How to find funding for your Social Enterprise
This research is just a quick link guide, to run alongside all the extensive information and research done in previous steps in different categories about funding.
What funding is available for Social Entrepreneurs?
If you are looking for funding to help you get your social enterprise up and running, there are a number of organisations who offer grants to social enterprises, charities and community projects as well as organisations who are offering social investment. This page brings together details of many organisations that offer this type of support. As such sources of funding often change, this list is intended only as a starting point and is not a definitive list. We have also included grant information and search providers that could help you further in your search for funding.
Fantastic advice about how to get funding from investors etc by Alistair Wilson from the SSE.
Huge long list of people who provide grants for social enterprises in the UK. Just a snippet of the list below…
How-to guide: funding your social enterprise with and without money
Money makes the world go round, right? Wrong. It is a common mistake to believe that you need funding in place before you start your social enterprise. By being savvy, communicating with customers and scaling on a budget you may not need initial investment to fund your social enterprise. Here are three common misconceptions and how you can tackle them:
1 You have an idea for a B2B product, and you need to build it before going to customers to try to sell it to them. Talk to your customers, show them mockups, process diagrams and samples. They may help fund your development or at least offer you criticisms and tell you how to improve your idea.
2 You are building a new product, and you need to spend money on advertising/marketing. Scaling can be done without spending huge amounts of money. Gabriel Weinberg’s blog and Ryan Holiday’s book, Trust me, I’m lying, are great resources. If you still think you need money for advertising, the problem might be the concept; if so, return to step one.
3 You need to pay someone to develop your website/product because you don’t have the technical skills. Ideas are cheap, and if you don’t have the skills to build even the basics then you are just a component of your founding team. You will need to talk to people and build your tribe: get people to work with you, not for you.
What to do if you do really need money
Tax reliefs are also available. HMRC schemes are there to help you finance your research and development spend and national insurance contributions, and accelerators are popping up all over the place, providing early stage finance, office space and mentoring.
It’s never been easier to find funding for a UK social enterprise. However, securing investment can be complicated, but the acid test is simple. If you’re ruthless with yourself, it’s hugely effective: write down every single assertion, projection and assumption in your pitch, then justify or remove each one in turn. Whoever you ask, you will have to demonstrate the same three things:
Credibility. Are you – and your other team members – the best people to do this? If not, can you build the perfect team, and is there a clear route to financial and/or social return?
Planning. Have you identified what your team, product and market look like for at least the next year? What is your strategy, and what are your milestones?
Progress. Do you have orders, customers, signups, written letters of interest? Does it “work”?
The job of most investors is two-fold: to safeguard money and make a return. Most startups focus on the latter – financial or social return. Instead of focusing on the impact, social entrepreneurs need to be realistic and focus on how they are going to pay the money back and on demonstrating they have sorted out their credibility, planning and progress.
Scaling up: what are your priorities?
But here, it is essential to ask yourself a different set of questions. What does scale mean to you? Does it matter if you are copied? Is scale about control and revenue, or is it about delivering greater impact?
If your primary purpose is to grow the impact or revenues of your organisation, then you may need to raise more capital (offices, people and equipment can be expensive). If your primary purpose is to scale your impact, think deeper than money. Look at franchising, open-source, training and network/partnership models. If you’re really ambitious, consider incubating other ideas, people and startups, before spinning them out to new regions or markets. This way you can deepen your impact and create sustainable, resilient structures.
The critical question when you start up is, “Do you really need money?”, and, when it comes to scaling-up, “What does scale mean to you?” You need to explore these questions before you start your journey because they will define how you’ll live and breathe for the next five plus years of your life. Good luck!
Social Entrepreneurship Awards Toolkit Theme #10: Funding and Financing
Sources of funding
The sources of funding are predicated by a number of factors:
- The amount of trading income you expect to generate
- The level of expected profitability
- Your enterprise’s legal structure
If your social enterprise is likely to generate only or mainly social or environmental outcomes with little or no trading income then you need to consider grant funding. Strictly speaking if you are not going to generate trading income it is questionable whether you can be regarded as a social enterprise.
