Can Social Enterprises help charities be financially independent?
How can charities raise funds without damaging their integrity or independence?
This question has never been more pressing. The collapse of Kids Company, the bombardment of vulnerable elderly with fundraising requests and the relationship between Age UK and EoN have led people to question the values driving the sector. Charities face a dilemma – the demand for their services remains high but funding from the public sector is being cut. How can they raise funds in a way that is ethical and transparent?
Eighteen months ago I created a new charity called Hubbub UK with start-up funding of £30,000. Our ambition was to take a fresh approach to how environmental messages are communicated. We wanted to engage a mainstream audience - ‘the mildly concerned’ - in a way that was compelling and engaging.
Our income by the end of year two will top £1m virtually all from companies. We are transparent about who funds us and why. Inevitably though questions are asked about the impact this has on our independence and priorities. Critics find it hard to believe that there is a clear distinction between organisational independence and funding sources. But in a time of austerity charities will benefit from alternative income streams to protect themselves from budget cuts and the mercy of the fickle world and brand marketing. Affecting their longer term impact.
We know that exclusive reliance on corporate funding can restrict our innovation and desire to explore approaches that fall outside the interest of companies. Charities are already looking to diversify their income streams. It is for this reason that we have launched Hubbub Enterprises.
This new social enterprise is a separate company wholly owned by the Hubbub charity. Its aim is to take our best ideas and explore whether there is a commercial market that will take the idea to scale and generate new revenue for the charity. If successful the relationship will create a virtuous circle of increased impact, greater revenue and inspiring new concepts.
A charitable foundation has provided start-up funding to test the approach. Our first product is the Ballot Bin encouraging people not to drop cigarette buts on the floor by asking topical questions such as ‘Who is the best footballer in the world Ronaldo or Messi’. People can vote using their discarded cigarettes.
So far traction has been overwhelming, with interest from the first prototype globally. We are now mass producing the bins and have built a website to generate sales. It is early days but orders have started and we are confident the Ballot Bin will create positive social benefit and income. The Ballot Bin is the forerunner to a number of other services created by Hubbub that will gradually be handed over to the enterprise company over the coming months.
As with much of what Hubbub has tried over the last 18 months the creation of the Enterprise arm is a leap of faith. There is a huge amount to be done ranging from negotiating the cultural fit of the two organisations through to the more prosaic financial arrangements. If successful, we hope our approach is something that other charities could replicate to help them in these austere financial times creating a new line of income which enables them to remain independent and act with integrity.Trewin Restorick