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Can Social Enterprises Help Charities Be Financially Independent?

24/03/2016 13:30 GMT | Updated 25/03/2017 09:12 GMT

How can charities raise funds without damaging their integrity or independence? This question has never been more pressing. The collapse of Kids Company, the bombardment of vulnerable elderly with fundraising requests and the relationship between Age UK and EoN have led people to question the values driving the sector. Charities face a dilemma - the demand for their services remains high but funding from the public sector is being cut. How can they raise funds in a way that is ethical and transparent?

Recently behaviour change charity Hubbub has created a new social enterprise wholly owned by the charity. Its aim is to take the charity's best ideas and explore whether there is a commercial market that will take the idea to scale and generate new revenue for the charity. If successful the relationship will create a virtuous circle of increased impact, greater revenue and inspiring new concepts.

To date the charity Hubbub has generated £1 million virtually all from companies. Whilst being transparent about who funds them and why. Inevitably though, questions are asked about the impact this has on their independence and priorities. Critics find it hard to believe that there is a clear distinction between organisational independence and funding sources. But in a time of austerity charities will benefit from alternative income streams to protect themselves from budget cuts and the mercy of the fickle world and brand marketing. Affecting their longer term impact.

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Exclusive reliance on corporate funding can restrict innovation and the desire to explore approaches that fall outside the interest of companies. Charities are already looking to diversify their income streams. We've seen the introduction of the Payments-by-results contracts and Social-impact-bonds.

A social enterprise is a connection to the market that charities operate in and will inevitably show whether there is a demand for the ideas or products that have the potential to be taken to market.

The first product launched by Hubbub is the Ballot Bin encouraging people not to drop cigarette buts on the floor by asking topical questions such as 'Who is the best footballer in the world Ronaldo or Messi'. People can vote using their discarded cigarettes.

So far traction has been overwhelming, with interest from the first prototype globally. The new enterprise is now mass producing the bins and have a web-site to generate sales https://ballotbin.co.uk/. It is still early days but orders have started and the company are confident the bins will create positive social benefit and income. The Ballot Bin is the forerunner to a number of other services created by Hubbub that will gradually be handed over to the enterprise company over the coming months.

As with much of what Hubbub has tried over the last 18 months the creation of the Enterprise arm is a leap of faith. There is a huge amount to be done ranging from negotiating the cultural fit of the two organisations through to the more prosaic financial arrangements. If successful, the approach is something that other charities can replicate to help them in these austere financial times, creating a new line of income which enables them to remain independent and act with integrity.