This is an edited version of the article which appeared in the 2022 Charity Finance Yearbook published by Civil Society Media.
2021 was another strange year for charities. We had all been officially free since June, but even before December’s ‘Plan B’ WFH mandate, charity offices throughout the UK were desolate. This was a stark contrast to the private sector.
As someone who works with both sectors, I wondered what the reasons for this difference were – why did company bosses and charity leaders seem to think so differently?
The great reopening
When the reopening arrived there were two tribes, we saw companies like Goldman Sachs insisting that all employees should be back in the office 5 days a week as soon as restrictions were lifted. Then Google, Facebook, and Twitter all announced that they would be remote-first, before about-turning and settling on more office-focused policies. Apple even took 500k sq. ft. of space at Battersea Power Station during lockdown.
But it wasn’t just Silicon Valley giants signing up for offices. At TSP, I saw our landlord clients’ office buildings fill up. One went from less than 50% occupied in May, to 95% full in November.
What about charities?
Charities don’t capture property press headlines. But throughout calls with clients and industry contacts I was repeatedly told the same thing – that working from home was great, and there was no hurry to get back to the office. In fact, some people might never go back at all.
Fortunately for me there were some exceptions. The TSP team worked on office acquisitions throughout the year. But even those charities committing to office space took less. The MS Society started out looking for 13,000 sq. ft. but eventually took 8,000 sq. ft. ClientEarth wanted 12,000 sq. ft. but ended up taking 9,000 sq. ft. – even though the charity was growing fast.
But mostly I was having conversations about how to get rid of space. Break options were being gleefully served where available. If leases ended, offices were left, and people worked remotely for the foreseeable. Even if a charity leader was an office evangelist, they were willing to take time out to think about the organisation’s needs. The urgency to rush into a decision was gone.
I also saw charity offices being sold. The pandemic was the final straw for those who owned an aging building; a tempting pile of cash was too much to resist. Charities from Seafarers UK to the Methodist Church put their properties on the market last year. More are already following as 2022 begins. It makes sense for some in a market where prices have remained high, but the occupational side is comparatively weak. Financial reality now outweighs sentimentality and the idea of selling the crown jewels is no longer seems abhorrent to Trustees.
Why are charities so indifferent to the office now?
Charities are highly consultative organisations. This is a strength because employees feel they are listened to. The results of most sentiment surveys indicate that employees want to work flexibly and they want access to an office that to use on their own terms. Charity leaders are listening to this voice and that’s a good thing. But I also think that charities are too cautious and sometimes hesitant to rock the boat.
WFH has meant more time with friends and family. Those lucky enough to have kept their job now have more money saved from fewer train fares, lunches at Pret, and fancy coffee. People have increased agency over their lives. It’s painful when you take that away. Humans are hypersensitive to loss aversion and charity leaders don’t want to be the evil bosses taking those perks away.
Responding to the Great Resignation
But that’s not the whole story. The private sector is taking its human resource more seriously than ever. The ‘great resignation’ has supplanted the ‘war for talent’. The pandemic caused widespread introspection and people have decided that they’re not willing to do a job they don’t like. And those people that love their jobs are probably better paid and better looked after by their employer than they were pre-pandemic. All this means that recruitment has become a nightmare.
The charity sector is not exactly renowned for high salaries and bonuses, so it needs to find another competitive advantage: flexibility. People are seeking more meaning in their working lives. So, could values-based organisations mop-up talent by offering remote-only positions to the increasing number of highly qualified corporate exiles?
The office as a perk
The physical workspace is now being used as a tool to attract and retain talent. This phenomenon – combined with a keener interest in sustainability – has led to a bifurcation in the office market. It’s an idea widely quoted in the property press and means that high-quality offices are the ones being let – at record rents.
Companies are asking their employees to travel to the workplace once again. But to justify the effort, those offices need to be the best spaces possible. They must be collaborative, activity-based spaces that people enjoy and thrive in.
A friend of mine, who is head of property at a tech company, told me they are offering free food, yoga classes, and nights out to draw people back in. It sounds fantastic – but not realistic for charities with limited budgets. Even the large, well-funded charities need to keep a lid on perks. And the prospect of returning to an average office is unappealing and it leaves charities in a bind. They can’t offer the high-quality spaces people now want. The next best thing is to provide flexibility: let employees decide where to work.
Technology and Demand Destruction
Technology has also underpinned the shift. Finance Directors have been forced to pay for new laptops, videoconferencing gear, and cloud platforms. Even the most prehistoric Trustees can run a Zoom call. Truly remote collaboration wasn’t possible before, but it is now.
I’ve seen the need for premises reduce due to this technological change. When I first started at TSP more than 10 years ago, one of my first jobs was to find 16 training centres across London and the South East for an education charity. When the pandemic hit, the sector was once again awash with funding. But there was no corresponding surge in property requirements.
These services are now delivered remotely. The properties that do still exist are in the big towns and cities and they are smaller. They serve fewer people, less often. It shows that charities are no longer acquiring property as a default setting – real thought is going in to whether there is a need to take on the liability. That’s a clear improvement in resource allocation.
I think it’s clear that the 5-day-9-to-5 at the office is dead for most charities. But there are dangers in lunging too far in the other direction, and I think some organisations are making this mistake.
It’s easy to love the extra money freed-up when office space is carved out of the budget. But it will lead to problems if the cuts are too deep. In a sector that skews demographically to Millennials and Gen-Z, how long is it before the lack of social interaction and in-person training has an impact?
We live in a world where access information is easier than ever. Human judgement is critical in this environment and interpersonal skills are even more important. If we obsess over short-term savings, the next generation misses the possibility of developing these core skills. We all remember being mentored and learning from our office elders. It’s not the same over Zoom.
There are ubiquitous mental health issues associated with long term isolation because it’s hard to know when people need help and support. For every senior leader with a comfortable home office, there are probably two millennial flat sharers or young parents struggling to balance work and home life.
Ultimately, charities will need to start adopting the private sector approach. They will still have an office, but it will be smaller. It will be somewhere for staff to go and collaborate, interact, and work quietly if they need to. The space should be as good as it possibly can be. If the footprint and rent is reduced, there is more to spend on soundproof phonebooths, meeting pods, better technology, and collaborative spaces. This is the best outcome for everyone.
We’re not there yet. The sector is still making up its mind about what the future of work will look like before committing. The challenge for leaders is to balance the needs of their people as well as the books. The best charity leaders have realised that the office is an indispensable tool that enhances productivity and fulfils their responsibility to the younger generation. It just needs to be adapted in the right way.
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