In A CivilSociety.co.uk article from October 2017, David Stead from the Charities Aid Foundation has urged charities to adopt a diverse funding approach.
Stead gives the example of crowdfunding and grant making bodies being used to finance the core costs of the charity.
Funding is the main issue facing small-to-medium charities. Government finance is available but can often be difficult to obtain, donations are uncertain and contracts are not easy to win.
Often there are times when funds are low, but a grant or large donation is expected soon. Stead advises charities to look into loan sources including bridging loans. Some financial organisation are prepared to provide financial advice at no cost that will help charities identify the risks and benefits of taking out a loan. A bridging finance broker can also help with advice on loan options.
Private donors are a good source of income for a charity, but Stead says that donors who make large donations often want an active role in the charity. If the donor is an entrepreneur, they may be able to help improve the efficiency of the charity or develop better marketing materials to encourage others to donate.
“Charities need to investigate the full menu of financing options available to diversify income sources, reduce risk and improve resilience.”
He advises charities to ask themselves what the optimal funding mix for both the present time and the future might be, and to consider what the sources of this finance should be.