6 simple steps towards diversifying your income

6 simple steps towards diversifying your income

The FSI’s Pauline Broomhead outlines six innovative ways your charity can raise funds

 

In times of economic uncertainty, when the usual sources of income are not guaranteed, increasing and maximising your assets is more important than ever. For small charities, diversifying income is particularly challenging as they struggle to balance the need for funds with ongoing and vital service delivery.

But steps can be taken to ensure every opportunity to raise essential funding is explored. Here are six tips to guide you through the process.

 

1. Take stock:

You need to know your starting point before you can plan where you want to end up. Take a good look at your charity to determine your income-generating strengths. Are you an organisation that would be attractive to, and has the resources to, secure funding from voluntary sources? And, if so, which ones? Or are you an organisation that needs to look beyond voluntary funding to income from statutory (contracts) or earned commercial sources? Knowing your organisation’s funding audience will allow a small charity to resource the areas of funding that will bring it a greater return on its fundraising investment.

 

2. Get the whole team involved:

This isn’t a job for one person and in small charities, where resources are tight, there is a risk that one person takes on this responsibility. So include as many people as possible: trustees, staff, volunteers, current donors and beneficiaries. We saw a great example of this recently where a small charity held a Dragons’ Den event. Staff, volunteers and trustees pitched their income-generating ideas to a panel comprising trustees, a beneficiary and the CEO. The chosen idea secured a small investment, plus expertise and dedicated staff time, to get the idea off the ground. These are three ingredients that it’s important not to ignore – investment in fundraising is vital to its ultimate success.

 

3. Work your assets:

At the FSI, we encourage small charities to identify how they can use their resources to develop additional income streams. This might be developing a ‘mission-based enterprise’ (taking what you already deliver to a new market or audience or securing additional funding from a commercial source) or developing an ‘asset-based enterprise’ (maximising your buildings commercial potential by hiring out meeting rooms or letting it out at times when it is not used by beneficiaries). A further avenue of income is the development of an ‘intellectual-based enterprise’: maximising your intellectual property or knowledge. An innovative example of this is 15Billion, a youth organisation working in east London. They developed a training course and DVD, made and delivered by young people, aimed at training youth workers in communication and engagement skills. This is now a product that they sell into other youth charities and statutory agencies.

 

4. Find your hidden treasure:

Personal referrals are a great way to find new sources of income, so draw on all of the expertise available to you. Start with ‘treasure mapping’ – it’s a great tool to identify the networks and contacts available to your charity. There are lots of ways to do this but, at its most simple, all you need is a flipchart, some pens and the right people in the room – namely the ones who can help you identify contacts for funding opportunities. This isn’t a one-off exercise, either. It can be ongoing research and exploration to help you build your network of funders.

 

5. Review your charging models:

Although, ideally, we would all offer our services free of charge, remaining open to reviewing charging models is essential. For example, you could offer a tiered pricing structure, in which those who are most vulnerable continue to get free access to services, but those who are able to pay either pay a subsidised rate or the full commercial value of the services. This model opens up new revenue streams to the charity. A solid business plan for the full commercial charging model could attract investors, whether social investors or fully commercial lenders. Introducing charging for services that have previously been free is challenging, but remembering the reason behind the change – that you are protecting the delivery of long-term services to the most vulnerable group of beneficiaries – will help keep it in perspective.

 

6. Get the skills you need for success:

There are lots of challenges for small charities exploring new income sources, but a lack of skills needn’t be one of them. At the FSI we provide a huge range of support including training, advice clinics, conferences, and even fundraising initiatives such as our annual Great Big Small Charity Car Draw. Our training courses cover key fund development and fundraising methodologies. So whether you are exploring a major donor programme, trying to develop corporate relationships or looking to develop an earned income stream, we have something for you.

 

Pauline Broomhead is CEO of the Foundation for Social Improvement

This article first appeared in The Fundraiser magazine, Issue 24, December 2012

Get the latest fundraising advice and insight

Sign me up