Ask any charity CEO what their biggest challenge is and you are very likely to get ‘funding’ as the response. With increased competition for funding, having a sustainable and reliable income source can feel like more and more of an unachievable feat.
At a recent workshop we confronted this challenge with some in depth discussion and analysis of potential solutions. Here are four great tips to bear in mind.
1. In order to grow your figures you need to know your figures
Getting a solid grasp around your income and expenditure gives you a solid base to start from, and specifies any precise gap you need to fill. It’s important to know how much it costs you to provide your services – in order to have control over your numbers. This applies equally to the board of trustees. Ensure the board are engaged with and fully understand the finances, by providing clear figures – using the traffic light system to highlight any risks in finance is a useful tool.
Ensure you are using the correct accounting package (Sage, Quick Books etc.) for your organisation. Paxton have a package specifically tailored for charities. For more information around what software is available check out IT For Charities.
2. Understand what new funders want
Once you have an understanding of your cost base and what you need to either sustain or grow, you can look at how you can diversify your income stream, to avoid reliance on one funder. With demand increasing, it is important to know what funders are looking for.
Philippa Weston from the Garfield Weston Foundation advised that funders want to be inspired and have clarity of purpose. Is your charity addressing a genuine need? Is it offering an effective solution? Does it have the capability to deliver the funder’s objectives? Most importantly, how will you build a successful relationship?
3. Explore social investment, but tread carefully
Other ways of approaching diversifying income includes social investment. This can help to expand and grow existing services. However it can be a complex process and is not always suitable for smaller charities. Investors expect a return both financially and in social impact benefits. Trading arms can help grow unrestricted reserves and reduce reliance on funding however, they can be complex and difficult to set up without the right skills, experience and resources.
4. Think about how to get the most out of your existing supporters
Membership schemes can build a reliable income source and help grow an additional supporters’ and advocates’ network. However, it’s worth bearing in mind that managing membership schemes can use up a lot of organisational resources. The crowd-funding route is relatively new and has been used successfully to get capital projects off the ground. It also helps drive brand awareness but again, can be time-consuming and unpredictable.
There is, of course, no magic bullet for funding problems – but a few ideas can go a long way.
By Miriam Cunningham and Richard Moore. Miriam and Richard are Project Managers at Pilotlight.
