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.

2. 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.

3. 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