You may generate trading income but the profitability may be comparatively low compared to what a commercial business would be expected to generate. Typically social enterprises also operate in markets that are high risk – e.g. environment, health, social care. Both these factors may exclude you from being funded by many commercial funding entities that are looking to invest in businesses with a higher profit potential and with a lower market risk.
You need to think through all these considerations before approaching sources of funding. You need to devise a strategy and also consider carefully what the implications of obtaining the funding sources may have on you personally and on your enterprise.
You will need to have a convincing story and outcomes to get the financial support that you need. This means that you need to have undertaken your marketing and created a business plan that explains what you intend to do, how you are going to create the social and financial returns (contained in financial forecasts) and how much you are looking for. As a start, we recommend you work through the frameworks and actions set out in relevant sections in the Business Model , the Marketing and the Financial Management themes of this toolkit.
You may need to plan for staged funding – you may not be able to secure what you need immediately and from one source. This is normal. You should plan to get what you can and build on that. So you need to be looking to, and approaching, all potential sources of funding.
Grant funding is an attractive option for many social enterprises. There is no repayment required. However grant funding needs to be carefully navigated. Grants from grant making trusts are often restricted to organisations that are non-profit making. So many social enterprises may be excluded because of their legal structure, i.e. a company limited by shares, or if the constitution states that the company is profit making. The social benefits that the enterprise will generate need to be explicit and probably measurable. The grant funders are also more demanding about wider community involvement in the ownership and governance of an organisation as well about the adequacy of governance structures.
Grants also tend to be project-specific. That is they cover the costs of delivering a project but not an enterprise’s central administration and management costs. For a start up enterprise it is exactly the administration and management costs that you need covered so that you are in a position to start delivering projects.
Grants are usually made available to organisations and not to individuals. The exception is Unltd (www.unltd.org.uk), which supports individuals involved in social enterprise activity. The grant is for projects at the pre-start up or early start-up stage. Grants of up to £5,000 (Level 1) are available. The grant is given specifically to assist the individual to realise a project, such as a one-off event, or to launch a longer term and sustainable project. Unltd also offer the budding social entrepreneur other support in terms of workshops, networking, seminars etc.
Social enterprise works – promoting your organisation
This information sheet looks at the way you promote your organisation, products and services, and considers what is involved in developing a promotion strategy. Your organisation might choose to promote messages about:
- The benefits of your organisation and its services/products
- The image of your organisation
- The people involved in the organisation
A promotion strategy might form part of a wider marketing plan, which should include amongst other elements a customer care strategy. See Social Enterprise Works information sheet on ‘Marketing’ under the Policy and Strategy section and Social Enterprise Works information sheet ‘Customer care guidelines’ under the Processes section.
The image of the organisation and business is the face it presents to the outside world: it is a major part of the message. It is important to ensure that the image presented is appropriate to the organisation/business and the potential customer/user. Image is reflected in many areas of activity:
- Product and Services: positioning, packaging:
- Business Presentation: Name, logo, stationery. Consider carefully the visual.
- symbols that are placed on letterheads, posters, vans, T-shirts etc…It may be worth “piloting” the graphics to see how potential customers/users respond, and it also may be costs-effective to bring in outside expertise:
- Staff: Physical and professional qualities as seen by customers/users, such as appearance, gestures and language along with skills, experience and knowledge. (see Information Sheet 1 ‘Customer Care Guidelines’)
One aspect to consider is whether the promotional techniques should be targeted to non-targeted. Targeted promotion means that it is possible to control or determine broad categories of people who will receive the message, and therefore be sure to reach the target market. Untargeted promotion sends out a message to a large and unspecified to a large and unspecified number of people in the hope that the target market is reached.
