Developing new income streams for charities through creative commercial partnerships

These are challenging times all round, but particularly for charities, and 2021 will continue to be even after the full roll-out of vaccines.

Even before Covid-19, I was a firm believer that there was an opportunity and need for charities to diversify their income streams and reduce their reliance on traditional fundraising methods. The traditional world we used to live in was already changing at a rapid pace, and this has only been accelerated further by the pandemic.

One thing that Covid has reinforced in all of us is that nothing is a given and should be taken for granted; we have all had to get creative and explore new ways to raise income and leverage the skills, networks, assets we already have.

This is all easier said than done, especially for charities which:

• Are often such experts in the fields in which they operate that they don’t have as much knowledge or experience in other areas.
• May not have the skills, resource or appetite to diversify.
• Generally, and rightly so, prioritise philanthropy and passion over profit and are not accustomed to having to constantly scrutinise balance sheets.

Real opportunity

With these challenges in mind, I believe there is a real opportunity for brave charities to stand out, behave differently and extend their scope in order to survive these current times. But it can only work with the following:

• The right mindset and commitment to venture into the unknown.
• The right partnership and people.
• 100% clear vision and buy in from the top.
• A genuine need that your diversification can serve.
• Focus on their assets that they can leverage to provide solutions.
• A customer first and backwards mindset.

Let me explain how the charity I ultimately work for, Versus Athritis, has embarked on producing a new income stream for through the pandemic and far beyond.

In what I like to regard as a pioneering response to the challenging charity landscape, the charity approached consultancy Good Innovation to collaborate and co-create a new social venture, Arthr. This initiative was not only commercially driven; it was also inspired by a genuine and urgent need for people with arthritis to have a greater choice of quality products that made every day easier for them without taking away their sense of dignity and independence.

Versus Arthritis had the vision, the research, the community, the understanding of the market, but lacked the commercial know-how, the resource and expertise to launch a new retail product range to market. So it sought outside collaboration. And for us that’s where a successful partnership works, where complementary skills are brought together under one common vision to make a difference not just for the charity, but for the 10 million people in the UK living with arthritis.

And so, Arthr was born.

Focusing on the mission

For me, as Arthr’s managing director, there was the extra dimension of running a business owned by a charity. Being a social venture I knew from the start that it was, of course, really important to focus on the mission that we were looking to achieve on behalf of the charity. So now, under the umbrella of making every day easier for people with arthritis, we keep our focus on the two key axes: providing positive impacts and delivering a revenue stream for the charity.

It goes without saying that the products we develop should be functional and provide the support that they are designed to. Our solution of having ChangeMakers, a network of critical ambassadors of people living with arthritis, is designed to ensure that all of our offerings are built from the customer backwards.

This is where a greater responsibility comes in. Being part of a charity we must ensure that we are completely respectful to the genuine needs of the user, rather than any products being just a well marketed product designer’s dream.

We have to always keep in mind that the person who has arthritis makes an informed decision about the products they use so we certainly avoid ‘selling’ but rather emphasise how the needs, identified in our research, are met. Additionally, one of the first roles that we appointed was that of a customer champion, someone who is an expert in the challenges of our community and has volunteered for Versus Arthritis for many years, so understands both the business and the charity.

In relation to the occasional past examples of some charities offering commercial services or products subject to criticism, Arthr has a strong review process and protocal in place with the trustees of Versus Arthritis ensuring that there is detailed governance across all aspects of our operation.

Running a social venture like this isn’t all about the opportunities; there are also the pitfalls and challenges. It can be challenging to develop a commercial operation, with the ability to scale production and marketing channels, within a charity context. Some within the commercial arena may view our stakeholder approach as too soft or even a weakness. However, we will persevere within a collaborative set up as we believe that strength comes from co-creating our solutions with experts in their field.

Separate streams

Then there is the matter of management style of the commercial operation, and whether that style should be completely separate from and uninfluenced by that of the charity. We believe it is necessary to focus on the specific initiatives as separate streams within the charity group.

We have positioned Arthr as a standalone, but also as very much part of the Versus Arthritis group culture. This means that we do respect the policies and values of the charity but have the flexibility to develop the commercial initiatives as a start-up typically would.

The style should be agile and focused on a customer backwards approach. This agility is something that provides real value to the development of the charity’s ongoing model. We believe that the winning formula is to combine the strengths of the charity with the dynamism of a start-up. This wouldn’t necessarily change too much during the upsizing phase.

The by-product of this “social venture with a commercial bite” is that 100% of Arthr’s profits will be invested back into the fight against arthritis. Our ambition is to meet the needs of half a million people with arthritis over the next three years.

Here are some tips for charities looking to seek alternate income streams:Here are some tips for charities looking to seek alternate income streams:

• Identify where the biggest opportunity lies for your charity to meet needs.
• Accept that if you want to diversify your income, you need to both leverage assets and build on your skills and talent. It is impossible to do everything yourself and you will need to outsource to experts. For example, we are working with an online retailer to handle the distribution and delivery of its products to customers and have sought the support and skills of many stakeholders to make our vision a reality.
• Focus on a clear strategy and simple business plan
• Keep the charitable contribution and purpose front of mind throughout, despite the focus on commercial.
• Consider positioning the commercial activity outside of the charity culture, to enable a start-up culture to develop.

The response to the launch of Arthr, owned by Versus Arthritis, has been incredible and every day I am humbled by the support and generosity we have been shown. We have built up a passionate community; an ecosystem of stakeholders, these being retailers, users, healthcare professionals, volunteer groups - all with a vested interest and common purpose to move this market forward.

If charities can take one positive away from this current pandemic it’s the renewed community spirit in which the sector has creatively and positively responded to these challenges. The key to success, in my opinion, is start by building your venture from the people you want to serve backwards – and the rest to follow.

If ever there was a time for charities to be brave, creative and more commercially stable it’s now.

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