Funding story: Sustainable funding

Generating income is the holy grail for many charities, but doing it in an original way is a huge challenge.

'Income generation' has become one of the many things every third sector organisation is under pressure to achieve. We all have something to sell, we're told; and if we sell it, that means grant funding becomes much less crucial. But is that really the case?

"If they look carefully, most organisations do have a trading idea," says Charmaine Sainsbury, sustainable funding officer at the NCVO. She points out that this doesn't mean they should replace grants, but that they should certainly supplement them.

"It's never a good idea to rely on just one source of income," she says.

"And trading produces unrestricted income - you can spend it on whatever you like."

The NCVO is so committed to this that it is offering its own - very small - grants to organisations that have already started generating their own income. The condition is that other bodies can visit them and find out how they're doing it.

It is an obviously good idea, cutting dependency on funders, getting a mixed income and possibly finding new areas to involve service users.

"We want our bursary scheme to help people visit those who've made mistakes and find out how not to repeat them," Sainsbury says. "They can find out what skills they need if they do have a trading idea."

But Mark Howland, head of marketing at Charity Bank, says coming up with an original idea is a challenge. "People tend to do things with a proven model," he says. "There's a lot to be said for that, because it allows you to get round the skills issue, but it tends to push you into certain activities - charity shops, furniture recycling, community cafes and so on."

Sarah McGeehan, deputy chief executive of the Community Development Finance Association, says: "You can go and see someone selling a similar service to yours, but that doesn't mean you can automatically do what they're doing. You need to develop your own customer base, your own market awareness, your own financing infrastructure - and the skills."

Howland concludes: "Income generation isn't appropriate for all organisations. If you happen to have really good skills in two or three things directly related to your mission but which may not transfer to generating income, it doesn't mean you're inadequate." Sometimes, grants have to remain the chief option.

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