Fundraising explained

Successful, resilient, and sustainable community organisations are often built on the foundations of good financial management. However, understanding your financial position, raising, and managing funds for everyday activities and new projects can be a challenge. There’s lots to think about and plenty of opportunities available so it’s important to know how and where to get started.

What are the main types of funding?

Aside from income generated through your regular activities, there are lots of different ways you can access funding. The main types of funding fall into four categories;

Fundraising

Fundraising is a broad term that refers to the collection of funds by asking for voluntary donations or via specially designed events or activities like quiz nights, raffles, gala-dinners, sponsored challenges, auctions, and competitions. For larger projects, online funding platforms such as crowdfunding are an increasingly popular way for community organisations to raise funds by engaging their members, local community or wider audiences.

Gift Aid

If your organisation’s a charity or Community Amateur Sports Club (CASC), consider registering for Gift Aid, a Government scheme that enables eligible organisations to claim up to 25% of donations received from UK taxpayers.

Sponsorship

Sponsorship is the receipt of financial support from third party organisations, like businesses. It can be financial or in-kind (non-cash benefits) and is usually given for the mutual benefit of both parties. Gaining sponsorship for things like kit, equipment, teams, grounds, advertising, events, tours, competitions, and much more can be a beneficial way of covering your costs. In return, you can offer sponsors the opportunity to advertise their company or brand, raise awareness amongst the local community and promote themselves positively.  For more information on sponsorship, including defining what your organisation can offer and sourcing potential partners, read our sponsorship page.

Loans

Loans can be a viable option for community organisations to secure necessary funds. Loans are often used for larger projects such as facility developments or refurbishments or purchasing of large pieces of equipment. They maybe available from a variety of different sources including your bank, Government schemes, charitable organisations or your National Governing Body.  Before taking out a loan it’s important to; consider if it’s essential, understand any associated terms and conditions, and do some financial planning to ensure your organisation’s ability to cover the repayments, any interest rates and other associated fees.

Grant funding

Grants are financial awards. They are usually non-repayable but often come with terms and conditions that restrict their use to a specific purpose. Grants are usually available to help support new activities as well as capital and revenue projects. In some instances, grants may also be available to help organisations recover from unforeseen events or emergencies or to help cover every-day running costs. 

 The level of funding provided by grant giving bodies can vary in size from small grants (under £5,000) to large grants (more than £250,000). Grants are usually categorised as:

• revenue (funding to support the running of activities, programmes, organisations or individuals), or
• capital (funding for physical projects including the development of a new facility, changes to an existing facility or the purchase of non-movable equipment)

When should community organisations consider applying for grant funding?

Grant funding is a tempting first port of call for organisations who are considering developing a new project, offering new activities, or reaching new audiences. However, except for responding to emergencies, many grant funders consider themselves to be ‘funders of last resort’, meaning that they expect community organisations to exhaust all other options before applying to them.

It’s important to check alternative ways of funding before you apply and be prepared to tell any funders about how you have tried to raise funds elsewhere.

Applying for grant funding is usually a competitive process. There’s never any guarantee that your organisation will be successful. It’s therefore vitally important that organisations don’t become dependent on grants but have plans in place to ensure they’re financially sustainable in the longer term. For more information on this check out our financial planning and sustainability pages. 

Click here to find out more about the process of applying for grant funding.