Examples of targeted promotions are:
- Word-of-mouth/networking – though slow and message may not be clear.
- Videos about the Organisation – Can target distribution but can’t ensure it is seen.
- Open – Days/Evenings, Conferences and Lectures – but there is still the question of how you inform the target market of these. Useful for introducing new services and products to an existing market.
- Stalls, exhibitions and shows – time-consuming but often effective.
- Specialist newspapers, journals and magazines- some adverts may be expensive, but may be cost effective. Be careful in the placement of adverts – check what headings they are placed under and ensure they are not placed where they will not be seen or next to something inappropriate.
- Leaflets and Posters – often a good technique if placed where the target market goes.
- Notices in shop windows – targets those in a geographical area.
- Radio – most stations have identified market, including ethnic groups different age groups.
The following are generally non-targeted promotional techniques:
- Press Release – good for controlling the message but difficult to target
- Newspapers – can control message with adverts: if editorial or article, the message may be distorted though may be free. As with adverts in magazines, check that placement is appropriate.
- Direct mail letters/newsletters, circulars – can have these inserted into local papers or delivered to all homes/businesses
- Directories (e.g. Yellow Pages) – Useful in reaching large market if message likely to stay the same for a long time, may be expensive
- Television – very expensive and need to b careful about image conveyed.
The choice of promotional techniques will also depend on other considerations:
- How quickly do you want or need the communication to take place.
- Whether “Instant impact” is desired
- Use AIDA formula: (gain0Attention,(generate)Interest,Desire(offer something) and Action (give opportunity to follow up)
*There are endless great tips and facts in this article/PDF. We have included the main points and the info-graphs/diagrams
Understanding your target audience and defining your value proposition
Now that you’re ready to turn your idea into a reality and begin defining your business model , it’s time to think about how you will market your products or services. Marketing is a much broader topic than many people imagine. Most people would probably define marketing as advertising, PR and sales; but the true concept of marketing is much broader and a key part of any organisation.
What is marketing and why is it important?
At the most simplistic level, marketing is the activity which connects your organisations ‘offering’ with the target audience(s). Marketing is therefore the key ‘enabler’ to growing your business and achieving success. The principles of marketing are commonly understood around the following core ‘components of marketing’
- The offering: the products (e.g. ethically sourced clothing) or services (e.g. counselling) your organisation will offer.
- The value proposition: Articulating your offering to the target audience- ‘the solution to their needs’.
- The marketing strategy: Your strategy for connecting with the target audience (e.g. deciding to target a specific geographical audience).
- The marketing plan: The objectives, budgets and tools that will be used to deliver the marketing strategy.
- The target audience: The stakeholders who will be ‘sold’ your value proposition.
- Underpinning all of these marketing pillars must be comprehensive understanding of the target audience (e.g. who they are, where they are, what are their needs and their typical characteristics). The relationship between these different components is illustrated in the diagram below:
Understanding your target audience
As introduced earlier, understanding your target audience is a vital step in enabling your organisation to define its value proposition(s). Once you have defined your external stakeholders within your target audience, the next step is to examine the key features of each stakeholder group or audience.
Understanding target groups (e.g. beneficiaries or paying customers) will probably require the most in depth analysis. For this target audience you will need to understand:
- The size of the target audience
- The structure of the target audience (this will often involve trying to segment the audience into a number of core groups)
- The trends associated with the target audience (e.g. growth)
- The needs and characteristics of the target audience (this is vital to allow you to develop a strong value position that addresses the needs and demands of the target audience)
What is a marketing strategy?
The marketing strategy of your organisation should define how you plan to communicate your value proposition to the target audience. It should therefore consider:
- Your brand identity – how you communicate your value proposition / offering to the market
- Your position in the market landscape- how does your value proposition compare to your competitors?
- Your ‘routes to market’- how will you reach the target audience with your value proposition?
