Grantmakers have been urged to increase their support for charities and social enterprises to boost their trading income in response to a new report.
Social Spider Community Interest Company (CIC)’s report defines “enterprise grantmaking” as that “which encourages and supports charities and social enterprises to increase or maintain their income from enterprise activities, including selling services or goods”.
Its report released today says that grants that currently meet the definition are worth £2.6m per annum, with around £22m to £115m supporting enterprising activity in a broader sense.
The Enterprise Grants Taskforce, led by a steering group that includes the School for Social Entrepreneurs (SSE), the Association of Charitable Foundations (ACF) and Access – the Foundation for Social Investment, called on funders to adapt their practices to become “more enterprise-centric to support the long-term sustainability and impact of the sector”.
Only three national enterprise grantmaking funds
Social Spider CIC looked at the definition, scope and size of the enterprise grants sector in the UK and conducted interviews with members of the Enterprise Grants Taskforce alongside other funders.
It found that SSE’s Match Trading, Access’s Enterprise Development Programme and Unltd’s Grow It fund are the only national funds meeting the definition of enterprise grantmaking, totalling £2.6m per annum.
Looking at seven national funders with “a clear enterprise focus”, including Power to Change, it estimated that their grantmaking was worth a combined total of £22.6m in 2019-20.
Meanwhile, grants by members of the Taskforce, which includes 13 organisations such as the National Lottery Community Fund, City Bridge Trust and Voice4Change England, “with a specified business focus” are worth £115m.
The report says that “there is significant demand and potential” for enterprise grantmaking to increase as a quarter of the UK’s 100,000 social enterprises previously reported a lack of grant funding as a key barrier to sustainability and growth.
‘Time to overhaul’ how grants are administered
The report adds that “an increasing number of funders are keen to use (or increase their use of) enterprise grantmaking” and that the Taskforce is “well placed to support this”.
Alastair Wilson, chief executive officer of SSE, said: “One thing’s for sure, the current sources of funding were not designed by practitioners on the ground. In 2023, is it not time we radically overhauled how grants are administered to reach broken markets whilst embracing the creative, entrepreneurial energy of local communities to create change?
“Social Spider’s report shows early signs of a new wave of grant-making that enables social organisations to become more sustainable and generate local impact. Funders interested in sustainability may wish to consider how they can incorporate enterprise grant-making into their funding mix.”
Seb Elsworth, chief executive officer of Access, added: “With a squeeze on household income and the public sector under stress for the foreseeable future, we need to think strategically and carefully about where an increase in the sector’s income can be found, so we can meet the many challenges facing our communities.
“Charities and social enterprises have a long tradition of generating their own income through trading and this report shows the huge potential for enterprise grantmaking to catalyse this further – increasing the impact of philanthropic funds regardless of their particular focus and driving sustainability across the sector.”
The Taskforce said that “now is the time for more funders to consider adapting their practices to become more enterprise-centric to support the long-term sustainability and impact of the sector”.
Anna De Pulford, chair of the Taskforce and director of Dulverton Trust, said: “Voluntary sector organisations are increasingly having to compete for donations. In this environment, enterprise can play an even more important role. Funders are rightly being called to provide flexible, unrestricted funding - but we also need to recognise that developing enterprise requires specific skills and resources.
“This report is a timely reminder that we funders could be doing much more to support the development of charities’ enterprise and I hope to see other funders joining this necessary and growing movement.”
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