“What do we want? Sustainability. When do we want it? Soon.”
If public agencies and major grant-funders were a group of protesters walking along the road chanting their philosophies for delivering social change in the UK, that’s the sort of thing they’d be chanting. In most cases, the slightly less snappy follow-up chant would be:
“Whose money do we want it to be paid for with? Someone else’s.”
Sustainability is the current holy grail for the voluntary sector in the UK. The government’s Big Lottery distributed, Transition Fund, awarded cash to organisations to enable them to find ways to survive without lost government funding. For many organisations, social enterprise is one of the suggested routes to that holy grail but clearly both social enterprises, and socially enterprising activities carried out by others, are also themselves mostly still in pursuit of sustainability.
“‘Sustainable funding’ is not simply a question of simply getting better at fundraising or locating one ever-lasting source of income.
We promote an approach that encourages organisations to explore income opportunities across a spectrum of opportunities; from charitable donations at one end of this spectrum, through grants, service level agreements and contracts, to social enterprise activity, trading goods and services. 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.”
The emphasis on diversifying income sources is clearly a sensible one but it’s also one that has the potential to create at least as many problems as it solves.
A couple of these problems are:
- alternative income opportunities are also alternative opportunities to losing more money than you were losing before
- the focus on generating income can often often be at expense, both theoretically and literally, of failing to consider ways to deliver similar outcomes while spending less money (discussed in part two).
I’d really like to have a pound for every local voluntary sector employee or volunteer who has excitedly told me about their plans to fund the activities of their organisation through some form of community café or related catering business. Collecting pounds on that basis would definitely make a more useful contribution to my ‘spectrum of income generation’ than actually opening a community café.
I don’t know whether voluntary sector organisations are unusually bad at running cafés but I do know that cafés are, in a general sense, difficult businesses to make a profit from if you’re not operating either at great scale or with a high degree of specialism. In that context, not knowing what you’re doing and being emotionally committed to running a day centre definitely don’t make things any easier.
I think the, apparently insatiable, drive to open cafes is mostly due to the fact that – when faced with the need to find new sources of income through trading – people in the social sectors (myself included) tend to alight on activities that are (or seem to be) easy to understand and involve people paying for things that are seemingly easy to provide.
We can all make a cup of tea and tea bags are really cheap so we can all run a successful business selling lots of cups of tea. Ours will be even better because we’ll have willing volunteers to make delicious homemade cakes for us in their spare time.
It’s thinking that’s comforting, internally logical and – if you can be bothered to do it – liable to be entirely demolished by conducting a straw poll of your closest friends and immediate family asking the question of whether they’d choose to buy their tea and cake in your community centre rather than Starbucks (other chains are available).
If your friends and family like you enough to tell the truth, your reassurance that your beverages will be 25% of the price of Starbucks’ and that your organisation really needs the money will not change their answer.
Based on the costs of making the services available and likely income generated, it makes far more commercial sense for the owners of struggling independent cafes to attempt to subsidise their activities by getting some training and offering counselling services in a room at the back, than for charities providing counselling services to subsidise their activities with a cafe.
There are clear exceptions here that I’m not talking about. One is those voluntary sector organisations who do a very good job running cafes and catering businesses as part of their social mission that deliver opportunities for people to take initial steps (back) into the job market – and are cross-subsidised with grants, donations and government funding. What these aren’t are ways for the organisation to generate a surplus which can be spent on doing other work.
The other exception – which crosses over with the first – is situation where people do actually know how to run cafes (restaurants such as Fifteen or catering businesses) and set out to run them as proper commercial businesses that deliver a quality service while delivering a profit for social causes and/or social change for employees in the process.
Cafes are the most obvious example but the mistake being made is the attempt to diversify income by delivering a trading activity – it could, equally but probably less expensively, be web-design or knitting jumpers – as add-on to what you really do.
A more sensible but – in terms of initial thinking, at least – more difficult route to sustainability is working out whether it’s possible to diversify your sources of income from things that you either already do, or that you could do based on your track record and the skills, resources and existing partnerships within your organisation. Ideally, things that are more specialised than making a cup of tea or baking a cake.