Why does the VCS need to diversify their income streams?

Is your organisation reliant on a small number of funders?  Have you ever thought about what might happen if those funders disappear and where that leaves your organisation?  It is a scary thought for most of us, when we have to work pretty hard just to attract the funding we can acquire. 

The Foundation of Social Improvement produces a report “Pulse of the Sector” which looks at their Small Charity Index.  This has shown that income to small charities is static, whilst as many you know, there is an increase in the demand for services.  An increasing number of small charities are having to dip into their reserves to continue to meet the needs of their beneficiaries.  We ourselves have noticed this whilst working on the research for Worcestershire Local Enterprise Partnership around the economic benefit of the VCS.

So what can you do?  There is often talk of trading to help with this.  Alongside applying for grants and fundraising, many VCS organisation need to consider how they can increase their earned income by various forms of trading. 

Some of you already compete to win tenders and contracts to deliver statutory funded services.  Its hard work, but usually worth the many hours it takes in putting a tender together.  So what else could you do?  You might all be familiar with the charity shop on the high street, and perhaps the second hand furniture warehouses that provide great, serviceable goods at very reasonable prices.  This is certainly one way of earning income, and some charities and social enterprises do very well from this, but some struggle.  Getting into retail is a whole new ballgame which takes new skills and new thinking. 

There are also the options of looking at what else you can do to earn income, and some charities have thought about providing services, some of which used to be free to the end user, and now need to be paid for by clients and beneficiaries.

Taking a look at your opportunities and current resources can be difficult.  Getting enough distance between your core work and what else you can do to generate income, probably needs a little objectivity.  Your trustees and directors can be of real help here as they bring fresh perspective.

You might also consider bringing some external help in.  This is where we have decided to develop our services.  We realise how difficult it can be to do this on your own, and as a social enterprise ourselves, we appreciate the difficult climate you are working in and the huge range of skills you need to tackle all of the issues you have in your organisation.

Please think about your options to increase your sustainability by diversifying your income strands.  If you need some help, think about contacting us for an informal free of charge conversation to look at your next steps on suef@unlocking-enterprise.org.uk