Tips for... Earned Income in the Voluntary and Community Sector

Earned income now makes up nearly half of the total income of the voluntary and community sector in the UK. There are many opportunities available to earn income - but each of these will bring its own particular demands to an organisation’s planning, structure and skills.

Some of the activities voluntary and community sector organisations can do to earn income include:

• Charging the beneficiaries of their project/organisation for goods or services;
• Charging the public for goods or services;
• Selling the products made by the beneficiaries of their project/organisation;
• Selling publications, training, consultancy and other in-house expertise to interested parties;
• Unrelated trading, like selling charity Christmas cards or running charity shops;
• Selling gift items to supporters, on-line catalogues or auctions;
• Letting space in a building: &
• Providing a service under a contract with another agency, usually a local authority or Primary Care Trust

Trading can be a really valuable source of unrestricted money for a voluntary and community sector organisation. It can mean that they are less dependent on grant funding and more able to take control of their future direction. In addition, developing a new trading activity can also bring further benefits to the organisation, for example, creating new skills and enthusiasm that bring a renewed sense of purpose and energy.

However, any Voluntary and Community organisation that is new to trading should always check that its constitution allows it to undertake these activities. If the trading activity is not part of delivering the organisations primary purpose, and is significant, then there may also be charity and tax law issues. A number of charities have set up separate trading arms to carry out their trading activity and donate any surplus income to the charity. Your organisation should always seek professional advice about any implications before proceeding. (see also Charity Commission webpage in External Links below re document ‘CC35 - Trustees, trading and tax. How charities may lawfully trade’)

Also, contracts for services can sometimes come with a number of ‘strings attached’ to them, for example, to supply a specific service at an agreed cost. This “restricts” the use of the money received to providing that service only and is similar to the terms and conditions ‘imposed’ by other grant makers.

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