Generating Income

Whatever the size or nature of your community group, one of your first priorities as a committee member will be identifying suitable sources of income. Being able to finance your services, activities and projects is crucial to your success as a community group, and having income to cover running costs, as well as development, is likely to be an ongoing challenge. 

This section looks at some of the fundraising options available to your group, and how to set about securing these.

Funding for community groups can come from a range of sources including:

• income that your group generates itself from trading (the sale of goods or services)

• discretionary grant income from a wide range of sources including lottery funding, European funding streams, grant making trusts and small local funding programmes

• procurement contracts with local authorities which pay for the delivery of specific service

• income from fundraising events held by or on behalf of your group

• donations from individuals

• donations of the trading surplus from a trading arm

• sponsorship

• legacies

Which sources of funding your group decides to target, will typically depend on a consideration of what is appropriate to:

• the size and nature of your group’s activities

• your overall ‘purposes’ or aims

• how much you need to raise and  how quickly you need the funding

• whether or not you already have a financial track record

• your potential for converting individual support into donations

• the resources you already have available.

Very often your community group will need to explore and utilise a variety of different fundraising methods. Being flexible and having the ability to attract and generate income from a diversity of means is one of the strengths of the Third Sector.

By their very nature, Third Sector groups are ‘not-for-profit’ – that is, they are not set up with the intention of making a profit. Any profit (or surplus) they might make, is retained to sustain the group’s activities and services, or to build a ‘reserve fund’ to cover running costs in the event of the group or organisation having to ‘wind-up’ or be dissolved. 

Third Sector ‘profit’ or ‘surplus’ is never something from which the members take any gain, and all grant income should be spent within the conditions of that particular grant.

This does not mean that Third Sector groups take a passive role in income generation – far from it. 

Most have to work very hard at income generation and can no longer rely simply on applying for grants to fund their activities and services. Increasingly community groups and organisations of the Third Sector are looking beyond the more traditional approaches to fundraising and adopting a more ‘business’ driven approach to their groups financial security.

 For some, this will mean trading as a social enterprise - not simply to cover costs, but to generate a surplus that can be ploughed back into the group to sustain its activities and services into the next year and beyond.