leadership we can draw from this. My research will capture qualitative and quantitative data by engaging a range of charities, including those with varying degrees of government funding, as well as across a spectrum of causes and issues.

Why am I interested in this area? In many ways the CSR initiated a crisis in the original sense of the word. Crisis comes from the Greek ‘Krisis’, a medical term used by Hippocrates to describe a ‘turning point’ in a disease, and from the Greek work ‘Krinein’, meaning to judge, decide, sift or separate. So was the CSR a ‘turning point’? One commentator from New Philanthropy Capital described the Comprehensive Spending Review as “The most important day for the UK charitable sector in 13 years”. The effect of the coalition government‘s determination to address the public spending deficit through a series of spending cuts has affected the income and jeopardised the viability of a number of charities and their services. Some estimate the cuts that followed the CSR will take between £3–5 billion out of the charitable sector over the next three years.

In the public discourse that has followed the CSR a narrative has been established of a charitable sector in retreat, a sector whose existential core has been rocked, a sector bedevilled by crisis. Many commentators predict a number of charities will face closure in the new financial year, and crowdsourcing platforms such as voluntarysectorcuts.org.uk have ensured that the grim tally of vital services closing are accounted for as best as possible. Critics of those charities that have grown through contract income from local and national government have been enjoying a liberal dose of Schadenfreude. By December 2010, NCVO Charity Forecast was reporting charity leaders’ confidence had hit an all-time low.

In conversation with colleagues I became aware of a range of different behaviours within organisations in either facing up to the crisis or in ‘hunkering down’. Some charities reached for their crisis management plans and initiated scenarios developed months before, anticipating income reductions of between 10–30 per cent. There was a mountain of murmurs about mergers and in some quarters an increase in appetite for collaboration. On the other hand, some organisations appeared to retreat to their bunkers, to retrench, and suspend rational decision-making whilst literally handing over agency for their futures to the government decision timetable. And as decisions filtered from central government to individual departments, debates rumbled internally about whether to come out campaigning or to seek to influence decision- makers more discreetly. Many charities are still held in a phoney war with local authorities and, in the near future, will discover whether their carefully marshalled missions have been roundly routed or whether a ‘Dunkirk spirit’, the resilience that many have in their founding DNA, will carry them through to another day.

For many charities in the arts sector, the response to the CSR has been determined by the changes to regional funding settlements and the priorities of national Arts Councils, as well as decisions made by local authorities. My own conversations have been limited to organisations affected by Arts Council England’s funding strategy, announced on 30 March 2011 – under which, having received a funding cut of almost 30 per cent for the period 2011–15, it decided to pass 15 per cent of the cuts onto funded organisations, which were subsequently reduced in number from 849 to 695. This is not necessarily reflective of changes for the rest of the UK, but provides an interesting viewpoint in the study of leadership during crisis.

The impact of the decisions taken by the Arts Council have to be understood in the context of the history of the relationship between the Arts Council and the organisations it has funded, and in particular the recent disruptive experience of the funding settlement in 2007, the details of which cannot be fully explored here. In very general terms, whilst many arts organisations may not always think of themselves as being part of a ‘voluntary or social sector’, they will have experienced many of the similar leadership behaviours in the period between and beyond the Conservative-Liberal Democrat Coalition forming and the publication of the CSR. The ACE announcements in March 2011 will merely have extended the period during which leaders were either acting or prevaricating, either recalibrating plans and structures or retrenching, and struggling between focusing on sustaining the business and advancing their mission. As one recent recipient of ACE funding informed me, for many organisations it has been and will continue to be “adapt or die”.

“…while some charities will undoubtedly suffer, many will come through this period stronger, discovering by design, deliberation or by desperation new capabilities and different business models.”

In my own reflections during this prolonged period of crisis, I have often wondered where the outstanding leadership in the sector is and whether I would recognise it if I saw it. Who could I learn from, who is delivering something different and who would I want to follow? Gene Klann, in Crisis Leadership (2003), offers some insight into this when he states: “Managing a crisis and providing leadership in a crisis are not the same thing, although each addresses different aspects of a difficult situation… crisis leadership principally deals with how leaders handle the human responses to a crisis, including their own.”

To some extent, and certainly through the prism of the Clore Social Leadership framework, this is where we ought to explore the ‘Krinein’ within the crisis, to honestly consider and reflect how sector leaders feel they have managed themselves through the crucible of the Spending Review.

Based on many of the conversations I have had early in the research process, I am hypothesising that while some charities will undoubtedly suffer, many will come through this period stronger, discovering by design, deliberation or by desperation new capabilities and different business models. We need to learn more about and celebrate the leadership behaviours and actions that have and will continue to ensure this survival and evolution, so that we can weave these behaviours more deliberately into our ways of working. We live in a time of continuous, overlapping crises and our leadership approaches need to be crafted to meet what is an ever-present challenge: leading through uncertainty and change.