Copyright ©2022 Registered charity no. 1175616 in England and Wales
FINDING FUNDING
So you’re organisation is curated, maybe it’s long standing, but we all need money to function. Below is an outline of the different types of funding you might come across as well as some links to further explanations.
If you want to check what funding is currently open see Shine’s managed funding page here or our list of funding resources here for external funding opportunities.
If you need some help and advice, feel free to get in touch with our funding team [email protected] or visit our useful contacts page.
Types of Funding
- Grants
- Fundraising from individuals and corporations
- Voluntary income (income given freely by a donor whether from an individual, trust, foundation, the government, or a private company)
- Earned income (income received in return for providing a service. This includes contract funding.)
- Investments.
Questions to Get You Started
There are a few key questions you need to consider before establishing your group:
- Why should the group exist and why is it needed now?
- What is the group going to do?
- Which geographical area will the group cover?
- Who is the group going to help?
Once you have some answers, do some research. You may find that there are organisations already doing the work you’d like to do. You don’t want to duplicate effort unnecessarily. If that is the case you could look to work with existing organisations in other ways.
Consider if a Charity Is The Right Step
Make sure you have the time and commitment needed to set up a new organisation. You’ll need to meet certain regulatory and legal requirements depending on the type of organisation you set up. These can be difficult to learn about and you’ll need time to understand new information and processes. The type of organisation you become differ in terms of their regulations, restrictions, and legal structure. From charities to social enterprises, and then within these, there can be a further degree of classification. We strongly advise that you take a look at a more elaborate description of the types of organisations and each of their individual pro’s and con’s by visiting the NCVO website and the alternative options to a charity on the Charity Commission website.
What to Consider
- What do you need funds for?
- Who is available to get involved in fundraising?
- How much time have you got to spend on it?
- Which of these types of funding will work best for you?
- What skills are needed for each type of funding or income?
- What expectations do they create that you will need to meet?
- Do you have a mix of income that is sustainable?
- Do you have a bank account with two or more signatories or could you get one easily for your your organisation?
- Do you have a constitution or set of rules that you use to run your organisation?
- Do you know what type of organisation you are?
Types of Funder
- Charitable funding is the money that charitable organisations – mostly trusts and foundations – give to organisations, to deliver projects and activities that further their charitable aims.
- Statutory funding is the money that government pays organisations to deliver projects and activities that provide public services.
Contract Funding
This is money that a funder agrees to pay to an organisation in return for the supply of certain services.
Most contract funding comes from government departments, local authorities, and other public sector organisations. However, a small number of voluntary organisations receive some funding through contracts with the private sector.
In theory, if an organisation doesn’t use all of the funding it receives through a contract to deliver the agreed services, it can keep this unspent funding as profit. In reality, organisations delivering under a government contract or sub-contract can struggle to achieve full cost recovery.
Grant Funding
This is money that is awarded to an organisation to support its activities. It’s given, as least partly, in advance. Some grant funding comes with no strings attached, but often, funders award a grant for specific use, such as a one-off project. This means that the grant funding is restricted, and can only be used for that purpose. While the grant giver will have some reasonable expectations and a degree of control as to the activities it will be used for, grant funding does not have to be paid back should the recipient not manage to achieve everything it planned to with the funding. Government funders do run some grant funding programmes. Trusts, foundations, and other charitable organisations generally fund voluntary organisations through grants. Find out more about government grant funding programmes here and about charitable grant funding here.
What Next?
Now you have a brief understanding of what is available it is time to find the funds and apply for them
- Be inspired by our past and present Shine managed funding projects here.
- Check out what managed funding we currently have open here.
- Visit our open funds page for a link to current funding opportunities here.
- Visit our useful contacts page for links to external websites that have application guidance and other useful information for the sector here.
