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Good Innovation reports on new models for generating income

Good Innovation reports on new models for generating income

A three-year project by the Good Innovation consultancy and 12 major charities into how charities can overcome challenging times by creating and growing new sources of income has published its results.

The project, developed by a small group of fundraisers, was based on the growing belief that the charity sector faced major challenges in maintaining and growing its income to rise to future challenges.

Changing expectations of donors, the fallout of the 2015 media criticism of some charities’ fundraising methods, the introduction of GDPR and the likely impact of Brexit stirred the group to ask the challenging question: what if fundraising income growth through existing channels and methods is peaking? What if the growth does not return to the levels of a few years before?

To date the findings and results of ‘Good Lab‘, the research project, have been shared within the charities and partners. Now, they have been made available to all organisations keen to consider new ways of fundraising and generating via the report ‘New ways to grow income: the story of Good Lab‘.

Andrew Bathgate, co-founder of Good Innovation, describes Good Lab as “a place for experimentation. A place for finding new business models, new ways for people to give, unlocking new audiences that traditional fundraising products don’t work for. A place to attract people who wouldn’t fit within a charity. A place for charities to share the risk of trying new things.”

 

Building a portfolio of fundraising initiatives

The group focused on action in order to learn about the process of bringing about change to fundraising.

Bathgate says in the report’s introduction that “We’ve created the commercial ideas we were hoping for – a portfolio forecasted to be worth £250m in 5 years and with the potential to be generating £200m+ annually in 10 years.”

Working with the charities Good Lab prototyped the selected ideas to grow new income streams, and supported them in getting underway.

Three years on and the partnership has yielded three spin-off ventures and a jointly-owned fundraising agency. The lessons they all learned are shared in the New Ways to Grow Income report.

 

Good Lab logo

Monetising charities’ assets

One of the Good Lab initiatives was to explore whether charities had assets that could be monetised. Kevin Waudby, co-founder of Good Innovation, suggests that these could be “right under a charity’s nose”.

He says: “There are billions of pounds tied up in the assets, skills, knowledge and, really importantly, the services that charities provide. The first step towards unleashing that commercial money is knowing what your assets are and that they have a market value. Then you can develop them into commercial propositions.”

This could lead to a tension between provision of the charity’s services for free and the need to generate income, but it need not be so. The British Red Cross already sells first-aid training to private companies while providing other information and advice at no charge.

 

Adopting a start-up approach

Good Innovation partner Janine Chandler argues that, to make the most of these assets, charities need to change how they operate and to adopt the approach of a small start-up company. She says: “What you start with has to evolve and pivot as you do things. You have to give the people working on it permission to go off and do things without having to consult a hundred stakeholders first.”

Identifying and encouraging entrepreneurial skills amongst existing charity staff can also help kickstart this different approach.

Nicola Tallett, Director of Engagement, Oxfam, described the approach and why it worked, saying: “It was about being collegiate, collaborative and about shared risk. Being part of it was exciting. It was a sector response to a sector-wide issue.”

 

Alternative approach?

If charities can’t achieve the cultural change that might be necessary to support this new approach then the Good Labs report suggests two alternatives:

  • work with existing start-ups, or at least those keen to incorporate social good within their business model
  • set up their own social enterprises and spin them off as separate organisations that operate independently. These then donate their profits back to the charities.

 

Spin-offs

Good Labs has launched three spinoffs and a fundraising agency, Good Giving, which is jointly owned by the RSPCA, WaterAid, the RNIB, the BRC, the Royal British Legion and the BHF. It will focus on “reinventing payroll giving”, staring later this year.

Spinning off social enterprises means that the start-up can seek funding and support that a traditional charity could not qualify for. Some Good Lab programmes have benefited from venture-capitalist funding or help from business accelerator programmes run by Facebook and Cambridge University.

 

Results after three years

The combined Good Lab portfolio is forecast to be worth £250m within five years, with the potential to be generating more than £200m annually in 10 years. Each of the companies is 15% owned by the Good Lab member charities.

OnHand matches elderly people in need of occasional assistance with people nearby who can help, in return for donations. Of the donation, 80 per cent goes to charity; 20 per cent is platform revenue. The charities also own the intellectual property licence for the product.

All the start-ups are led by independent “founders”, who bring focus and passion to drive the company forward. OnHands’ founder, Sanjay Lobo, is ex-marketing vice president at Vistaprint.

Two of the ventures started raising investment in the Spring of 2019 and both have been successful. As of the end of July 2019 Matchable had raised £145k in seed investment, and OnHand had raised £200k in seed investment

Waudby says the over-riding message from Good Lab is that charities need to accept that radical change to the fundraising model is needed, and to collaborate, both within and outside the sector.

He said: “The rate of change we’re seeing in the rest of society is exponential, but in the charity sector change is very slow. If we don’t speed it up, the charity sector will be shaped by events, and it won’t be the sculptor of its own future.”

Howard Lake is a digital fundraising entrepreneur. Publisher of UK Fundraising, the world's first web resource for professional fundraisers, since 1994. Trainer and consultant in digital fundraising. Founder of Fundraising Camp.

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