Overcoming Charity's Biggest Challenge

In April 2019 the Charities Aid Foundation, in association with ACEVO, published the outcome of its research on the greatest challenges charities face. As in previous years, the number one challenge reported by charity leaders was generating income, followed by meeting increasing demand, and in third place, the reductions in public and government funding.

This closely intertwined triumvirate of charity challenges sits head-and-shoulders above the four other big issues of the day:

That’s not to say those four aren’t important, but clearly and consistently, the greatest challenge felt by leaders is the ability of their charities, with eroding traditional income sources, to finance the increasing need for their work.

The first recommendation of the report is, therefore, (and stop me if you’ve heard this one before): “Charities should look to diversify their income.” And yet, in CAF’s events calendar for 2020, there’s nothing; not a single event looking at income diversification, and through all their recent publications, the income conversation is confined entirely to public giving.

Similarly, ACEVO’s events agenda comprises leadership, conflict management, unconscious bias training and storytelling – nothing on income diversification; its 2019 conference did, however, have one afternoon panel session on encouraging ethical entrepreneurialism. So, there’s that.

They aren’t alone. Charity Times, Third Sector Magazine and indeed most of the academic and umbrella institutions that offer charity leadership development, rarely touch on the biggest challenge facing the sector: how to reduce its dependency on the declining sources of fundraising and grants by diversifying its income. At best there may be an article or module on setting up a social enterprise. At worst, the 50% of all charity income that currently comes through commercial means is entirely ignored.

There are a great many charities looking right now at income diversification, particularly new ways to earn more income, but most of them are working in splendid isolation from each other, reinventing the same wheel again and again. As a result, there are even more charity professionals exploring commercial ideas and opportunities, few of whom have a network to tap into, resources to draw upon, or skills to fall back on that can help them on their way.

Yet clearly, across the sector, there are plenty of organizations who have trodden these paths before, made their share of mistakes and missteps and found their way through; just as there are plenty of charity professionals who’ve found their feet in sales and business development, in marketing and commercial strategy.

How do we share those skills and lessons learned? How do we help people come together to talk about diversification and earned income? These were the questions that drove me to write the first book on the subject, called  The Commercial Charity, to consolidate what I’d learned from working with charities on earned income, and market-based social change over the last six years, including case studies and interviews from the leaders of dozens of UK and International charities.

Income diversification is not just desirable, it’s increasingly essential, and is eminently possible so long as charities learn the right lessons from each other.