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.