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Match Trading is boosting the social economy

Richard Collier-Keywood, chair of trustees at the School for Social Entrepreneurs, shares his view on the sustainability and growth of the social economy, following the release of new data on Match Trading grants

The social sector is under huge stress. Looked at positively, it’s a time of change and opportunity with a focus on diversity in income streams. Charities, community businesses and social enterprises are taking on innovative approaches to funding, beyond the traditional grant and donation.

With less grant funding over the last decade, they’ve become more enterprising.  77% of social enterprises earn more than 75% of their income from trading.  52% grew their turnover in the last year (SE UK).

Social investment, crowd-funding and trading are increasingly part of the social sector’s ‘tool-box’. Grants are still important in indemnifying the cost of operating in broken markets. But an over-dependency on grants can hamper the long-term sustainability of social-purpose organisations.

That’s why the School for Social Entrepreneurs (SSE) developed Match Trading® grants, which have so far supported over 500 social enterprises, small charities and community businesses. Match Trading is an innovation in enterprise funding that incentivizes growth through trading.  A Match Trading grant provides social entrepreneurs with funding that pound-for-pound matches an increase in income from trading.  It empowers them to deliver on their impact objectives by entering new markets, testing out new products and diversifying income streams.

We recently published our latest evaluation results on the impact of this new funding model.  Charities, community businesses and social impact organisations incentivised by a Match Trading grant are increasing their income from trading at 2.5 times the pace of those supported by a traditional grant.  It’s an uplift of 64% compared with their income from trading in the previous year.  Plus the ratio of their income from trading vs grant funding went from 58% to 69% in just a year.  This is good news, but it’s not the whole story.

Because it’s not just about the finances.  It’s about changing the mind-set from grant-dependency to a more entrepreneurial approach. That’s why Match Trading grant recipients are also supported by a learning programme.

This gives the individual leader the business skills, confidence and peer support needed to develop a truly entrepreneurial culture.

It’s the shift in culture set by the leadership, from grant-dependency to an entrepreneurial mind-set, which will lead to more sustainable business models.  The combination of a supportive learning programme, with the incentive of the Match Trading grant, encourages leaders to diversify their income streams. This increases an organisation’s chances of long-term sustainability, so they can create greater social impact.

A great example is Monkey Park CIC.  It received a £10k Match Trading grant when its founder Simon Redding took part in the Community Business Trade Up Programme, run by the School for Social Entrepreneurs in partnership with Power to Change.  Monkey Park CIC is a diverse community hub, providing a home to a bike project, café, and workspace for the people of Brampton, Chesterfield.  Its business model includes sales from a bike shop, café and rented workspace, with local authority contracts covering the running costs.  It also successfully used Crowdfunder to cover building renovation costs.

But Monkey Park was still losing money.  Simon turned this around during the programme after learning about pricing and winning contracts.  He explains: “We spoke to our customers, increased our prices in the café and even won a contract with the local authority to run community wellbeing courses.” He gained the skills to grow turnover and employ a part-time manager.

So what about the Match Trading grant?  Says Simon, “the Match Trading grant turns funding on its head.  It’s a real incentive as you can double your money”.  And Simon and his team did just that.  Monkey Park achieved a £10k increase in income from trading, and therefore received the maximum £10k grant as a reward.  But Simon says it is the business skills and support he received that will mean Monkey Park will be here for many years to come.  “The learning programme made us more resilient and helped us to grow our income from trading and profitability.”

So what’s next for Match Trading?

A Task Force of 20+ organisations from the private, public and social sector oversees the development of Match Trading.  So far programmes in partnership with Access – the Foundation for Social Investment,  Guy’s and St Thomas’ Charity, Lloyds Banking Group, the National Lottery Community Fund, Power to Change, Rank Foundation and the Scottish Government have enabled further understanding of the impact the Match Trading grants.

The Task Force is keen to develop Match Trading in other settings to better understand the qualitative and quantitative impact.

We’re heading in the right direction.  But Match Trading is still new, having launched in 2017.  The next step is to analyse the long-term impact of this new type of enterprise funding.  Then we can better understand the role it can play in growing a sustainable social economy.

www.matchtrading.com

 

 

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