Can anyone talk to me about fundraising in a profit-making business?

[ella47]

I'm about to start my own business and need it, on the whole, to be profitable because it'll be my sole income. However, the nature of the work I'll be doing (don't want to out myself) means there'll be some people who can afford to pay the going rate and others who'll really need the service but won't be able to pay. I'd like to be able to start a project within the business to subsidise some of those that can't pay by fundraising - especially as grants/subsidies/funding are few and far between and highly sought after in this area of work so it's unlikely I could get funding to cover those with low/no income.

I'd be prepared to give my time for free so wouldn't be taking wages from the funds raised but I could only do that for relatively few hours a week, and if I could take the cost of my time out I'd be able to do far more (the need is pretty huge, certainly around where I live). But I'd need funds anyway for other costs (renting the room I'd use, supplies etc).

So is it actually legal/ok to fundraise for a project done by a business and not a not-for-profit organisation? Would it be legal/ethical to pay some of my time out of the funds (I'd still do the free time, but anything over and above that)?

I'm not a legal expert, but I believe that if you are up front about what the money will pay for, ie providing a valuable service to people who really need it, and you make sure that happens, then you are OK, but I'd suggest checking it out with the Institute of Fundraising.

Depends what you mean by fundraising. Rattling a can in the high street would be illegal. Approaching businesses or individuals for sponsorship is legal but they are unlikely to give it to you rather than a charity, and if they do then it cannot be treated as gift aid. Approaching existing charities/grant giving bodies may be worthwhile but again they may not be happy with your business structure and are more likely to support a charity or social enterprise providing the same service.

One way to achieve the same result may be for an existing charity to pay for the external costs and you give your time free?

In this situation I would probably think carefully about who needs the service but cannot pay for it, and what charities/grants already exist to support them. Talk to them.

Without knowing exactly what your business does, it's hard to answer. However, most organisations who give to charitable causes (charitable trusts and foundations, corporates) do specify you have to be a registered charity to receive funds. Not all do though - there are a few out there who will give to other organisations - as long as you can demonstrate you will spend the funds on activities which align with their objectives. As noted above though, competition with charities means you are unlikely to access these pots however.

There are plenty of profit making companies/organisations out there who access funds in the way you describe, and this is mostly done through working in partnership with registered charities who are also working with the beneficiaries you are looking to support.

Let's say for example, you are offering a job brokerage service; you could work with a charity which is delivering education and employablility services to offer an additional element to their offer for their beneficiaries. It would make their offer more attractive to their donors (and the individuals they support) and they can pay you for your time with any grants or contracts they receive. Be aware, it may take time and there are no guarantees.

There is nothing legally wrong with this, or ethically wrong. Charities still have to pay staff/contractors to deliver a quality service to their clients/beneficiaries. As long as you can demonstrate that what you will offer is both high quality and relevant to them I think you can sleep easy!

If you aren't sure where to start in finding partner charities, you can contact your local Council for Voluntary Service (www.navca.org.uk/directory) who may be able to point you in the right direction.