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Why companies should follow Nuffield Health’s example

It was pea and ham hock soup and fine wine at Nuffield Health’s annual general meeting held at The Royal Automobile Club in Pall Mall on Wednesday.

And why not? The charity, which runs private hospitals and gyms, has had a very good year.   

Its annual accounts published earlier this week show that turnover increased to £645m in 2012 and its operating surplus increased 25 per cent to £23m.

It has also launched a £15m retail bond that will pay an impressive annual fixed-rate return of six per cent over the next five years.

All this has been achieved against a backdrop of turbulence in the NHS, one of its main clients, and consumers tightening their spending on expenses such as gyms.

At a time when many charities are struggling to maintain their income from their traditional fundraising activities, Nuffield certainly stands out.

But perhaps the biggest lessons aren’t for the charity sector, but for big business.

To the casual observer, Nuffield operates much like a large business: it charges market rates for its most of its services and competes for customers and patients by offering high levels of service.

Where it differs from your average company is that it has no shareholders to appease. Instead, any profits are reinvested to raise standards of care and to provide access to its health services for those who wouldn’t ordinarily be able to afford it. It’s a business with a clear social mission.

A chat with David Mobbs, group chief executive of Nuffield, over lunch reveals his surprise that more companies don’t consider becoming charities. In an age when an increasing number of consumers expect the organisations they buy from to operate in an ethical way, the charitable model could make good business sense. Not only that,  but it could bring significant social benefits if organisations with hefty financial clout reinvest their profits for the good of wider society.

Take note Google, Amazon et al.