Tag Archive for: financial sustainability

Income diversification discussion for voluntary sector groups

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Background

Support Cambridgeshire ran 2 discussion groups with voluntary sector groups considering the barriers to diversifying their income streams and discussing solutions to build more sustainable futures.

Group 1: comprised 4 smaller organisations with incomes of less than £50k per annum. The groups were a mixture of charities and CICs, all serving different local communities from a variety of perspectives, The current main source of income of for each organisation was grants, with some donations, sales, and member/subscription fees

Group 2: comprised 4 registered charities with turnovers exceeding £100k pa. Their main income sources were grants and contracts and in one case major donors. The funding streams engaged with were:

  • Grants
  • Contracts
  • One-off donations from individuals/online/text/bucket collections
  • Regular donations from individuals through direct debits
  • Large donations from individuals
  • Fundraising via organisational events
  • Fundraising by supporters
  • Sponsorship and business donations
  • Legacy giving
  • Trading through sale of goods and services
  • Donations from other organisations eg Rotary Club

Challenges to diversifying income

We asked the groups about the challenges they are facing in diversifying their income and what ideas they had around the support needed to help them generate more sustainable income.

The key challenges identified were:

  • Lack of capacity
  • Concerns around risk
  • Legal restrictions
  • Need to prioritise beneficiaries
  • Demands made by funders
  • Demands from business supporters

Lack of capacity.  Both in terms of staff time and relevant expertise to find ways to diversify income

All the groups cited lack of capacity as an issue.  The smaller organisations highlighted the need to recruit more volunteers and in particular trustees with the right skills.  They also mentioned the need to offer training and development support for their (often voluntary) leadership teams.

‘The effort it takes to raise money through those kinds of things is so high I think you’ve got to be a charity of a certain size where you’re able to cover those fixed costs.  When you’re this small you’re adding to someone’s role creating a real burden’

Concerns around risk.  Groups are hesitant to explore new income streams due to fear of financial and operational risks.

‘So often these events (organisational fundraisers) represent a massive gamble in terms of resource and costs and certainly don’t deliver the hoped for income gains.’ 

‘We are reliant on what we can raise, we can’t borrow or attract investment.  The more successful we are in meeting our clients’ needs the less funds we have.’

  • The need to prioritise needs of beneficiaries before all else

‘We must be sensitive and respectful about the way we portray our beneficiaries. They don’t want to be labelled disadvantaged.’

‘The absolute priority is the experience for the coworker so that is above and beyond anything that we produce.’

Demands made by funders both around application hurdles, geographic boundaries and reporting

‘There is often a really high level of work for a very low level of donation’

‘We aim to support refugees but the funding we have been given will only support those refugees within a certain local authority boundary, whereas refugees live all over Cambridgeshire, on top of that we get referrals from social prescribers that we refuse because the person doesn’t come from the area we are funded’

Demands from business supporters that can conflict with a group’s mission or operational capabilities

‘ I learned my lesson a bit about over promising to corporates you’ve really got to get crystal clear on how much you can actually deliver for what they’re giving you.’

The smaller organisations also highlighted:

  • The volunteers and trustees supporting the organisation did not have the skills or time to effectively support the growth of the organisation, leading to inconsistent support.
  • Perception that Cambridge organisations were more likely to receive donations than organisation located outside of the City- how could that culture of giving be extended across the county?

How to address the challenges

  • Provide greater access to expert support and guidance
  • Develop more opportunities for networks and peer support learning
  • Encourage the right kind of business support
  • Change the dynamic with grant funders.
  • Create a county wide ‘social value’ brand for Cambridgeshire

Provide greater access to expert support and guidance:

  • Legal/Finance support around trading, legacy and payroll giving
  • Financial guidance and training around budgeting and pricing strategies
  • Fundraising expertise and help with fundraising event logistics
  • Strategic development support.

‘We need to be having more conversations about Legacy giving but I find that most of the resources out there about it are pitched at much larger charities.’

