Last night, TSIC launched our latest report, ‘Charities Unlocked: Realising the Commercial & Social Value of Charitable Assets’ at an event for sector leaders sponsored by Unity Trust Bank at Toynbee Hall in East London.
Our research for the report included interviews with 50 executives of UK charities representing just under £500m in total income. An impressive 88% told us they were already earning at least a portion of their income through service contracts or trading activity. 65% reported they planned to grow the share of their earned income further in the next five years, while the average aspiration was to double the percentage currently being earned from trading.
Social enterprise trading models are going to be a site of continued experimentation for charities in the coming years, and we were delighted to be joined by a talented panel of speakers to discuss the opportunities and challenges for charities looking to move into this area.
Gordon Morris, Managing Director of Age UK Enterprises, spoke from experience leading one of the UK’s most successful charity trading arms. He argued Age UK has been able to compete successfully with mainstream insurance providers by taking a strong focus on their customers– selling fair financial products that treat older customers with respect rather than trying to maximise profit off them through, for example, charging hidden fees. This ethos has won Age UK’s business a great reputation, and many customers have also become supporters of the charity rather than dampening their likelihood to give. Morris advised charities looking to develop trading activities to ‘ask your customers what they want and design products and services around that,’ alongside undertaking thorough market research and planning.
Trewin Restorick, CEO of Global Action Plan, spoke from the experience of being a relatively young charity that has gone from being 100% government grant-funded to generating income from a range of business streams in the space of a few years. He expressed that smaller charities have great opportunities to trial new business models because they’re often more agile and quick to respond to new ideas than more complex organisations. He advised that the best time to look for investment is at the ideas stage and recommended getting as much investment as possible at the start so an idea can be pursued thoroughly without continually having to go back to find further cash.
Richard Mayhew, Managing Director of Catch22 Social Enterprise Ltd also stressed that cashflow is a serious challenge in starting any new venture, advising charities they should, ‘halve the growth and double your costs’ in any business plan. Catch22’s trading arm, Auto22, has developed a USP in the car service and repair industry through operating as an ethical company – setting transparent prices and offering a women-friendly environment – in an often unwelcoming industry. “When you offer a competitive price, a positive customer experience, and tell people they’ll be helping unemployed young people from the community into work by purchasing from you, it’s a no-brainer.”
While larger charities may have an easier time leveraging existing assets such as a strong brand or cash reserves to launch new businesses, Holly Piper, Investment Manager at CAF Venturesome seconded Restorick’s view that smaller charities have great opportunities in this space as well. She advised that charities should consider talking to social investors or existing supporters to help bear some of the risk involved in launching new enterprises. CAF Venturesome’s portfolio contains a mix of low and high-risk investments into charity enterprises – with higher-risk investments generally for higher social impact projects – and expressed that, for some charities, the risk of not experimenting to diversify revenue streams might be greater.
Many thanks to all our guests, speakers and to Unity Trust for a great evening.