- If you’re still not sure what it is you need, take a look at further funding streams below, or get in touch with Shine using: [email protected]
Other Funding
Relatively few organisations rely on corporate fundraising, charity shops or other types of trading, these alternative sources can provide significant income. Some organisations also receive donations from the public, though this is fairly uncommon, especially compared to the UK-wide voluntary sector.
Alternative sources include:
Corporate funding means any type of financial contribution an organisation receives from a private sector business. Corporate funding includes donations, sponsorship and sometimes contracts. Voluntary sector organisations that host ticketed events (such as theatre or music performances, or sports matches) might consider corporate sponsorship, from a business with aligned values. There are lots of legal, regulatory and operational considerations for organisations thinking about corporate funding. Read the Chartered Institute of Fundraising’s guidance to find out more.
Donations from the public are an essential sources of income for many charities, though criminal justice voluntary organisations are significantly less reliant on donations from the public than the general charity sector. The NCVO website includes helpful guidance on the different ways organisations can fundraise for donations from the public. The Chartered Institute of Fundraising provides more detailed, practical information and the Code of Fundraising Practice sets out the regulations that organisations must comply with when receiving donation funding.
Investments are any type of purchase, or commitment of funds in the present, made with the goal of generating income or appreciating value of time. Common types of investments are shares, property and unit trusts. While criminal justice voluntary organisations do receive some income from investments, again they generally receive a smaller proportion of income from this source than the general charity sector. Investing carries risk and you must take advice before investing organisational assets. NCVO provides guidance on investing charity assets.
Legacies are financial gifts that people leave to an organisation in their will. Some larger charities receive a significant amount of income through legacy gifts, and employ specialist fundraisers to organise these. As with other donations from the public, criminal justice voluntary organisations receive significantly fewer legacies than the general charity sector. Again, organisations that intend or expect to raise funds through legacy gifts will need to ensure they comply with the Code of Fundraising Practice. The NCVO website provides a really helpful overview on receiving legacy gifts and the Chartered Institute of Fundraising covers all the essential considerations in detail.
Membership fees are sums charged to an individual or organisation, to provide them access to information, activities and community. Membership fees can provide vital income to infrastructure organisations, community centres, clubs and societies – but bear in mind that charities which charge for services or facilities will need to ensure that the cost does not exclude anyone from accessing these. Organisations that charge membership fees often do so on a sliding scale, proportionate to the income of the member, to ease the burden on smaller organisations and ensure they remain accessible to all individuals. While membership fees can provide valuable income, organisations should do a careful cost benefit analysis as part of their research into this source of income. Collecting fees can create a significant administrative burden. Find out more about the legal requirements for charities charging membership here.
Social investment is the use of repayable finance that enables voluntary organisations to increase their impact on society. It can provide working capital, allowing the organisation to deliver a contract or buy necessary assets. Social investments are not the same as grants or other types of donation. A social investment is repayable, often with interest, so it is not suitable to every organisation. The Good Finance website has lots of useful information for organisations that are considering seeking social investment.
Trade income is earned income received through trading activities – selling products or services. Running a charity shop is a type of trading activity, because it involves selling donated goods to the general public. Renting out space is another fairly common type of trading activity for voluntary organisations that have a physical premises. They can receive income by hiring out parts of the premises when these are not being used for their own activities. An organisation that is considering raising trade income, will first need to understand whether their constitution allows for this. Charities have a limited ability to trade, because making money is not in itself a charitable purpose, even if it is done in order to enable charitable activities. The NCVO website has a helpful overview of trading, and the Charity Commission also provides detailed guidance for organisations interested in generating trade income.
Loans are sums of money borrowed from banks or other financial institutions, which the borrower agrees to repay over a set period of time. Generally, lenders require borrowers to pay interest on loans – interest is a fee paid to the lender for the use of their money. Loans are a form of debt finance and therefore a higher risk form of income. For this reason, they are an uncommon form of income for small, voluntary organisations and will not be suitable for most criminal justice voluntary sector organisations. The NCVO website provides further detail on the risks associated with loan finance and the necessary reporting processes.