If you are thinking about developing an idea for a social enterprise – or you are already running one – it is essential to consider how your future income will be generated. To become self-sustaining, most social enterprises require a mix of income streams including grant-funding, trading, crowd-funding, fundraising and commissioning. Here’s your guide what’s what when it comes to income.
Below, I will outline the routes to income generation, and how your social enterprise can benefit from various resources out there:
Funding
Funding is money secured through grants and is a good way for a venture to get going. As well as subsidising or covering project costs it can be used for research, social impact measurement and organisation development. As grant funding is not a sustainable revenue stream it shouldn’t be wholly relied on, and should instead be used in tandem with other income channels. You can also spend a long time writing funding bids that may or may not be successful.
Trading
Trading is the sale of products and/or services – either to the public (consumers) or to businesses.
We can look at the Hulme Community Garden Centre as an example of income generation through trading. HCG generates the majority of their income by selling plants, trees and various tools, they also sell gifts and ethical products as well as trading room hire where people can rent outdoor areas for events they want to run. They then reinvest their profits to their volunteer programmes and support their environmental and sustainability agendas.
Another example of trading can be located within social enterprise cafes where they sell food, drinks, and snacks. Many social enterprise cafes try to reach a target audience who are interested in supporting a particular cause or group; this could be the younger generation, people who have come into contact with the criminal justice system, and homeless people.
Fundraising
Fundraising offers the advantage of having fewer strings attached than grant funding or commissioning. Because you raise the money yourself you don’t have to worry about eligibility criteria or restricted funds and you have relative freedom in how you spend the money. Different fundraising paths include: donations, crowdfunding, sponsorship, corporate partnerships, membership, e-fundraising, community shares, social impact bonds and ticketed events.
Crowdfunding
Crowdfunding is a way of raising money through the collective efforts of your community, friends, family and wider network. Crowdfunding works by asking a large amount of people for a small amount of money and tends to be most effective when it focusses on a tangible project/goal that the community has an interest in or will benefit from. Various crowdfunding platforms are available to make the task easier and sometimes ‘investors’ are offered some equity or benefit in return for their investment. Find out more in our All About Crowdfunding podcast.
Commissioning
Commissioning might be described as a ‘wholesale’ version of trading, where a client or commissioner is buying from you in bulk in order to achieve their strategic goals. Commissioners might include public sector budget holders in sectors such as health & social care, education, employability, environment/sustainability.
Commissions might include projects or programmes, research or development initiatives or pilots. To get started, think about which problems you could solve (or are already solving) and who (i.e. which bodies or organisations) could this help? Then research their strategic needs and priorities (read up in their strategy documents and policy reports) and consider a) how your services could meet their needs and b) how you can start to build a relationship with them. Find out more about commissioning in the women’s support sector and hear from commissioners in our Commission with Compassion & Conviction podcast.
More resources on Income Generation ***
Flourish has a wide range of resources made available for you to use. If you’d like learn more about income generation, you can get tips and guidance through this Income Generation training webinar.
You can also listen again to our recent discussion panels: Income Generation Stockport – featuring Amanda Fourie and Mel Page (Heatons Post/Drawing Board Productions), Oonagh McDonell (ItsHerStory), Claire Worthington (The Village Web Company) and our own Nickala Torkington (Flourish). Also Income Generation Manchester – this time featuring Grace Dyke (Yellow Jigsaw), Nicki Dickins (Profit for Purpose). Two panels with completely different content, both well worth a listen!
