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5. Decide where you will get the money to start the businessThe types of finance available to any start-up are fairly limited. Apart from your organisation’s own funds and grants or loans from other supportive organisations, the options tend to be limited to commercial sources such as: banks and asset-related finance. Commercial Finance Options Banks provide fixed & floating rate loans & overdraft facilities - the former will carry a repayment schedule and possibly a charge over business assets, the latter can be cancelled with minimal notice. Your business is thus more vulnerable if it relies too heavily on overdraft finance. What you need the money for (and for how long) can also determine the types of commercial finance that may be most suitable for consideration:
Trusts and Foundations There are approximately 10,000 independent trusts and foundations in the UK that allocate £2 billion in grants to charities – an amount similar to the government grant funding of the voluntary sector. Pearl of WisdomClick the Pearl of Wisdom icon to reveal the text.
As we said earlier, you are likely to derive funding from different sources, the more varied your funding the better as it reduces risk and cost! A key source of finance for social economy organisations is grant aid funding from trusts and charitable foundations and it is often the first thing that you will think of when talking about finances and funding – which is why we put it at the end! These are good sources of funding for unpopular causes and many are quite progressive in funding pilot projects and initiatives that, by definition, carry risk. It is common of these funding sources that they tend to prefer to fund gaps in government funding however each has their own criteria and these should be checked thoroughly before applying! Essentially these fall in to three main categories: Community Foundations These are grant making trusts that that are owned and managed by communities; they raise funds from private, public and voluntary sectors which they invest in permanent assets, they then use the interest from these investments to make grants to meet local needs. They also act in many cases as intermediary award bodies for other bodies e.g. PEACE II monies. Visit: www.communityfoundationni.org Venture Philanthropy This involves funding a social enterprise, not only with financial resources for short-term projects, but also with skills and expertise for long-term organisational development. Venture philanthropy is most usually associated with wealthy business people who want “to give something back” by investing for social return. This principle of sustained investment or “patient capital” is what trusts such as the Baring Foundation or World in Need have referred to as “engaged grant-making.” Sources of Grant Aid So where do you find out about trusts and foundations that might be able to assist you? Look at the following:
Guides in relation to fundraising from these sources, as well as other useful information, can be found at: www.dsc.org.uk Don’t forget too about potential European funding: www.eugrants.org A key source of social economy project funding over recent years in Northern Ireland, as with the rest of the UK, has been National Lottery derived funding. There are several distributors that award lottery funding – they are:
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