Develop networking and peer support learning and action groups

  • Large scale events that bring in a wide range of potential, customers, partners, collaborators and experts to network and to learn from
  • Peer networks such as small charity CEO networks

Encourage the right kind of business support

The smaller organisations highlighted building relationships with businesses via business networks and The Get Synergised platform to help broker relationships.

The larger organisations had all experience of receiving support and income from businesses and want to improve the way voluntary organisations and business interact by:

  • Promoting the confidence of charity leaders in asking major donors and businesses for money without creating expectations that add additional demands on limited resources

‘We worry we aren’t qualified to talk to potential major donors but our knowledge of delivering front line services makes us passionate and credible.  This is our superpower.’

‘Sometimes it’s enough just to say can you give us some money – we don’t have to sugarcoat it or negotiate or discuss what you’ll get in return’

  • Persuading business to recognise the value of charity time and expertise and consider payroll giving

‘We’ve been lucky in having a few key businesspeople who’ve then been very generous with their contacts and that’s the way that we have become a little bit more known and garnered business donations.  The great thing about business donations from our point of view is that they are in the main unrestricted.’

‘Promoting your charity as an option for payroll giving is a really good one to put back to corporates.’

  • Promote more opportunities for collaboration with key institutions including universities

Change the dynamic with grant funders Title: Supporting Income Diversification for Voluntary Sector Groups Main Content: • Introduction: o Support Cambridgeshire conducted two focus groups with voluntary sector charities and CICs. The goal was to explore barriers to income diversification, potential solutions, and the future if no action is taken. • Barriers: o Lack of capacity o Concerns around risk o Legal restrictions o Need to prioritize beneficiaries over income o Demands made by funders o Demands from business supporters • Solutions: o Provide access to expert support and guidance o Develop more networks and peer support learning o Encourage appropriate business support o Change the dynamic with grant funders o Create a county-wide "social value" brand • The Future Without Change: o Reduced capacity to meet beneficiary needs o Staff burnout o Smaller organizations may not survive • Impact of Session: o Participants found the sessions very or extremely useful. They gained valuable insights and ideas to benefit their organizations, particularly regarding income diversification. The sessions also provided an opportunity to share experiences and best practices. Visual Elements: • Icons illustrating each section, such as a magnifying glass, a speech bubble, and a checkmark, are used to reinforce the points visually. The infographic uses a colour scheme of teal, orange, yellow, and green with bold and clear fonts.

Advocate for grant makers to adopt more flexible, long-term funding strategies that support capacity building and income generation Persuade funders to make their requirements proportionate.

Creating a countywide ‘social value’ brand to support individual marketing

County marketing to build a social value network in Cambridgeshire leveraging collective strength and raising the profile of their work within the county.

The future without change

We asked the groups what are the consequences of continuing with their existing funding models and where did they think they would be in 18 months’ time?  The larger organisations expected to still be in existence in 18 months’ time but had concerns about their capacity to deliver services and the wellbeing of their staff and volunteers.  The smaller organisations agreed that in the medium term they needed to change their current funding model if they were to survive.

The groups focussed on:

  • Staff burnout

‘Something’s got to shift either we have to grow (and take on more capacity and expertise) or shrink.  We can’t sustain where we are now.’

‘I am the only person who writes the funds, manages and reports on them and it is only a small part of my job – burnout is a concern’

  • The dangers of having an inbuilt cycle of short-term planning

‘Our horizons are short term.  I don’t have a road map into next year, it is hand to mouth all the time.’

‘We will carry on, but we have a crumbling building that needs work and issues with keeping our staff motivated.’

 

Impact of focus group sessions

The groups’ feedback was that the sessions were very useful or extremely useful and agreed they had gained something to benefit their organisations.  They welcomed the opportunity to share experiences and best practice and took away income diversification ideas to discuss with their own organisations.

‘It was reassuring learning about the issues that other managers were experiencing, and the similarity with mine! Particular approaches to fundraising were especially useful and the commonality around the balancing act of being both inclusive and money focused.’

