OPINION: Can you make your funds pay their own way?

GERALDINE PEACOCK, chief executive of the Guide Dogs for the Blind Association

As the voluntary sector plays an increasing role in providing direct services, its long-term sustainability becomes more pressing. This involves using the creative energy that launched charities and applying it to creating financial sustainability. Not an easy task: it means changing from surviving on hand-outs to maintaining independence and developing entrepreneurial activities. We must look into maximising our resources - sweating our assets, in other words.

This can mean many things, such as forming strategic alliances, as Guide Dogs did with The Winged Fellowship, which now runs our holiday programme.

This allowed economies to be made through increased purchasing power and merging two administrative infrastructures.

It can mean mergers, which are on the increase in the sector. Others are looking at setting up holding companies to share infrastructure costs, or exploiting their intellectual property. Many voluntary organisations are selling their specialist knowledge and skills to raise income and awareness. They are also trading, making money from their fixed assets and selling support services. Earning money, rather than "raising funds", is an increasingly important strand of income - and it brings independence.

And why use your money once when you can recycle it? A number of organisations, particularly those with grant-making functions or substantial reserves, are exploring ways to make their money go further. These include providing loan guarantees to enable other groups to access funding they would otherwise be denied. Some are taking equity funding in projects - programme-related investment (PRI) - and receiving both social and financial returns. The Charity Commission has recognised PRI as a legitimate use of funds and has provided guidance based on the recommendations of the Social Investment Task Force. Another option is investing in social venture capital funds or selling infrastructure services, e.g. an in-house lawyer's spare capacity.

This agenda challenges trustees, chief executives, finance directors and investment advisors alike. It requires a significant shift in mind-set, away from risk aversion and dependence, to the promotion of an enterprise culture in which we think laterally to make voluntary organisations' assets work smarter.

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