Charities with a trading arm 'are more likely to get funding'

Charities should consider setting up social enterprise trading arms to improve their chances of securing funding from foundations, according to Uday Thakkar, director of social enterprise consultancy Red Ochre.

Thakkar told delegates yesterday that funders looked increasingly favourably on charities that earned income through a trading arm because they were seen as being more sustainable.

Some charities that had been turned down for funding were awarded a larger grant when they reapplied after launching a trading arm, he said.

Setting up a social enterprise could also help establish a strong market position in the face of increased competition for contracts.

"Charities could end up in a vulnerable position because many services that they formerly provided for free are now being paid for," said Thakkar. He warned that potential funders might be unwilling to give a grant or donation if other organisations were getting contracts from local authorities, primary care trusts or the Government to provide similar services.

Thakkar also said now was a good time to take advantage of unprecedented government support for social enterprises. However, he said charities should act quickly because funding is unlikely to last for longer than the next two years.

"There are millions of pounds sloshing around government departments right now, but the chances are that will come to an end soon," he said. "If you're thinking of setting up a social enterprise, now is the time."
Thakkar added that setting up enterprises was best suited to charities that wanted to have a social impact that was difficult to achieve as a charity.

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