With consumer markets facing sluggish demand and the public sector shedding jobs, these are testing times for many UK organisations. Doing ‘more with less’, focusing on priorities and motivating the workforce will all be watchwords in the days ahead.

While charities and not-for-profits will also face challenges in current times they are perhaps better placed than many to weather the storm. As the Schumpeter column in this week’s ‘Economist’ points out, many of the techniques used in third sector organisations are ones other parts of the economy would be wise employ.

The article cites the recent book by American Nancy Lublin, ‘Zilch: The Power of Zero in Business,’ to show how the passion and professionalism of non-profits often outshines that of other sectors.

Knowing why you’re in business

With many public sector bodies facing funding cuts of up to 25% there is an urgent need to identify their core purpose. Why do they exist? Where can they best make a difference? Where should resources be targeted?

For most charities, the mission and driving zeal of the organisation is usually strikingly clear. So clear, they attract volunteers and donors that are willing to line up behind the cause and give up their own time and money. Keeping all stakeholders focused on the organisation’s raison d’être (especially if it’s growing) is something certain public bodies - with inflated budgets and (often) ambitions – have clearly lost.

Being lean and mean

Most charitable organisations are small – typically 2-3 person ‘micro enterprises’, with many being small and medium sized. They are used to doing without expensive support systems and departments, and cast a wary eye on anything approaching excessive management and control. Empowerment of staff and volunteers is therefore a big thing - why crush their enthusiasm anyway with excessive management?

As Ms Lublin points out, these are often therefore highlight efficient organisations, whose resources are overwhelmingly concentrated on areas of added value activity.

Motivating and engaging people

It’s long been said that you can learn a lot about human motivation when working with a volunteer workforce. Without the threat of job loss, or ability to offer financial incentives, the challenges really start as to how to engage people’s hearts and minds and fire them up to do a particular task. Few know about this better than those running charities.

In an economy where many people are facing year-on-year wages freezes (or cuts), as well as possible job losses, keeping up morale and creating a positive esprit de corps will test the most people-centre of managers. Learning some tricks from not-for-profit organisations could well be in order here.

And we’re also in the age of Wikinomics!

Many technological and social developments in recent years have helped engender a culture of online collaboration that is highly sympathetic with many charitable movements.

As Tapscott and Williams point out in their 2007 book ‘Wikinomics: How mass collaboration changes everything’, thanks to the latest generation of Web technologies, we are increasingly living in a participatory economy. It is a world where workers operate freely across organisational boundaries and ‘in which customers are happy to ‘co-produce’ products, from user generated Web content and through to production of open source computer software.

The same spirit and set of principles that make not-for-profits successful (sharing, collaborating, volunteering) are also helping organisations - many of them private – to innovate, improve efficiency and stay closer to their customers.

Indeed, a more digital third sector could prove to be the most exciting place to be in the years to come – with powerful lessons for all parts of the economy.

What’s often most exciting about new technology – the Web in particular – is not the new gadgets it ushers in; nor even the new user channels it brings.

Perhaps more profound are the ways it shakes up established ways of doing things. This is all the more interesting when such developments playfully interweave other innovations in new and unanticipated ways.

This is happening, for instance, in the way today’s Web technologies and online services are enabling changes in the way we pay for things and move money about.

For the most part, e-commerce would be inconceivable without the ability to digitalise payments using debit and credit cards. Online systems such as WorldPay have oiled the wheels of online shopping and donating, providing a means of integrating Websites and payment systems.

But with the rise of new financial players such as PayPal - particularly once it opened its code up to outside developers - a new wave of creativity has been kicked off.

1 + 1 makes 3 (or more, or £ billions)

Today, PayPal is on the road to being a major global bank. While its financial flows and transactions may still be small compared to the established players, its growing share of the market and innovative services make it a strategic threat to the big boys.

Now there’s a thought. No more waiting days for the banks to push money sluggishly around, no more creaming off bank fees; just the immediate, frictionless flow of money.

Okay, that’s interesting enough, but what’s even more attractive is the possibility to combine this with new services such as Twitter. Which is exactly what TwitPay has done, allowing for money to be moved between users’ PayPal accounts simply by using their Twitter IDs. RT2Give provides an online giving version of this, supporting rapid fundraising.

The new face of Banking?

It’s even been suggested that Facebook could profit from its massive network of users to get into the banking business, and indeed is already building financial mechanisms that could eventually lead to £ Billions cascading around and between networks of ‘friends’.

In the UK www.zopa.com has sought to cut out the banks by allowing lenders and borrows to come together via the Internet. Lenders choose the amounts they wish to lend, the sort of (credit rated) customer they want to lend to, and they are duly rewarded with corresponding rates of interest – which are promised to be better than the banks. (Out of interest, risk is mitigating by spreading individual customers across a range of borrows.)

What next, mobile money?

Indeed…and it’s already here. Take Obopay, for instance – a service that allows you to transfer money via mobile phones, which can then be downloaded to a bank account or prepaid MasterCard (US only at the moment).

So what are future possibilities?

Once Web applications are combined with online (PayPal-type) accounts, subsequently linked to mobile divides, integrated again with new Web technologies and thrown into a network of social contacts (of perhaps millions), the possibilities are endless as to what happens next.

We can imagine a world in which Facebook groups, linked to special interests and causes, are targeted to respond to emergencies (think Haiti). Within minutes you might have thousands or millions of pounds flooding (virtually transaction free) into an online account, ready to be transferred instantly to the part of the world that needs it most.

On the business-to-business side, there is the chance of seamless, Web-based applications for invoice processing, again with money changing hands more quickly and efficiently, and with less of the banks taking their share.

One thing’s for sure, things will probably happen fast and no doubt where you least expect it.