- Your marketing strategy should be seen as an integral component of the overall business strategy and will be play fundamental role in delivering your organisation’s mission and overall strategic aims. Once you have defined your marketing strategy, you will then be able to develop a marketing plan – i.e. the objectives, budgets and tools that will be used to deliver the marketing strategy.
- Marketing strategy – brand identity
- In some cases you may need to communicate your value proposition in different ways depending on the target audience or route to market. For example, an organisation providing information and advice services to the homeless is likely to communicate very differently with beneficiaries versus Local Authority commissioners.
- Features are factual statements about your product or service, whereas the benefits should answer the target audiences question ‘how does this benefit me?’
Your brand identity needs to work effectively with all segments your target audience, and through all routes to market. However, the specific features and benefits you decide to emphasise may vary depending on the audience segment/ route to market in which you are communicating your value proposition (see marketing plan- next section).
Marketing & Modelling your Social Enterprise
University of Greenwich
Most Successful Social Enterprises in the UK – Solving a social problem directly.
The Big Issue Foundation is a financially independent charity. We believe in a ‘hand up and not a hand out’ and recognise that earning an income is a key step in a person’s journey towards stability and a better life. Achieving something for yourself is 100% more empowering than having it done for you. The Big Issue offers the incentive of earning an income; it means that we engage with a number of individuals who are not seen by other services or projects. We work exclusively with Big Issue vendors. People who are homeless are often excluded from mainstream society, financially impoverished and disadvantaged in multiple ways; we seek to address the fundamental issues attached to social and financial exclusion. Please click here for more basic facts about us.
We operate an open door policy and work with individuals who have made the first step to try and work themselves out of homelessness. Our charity work focuses on delivering brighter futures, boosting self esteem and helping vendors to reclaim their citizenship.
A key part of the way that we work with Big Issue vendors is by identifying and motivating individuals to engage with the services that will help them move forward and deal with their homelessness, health issues and achieve their own goals.
Our objectives are:
‘Vendor-centric’ – our charity work is led by the hopes and aspirations of Big Issue vendors
‘Inclusive’ – social and financial inclusion at the heart of our philosophy
‘Non-judgmental’ – we work with anyone who is prepared to engage with self-help.
Through this approach we seek to ensure that our vendors have the following:
- somewhere meaningful to call home
- access to a doctor and equality of access to health care opportunities
- the essential support that is needed to overcome addictions
- direct help with business skills to maximise independent earnings
- the crucial personal identification that opens so many doors
- access to additional financial support and secure saving opportunities
- the opportunity to re-connect with family members and loved ones.
The accounts show an increase in profits over the last two years, but is far too varied to try and snippet into this doc. Below is a pie chart, taken straight from the website of TBI, showing where their income is generated.
HCT Group is a social enterprise in the transport industry. Our story starts in 1982 with the formation of Hackney Community Transport, providing low cost minibuses for local community groups – a service we provide to this day.
In 1993, with traditional grants under threat, we came to the realisation that the best way to become a sustainable social enterprise was to become an effective enterprise. We began to compete for commercial contracts in the marketplace to ensure we could continue to provide community transport.
This approach has seen HCT Group grow from a handful of volunteers and a couple of minibuses, with a turnover of £202k in 1993 – to a large scale social enterprise with 800 employees, ten depots spread across London, Yorkshire, Humberside, the Southwest and the Channel Islands, a fleet of 500 vehicles and a 2015/16 turnover of £44.2m.
- To enhance people’s lives, provide opportunities and bring people and communities together through transport and training.
The HCT group have an incredibly detailed, and inspiring impact report that can be found here:
It lists the hundreds of reasons they run their enterprise, but also provides case studies, infographics (such as below), and reasons for every action that they take.
Organise an event or a Get Together
Have a go at getting a group of like minded people together to generate ideas and get inspired. Plan and organise a small event, gather feedback and ideas and use these to take the next step… funding! Set up a Facebook group (like CoWorkLisboa) and build your community of like-minded people.
Free Planning Tools
Free planning tools!