Moving to a sustainable funding approach The funding an organisation needs comes down to what it does, who its users are, and what stage it’s reached in its developmental lifecycle. A stainable funding approach is about using the appropriate income stream(s) to drive development at the appropriate time.Sustainable funding is based on the idea that organisations are most at risk if too much of their funding is concentrated in one source – this could be from one income stream or from one funder. This not only spreads risk, but ensures organisations are best placed to take advantage of emerging trends and opportunities and are able to safeguard their financial future without sacrificing independence or mission.Becoming more sustainable often means making changes in a number of aspects of your organisation. Key to achieving sustainability is an understanding of diverse and durable funding streams available a sound understanding of financial management and strategic planning. Income sources Income sources range from: Gift economy or unrestricted donations This includes community fundraising, events, corporate donations, legacies etc. Grants Grants for specific activities are normally applied for through an application that meets criteria set out by the funder such as public bodies or trusts or foundations. Contracts often to deliver public services – the structured market Voluntary sector organisaitons have rapidly expanded into this area in recent years getting involved in all aspects of delivering public services. Structured markets can also include contracts with other voluntary organisations or with the private sector. Contracts are legally binding agreements and are often secured via a competitive tendering process. Trading goods or services – the open market Many non profit organisations look to develop income through some form of trading or social enterprise activity. Charities are legally permitted to trade, within some limits. There are lots of types of trading that organisations can explore, which can provide valuable unrestricted income. Income Spectrum tool NCVO’s sustainable funding team have produced a free tool – the Income Spectrum to help organisations to analyse their income streams and think about all the different sources available to them. Download NCVO’s Income Spectrum Tool (PDF, 474KB)Download the NCVO’s Income Spectrum Tool (PDF, 2MB) Other options Social investment Social investment or loan finance is relatively new tool for the voluntary sector. Although it’s not an income source but can be used as a financial tool or enabler to help your organisation to grow, develop or manage cash flow effectively.Loans or investment income may be an option where a large sum of money is needed, to bridge gaps between receipt of grant payments, or to enable projects to move forward during the time taken to raise capital from more traditional fundraising methods To explore the main types of social investment so you can decide whether social investment is right for your organisation see our section Social Investment Made Simple. Further help and advice Why not try the KnowHow ‘Sustainable Funding’ online training course?
- Funding and income basics
- Generating income