UnLtd, Charity Bank, NCVO, London Rebuilding Society and Jamie's Farm

When Third Sector last looked into start-up funding, applications were surprisingly low in number and quality. Has this changed?

To some extent, yes, says Jonathan Jenkins, director of ventures at UnLtd, a charity that funds social entrepreneurs. "The main core of our business is grants to early-stage entrepreneurs," he says. 

"And although we're not getting more applications, the quality is definitely improving. There is more understanding that doing good stuff isn't enough in itself; applicants have to be a bit more financially stable."

Other funders seem less optimistic. "Applications for loans are getting better, but they still need a lot of work to turn them into investment-ready propositions," says Malcolm Hayday, chief executive of Charity Bank.

Graham Collins, sustainable funding programme manager at umbrella body the NCVO, agrees. "Some funders say the applicants haven't assessed the market or the risk," he says. "To funders, it's not so much about the idea, but whether the organisation can sustain it in the long term."

Naomi Kingsley, chief executive of London Rebuilding Society, which provides loans to social enterprises in London, says the number of applications has increased by a small amount, but they are not always suitable.

"Applicants are generally presenting us with more difficult plans to finance," she says.

Hayday says the whole concept of social enterprise still causes problems for some organisations. "There are real tussles and tensions between mission and money-making," he says. "It's hard to understand whether this is furthering the charitable objects of an organisation."

Hayday says these tensions are "part of the developmental stage of social enterprise". There is still a long way to go before social enterprise comes into its own.

CASE STUDY: Jamie's Farm, Bath

Jamie's Farm, near Bath, offers short stays on a working farm to young people who are at risk of social exclusion.

It recently received a £15,000 grant from UnLtd - on its second application. Founder Jamie Feilden says: "My first application, in March 2008, wasn't even shortlisted. It was a bit of a shot in the dark because the charity was still at the idea stage.

"By the second time, we were a full-time organisation with a successful fundraising track record and a much clearer idea of what we were doing; we had evidence that it was working and that we needed to carry on.

"I hadn't realised just how important it is to demonstrate to funders that you mean business.

"The grant is given for living costs - essentially, paying my salary. It's £15,000 in four instalments. It takes the pressure off the organisation of having to pay those costs, and means you can get on and run the charity properly."

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