Some time ago I read a paper by nfpSynergy entitled Just my Type – An Archetype Analysis of Charity Finances. The paper identifies six different types of charity categorised by income:

1. Contracts and service providers. Amongst larger charities, these are the most numerous. They provide government or local authority contracts or paid-for services. Examples are disability and addiction charities.
2. Fundraisers. Not so numerous, but tend to have a larger public profile. They generate their funding mainly from fundraising and events. Examples are CLIC Sargent and Battersea Dogs and Cats Homes.
3. Legacy fundraisers sit as a sub-group of fundraisers and rely heavily on legacy income, such as Cats Protection.
4. Traders. Tend to be heavily reliant on charity shops or other forms of trading for their income. Examples are Sue Ryder and the many charitable social enterprises that exist.
5. Linked trusts. Tend to either be the charitable trusts of large organisations, such as the Shell Foundation; or vehicles for donating large sums of private money, such as the Sigrid Rausing Trust.
6. Invested trustees. These are generally charities with an independent endowment, or fund of their own, eg Joseph Rowntree or the Wellcome Trust. They use these funds to deliver their work.

Each of these typologies has a business model that is distinct and different. Similarly, each has to invest in time, money and resource to generate income and therefore each has a different return on investment. For example, contracts and service providers rely on investment in relationships and business development to ensure a future pipeline of business. Often, this time and effort is hidden in a charity’s resource plans and the relationship between this investment (in money, time and effort) versus results is not understood.