If you are interested in discussing ideas around income diversification for your not for profit organisation, please get in touch: enquiries@cambridgecvs.org.uk

Let’s talk about trading

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We recently hosted an event – one of three this summer exploring funding diversification for charities.  The focus of this event was on trading.  We kicked off with a presentation from Livia Velicu – an Associate in the Charity and Social Enterprise team at Bates Wells, followed by presentations from three local charities who are trading or in the process of developing their ideas on trading.

Livia gave us a whistle stop tour of charities and trading looking at the legal basis on which charities can trade without creating a trading subsidiary.  She then went on to explain when it might be advantageous to set up a trading subsidiary and the pros and cons of doing so.  You can watch a recording of Livia’s presentation here.

The charities sharing their experiences around trading were:

Cambridge Community Arts (CCA) – a social inclusion charity that uses art place-based activities to support personal growth, improve health and wellbeing.

The Kite Trust – who work to support the wellbeing and creativity of LGBTQ+ young people in Cambridgeshire and Peterborough.

Romsey Mill – who are committed to overcoming disadvantage, injustice and social inclusion with young people, children and families across Cambridgeshire and into Peterborough.

We asked each charity:

– what they do at present by way of trading

– the contribution it makes to their charitable mission.

– how they see trading in the context of their funding mix now and in the future

CCA’s new CEO Emily Jolley shared that her charity is at an early stage in their trading journey.  Historically they have obtained most of their income from contracts with some trading income derived from learners contributing to fees.  Their main contract is coming to an end which has led the team to re-evaluate their approach to trading income.  Trading plans include looking to develop workshops for companies around employee engagement and wellbeing, and running one off workshops for paying learners.

Emily went on to conclude that aside from the need to develop inhouse expertise and delivery models to make a success of trading, there were barriers to overcome towards charities looking to raise income and that this needed to be addressed.

The Kite Trust’s CEO Pip Gardner shared that around 20% of their income comes from primary purpose trading.  There are 3 strands to this:

  1. Merchandising which makes a minimal contribution.
  1. Work with schools – originally local authority grant funded, the Rainbow Flag Award is a national programme which The Kite trust run in partnership with charities from elsewhere in the country.  The programme is set up to focus on positive LGBT+ inclusion and to tackle LGBT phobic bullying in schools and is funded by fees from schools.  The Kite Trust views this programme as aligned with their charitable purpose and is run to break even rather make profit as they recognise the limits on school budgets.
  1. Training consultancy – after a slow and unsteady start (thanks to the pandemic) this income strand is starting to yield income – the target is 5% of the charity’s turnover.  To develop training consultancy income the charity has made significant investment in developing a bank of associate trainers (from a wide range of backgrounds) and recruited staff specifically to manage the programme.  Early in the process the charity was able to secure a grant to build capacity for the development of this funding stream which helped limit some of their financial liability.  The Kite Trust is currently looking to develop a business plan with systems, processes and marketing to scale up the training consultancy programme.

Romsey Mill’s CEO Neil Perry outlined that at £300k, trading represents around 17% of his charity’s income.  The main areas of trading activity are:

  • Romsey Mill’s charity shop on Mill Road
  • Cara Coffee social enterprise coffee shop in Shelford
  • Hall hire from the three local halls that the charity manages
  • Some training and resources sold to other organisations.

Romsey Mill’s approach to trading is reflective of the relational rather than transactional approach the charity takes to its activities.  They look for trading to bring together community benefit including valuable volunteering experiences.  Neil highlighted the importance of looking for capital funding to help set up any enterprise rather than risking a charity’s own reserves.  As Neil made clear, trading is ‘not a pot of gold’ it is resource and time intensive – Cara Coffee after several years now makes a £9,000 surplus but this is in large part because the café operates rent free.

Neil recommended that organisations considering trading:

  • Review their current income mix
  • Learn from others and be prepared to innovate
  • Be clear about their ideal income mix and their organisation’s approach to risk
  • Be realistic about timescales and results.

Looking to the future Romsey Mill are open to developing further social enterprises and are considering developing their knowledge and experience products.

To hear much more from the three charities involved in the event you can see a recording here.

If you are interested in discussing ideas around income diversification for your not for profit organisation, please get in touch with us at enquiries@cambridgecvs.org.uk