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July 16, 2013; The Guardian
NPQ has covered the issue of the reliability of income previously on any number of occasions, but perhaps nowhere to so much acclaim as in Jon Pratt’s “Dynamics of Funding: Considering Reliability and Autonomy.” Now, this blog entry written by David Floyd for the Guardian takes up the same issue for social enterprisers, because the author thinks that there is something of a default view that earned income is more likely to produce sustainability than grants.
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This, he contends, is an oversimplification. “The sustainability of any source [of] income is based on how likely that money is to continue coming in and that will be different for each organization depending on their circumstance.”
He suggests that we imagine a hypothetical group that has been established to provide homes for retired llamas and consider their possible revenue streams:
- Fees from zoos who are legally responsible for providing homes for llamas in old age
- Regular donations from people who are keen to see retired llamas have a good home
- Grants from grants trusts (institutional funders) with an interest in llama welfare
- Admission fees from people who want to come and visit the llamas in their retirement
- Fees from the National Health Service for providing experimental “llama care therapy” for their patients
- Selling llama-related t-shirts and merchandise
In this case, he says, “(a) is the ideal source of income, because you’re being paid by a customer who needs your service to deliver that service. (b) + (c) would be the next best things because you’re being paid by some people who want to pay for (buy) the social activity you’re providing. (d), (e) and (f) all involve providing services and products other than the social activity your organization provides, in the hope that these services and products will make a profit to enable you to deliver your social mission.”
But this scheme regarding the llamas all falls apart if the zoos feel no responsibility and the llama lovers have other more pressing commitments they cannot be persuaded out of. The point, Floyd writes, is “to start from your social mission and work out the most likely way to generate the cash to deliver it on an ongoing basis.”—Ruth McCambridge