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The challenge of income diversification for the Third Sector

ImproveMy colleague Julian Lomas has written an interesting paper on the challenges facing Third Sector organisations as they have tried to diversify their income streams since the start of the economic downturn.  So many charities had become totally dependent on funding from the public sector that when the “plug was pulled”, they were in serious trouble.

His article talks about trading, social investment and alternative grant sources, and makes a particular point about the importance of full-cost recovery.  Having worked with a number of public sector and charity organisations to understand their service delivery processes, I know how important it is to be able to quantify where direct and indirect costs are being incurred.

Julian concludes by saying: “The best time to diversify income is when the organisation is relatively financially secure rather than as a fire fighting measure when times are tough but whenever you do it, do it in a thoughtful and planned way.”

Read Julian’s paper.

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