Generating income to reduce grant dependence
On Thursday 4 September, a group of chief executives and senior staff from grantees supported through the PHF Social Justice programme came together for a learning seminar on ‘Generating Income to Reduce Grant Dependence’. The seminar aimed to enable grantees to learn from peers’ experiences, influence our thinking on the issue, and connect grantees with sources of expertise in the sector. This was the second seminar of a short, informal series; the first, on ‘Spreading and Scaling Practice’, took place in April.
Grantees had a diverse range of relevant experiences. One had started its own clothing range in partnership with a global sportswear brand; one recently opened a shop in Brixton Market; a third is growing through social franchising; and another has, over time, switched from giving away content to maximise the numbers of people reached, to charging for it to generate income.
The session kicked off with a case study from Alastair Wilson, Chief Executive of the School for Social Entrepreneurs (SSE), who described how SSE significantly reduced its reliance on grant funding, while growing turnover from £400k to £2.6m. Alastair highlighted a few key points:
- Income generation is only one element of an overall strategy to increase an organisation’s impact in its target group. It is important for the Chief Executive to consistently reinforce to staff the message that making money enables the organisation to further its social mission.
- It is important to have access to, and learn how to motivate people with skill sets such as target-driven sales, which are not naturally present in charities.
- Charities will need to find or identify champions at both senior and operational levels in their target markets.
- Funders can support grantees’ transition by transforming a grant into a purchase – buying x amount of product in place of funding a post or a project.
A number of other themes emerged in discussion.
Managing corporate partnerships.
One participant noted how corporate partnerships are different from other types of funding: expectations for the relationship are, in the main, negotiated rather than set out by the funder as standard (as often happens with trust and statutory funders). Others reported positive experiences of this type of relationship, saying that they had helped them to understand better their strengths and the power they have as charities, as well as identifying the things they are not best placed to do. They also referenced the importance of clear achievements to engage and motivate corporate supporters. A few organisations had been able to develop relationships outside of CSR departments with budget holders in marketing and human resources, and two noted positive experiences of pro bono legal support.
The value of market research
A second emerging theme was around the value of market research: finding out what people are willing to pay money for (which may not be what you think), and how they perceive the product you are offering. Two organisations had heard uncomfortable truths about work they had invested in by going outside their normal networks; in both cases this led to them making important changes to their marketing. Two organisations had secured grant funding for this kind of scoping and market research.
Income generation takes time
Attendees agreed that it takes at least 18 months or two years to generate any meaningful level of income and/or break-even in an income generation strategy. This is how long it takes to bring relationships to the point of a sale. The Chief Executive is usually involved in major sales; such senior-level relationship building cannot be neglected.
Challenges to ‘productising’ work
Organisations working in holistic ways with vulnerable young people may find it particularly difficult to ‘productise’ their work. PHF grantees often deal with sensitive or unpopular issues. For example, a charity’s support for young people in the criminal justice system, who may have committed serious crimes, can scare off potential supporters. A couple of organisations have worked around this by creating businesses that trade on an aspect of the work (such as sports and martial arts) or commercialise young people’s creative abilities (for instance, a clothing range designed by young people). Others are marketing their knowhow or a successful way of working through consultancy and social franchising.
When successful, income generation activities can grow an organisation’s reach and networks, and create a pool of bought-in customers who can act as advocates and influencers. It is not a source of easy money, and can risk being a distraction or creating tensions within an organisation. Overall, though, grantees were enthusiastic about the potential to learn from each others’ experiences and the value of appropriate professional input, and hopeful about the potential for the future.
198 Contemporary Arts and Learning is a South London charity whose mission to advance public interest in the visual arts, as well as nurture and support the career of emerging, under-represented artists. In 2010 it started HustleBucks, a youth-led design enterprise with retail premises in Brixton Market. It is developing plans to partner with other organisations In Lambeth to create an arts and enterprise production space and commercial showcase for young people’s creativity in Brixton.
Body & Soul (host venue) is dedicated to transforming the lives of children, teenagers and families living with, or affected by HIV. It started generating income in 2012, initially through hiring out space for events in its central London building. Gradually it has built relationships with health commissioners and corporates, offering young people-led training on topics such as empathy.
Chance UK offers early-intervention mentoring for 5-11 year olds with behavioural difficulties across London and in other areas of the UK. It is looking into options to generate income from new activities, to fund its core child mentoring programme and support to the parents/carers of children who are being mentored.
Changing Tunes uses music teaching, rehearsing, recording, performance, improvisation and composition to aid the rehabilitation of prisoners and ex-prisoners. It is developing its plans to generate income from its activities.
Fight for Peace uses boxing & martial arts combined with education and personal development to realise the potential of young people in communities that suffer from conflict and violence; it started in Rio and opened in London in 2007. In 2011 Fight for Peace’s founder launched LUTA, a new global sports and martial arts clothing brand, which will give 50% of its profits to the charity.
Liberty Needs Glasses CIC is a new social enterprise which will work with young offenders on day release to train them in optics and create a commercial business-to-business optical lab. Its line of sunglasses is available from http://www.mahm.co.uk/.
London Youth supports a network of 400 diverse community youth organisations across the capital, delivering programmes within and through the network. It generates significant income through running an outdoor activity centre in the New Forest.
MAC-UK works with young people affected by serious youth violence to enable them to access mental health support through youth-led projects. It has pursued a couple of options for income generation, and is developing a model to mainstream its practice within the next five years.
Tender works to promote healthy relationships and engage young people in the prevention of abuse and violence, using theatre and the arts. In 2012 it began a national expansion through social franchising, with the help of the International Centre for Social Franchising.
Working with Men works with young, at-risk men to help them develop positive models of male identity and engagement. It started generating income in 2012, when it realised that some of its courses for fathers attract middle-class professionals with the ability to pay.
Alastair Wilson, School for Social Entrepreneurs
Having worked extensively in the private sector, Alastair became a student of the School for Social Entrepreneurs (SSE) in 1998. Having established and run his own project, he returned to SSE as Development Director before moving into the role of CEO in 2004.
SSE’s core service is a year-long ‘action learning’ programme supporting early-stage social entrepreneurs from a wide range of backgrounds. SSE additionally offers specialist shorter programmes e.g. Social Franchising, Public sector spin outs and Trading for growth. SSE is also scheduled to give out over £1million annually in grants to social entrepreneurs for the next 5 years.
Over 1,200 social entrepreneurs have completed SSE programmes, and there are now nine SSE franchises in the UK and international schools in Australia, Canada and Ireland.
Alastair is also a trustee of the Sheila McKechnie Foundation.
Attendees have expressed willingness to be contacted for more information about their work on this topic. If you are a PHF grantee and wish to be put in touch, please contact Susie Dye.