Sustainability & Diversified Income: Beyond Grants and Donations
- Third Sector Experts International
- Oct 24
- 5 min read
For many charities and CICs, the phrase “we rely on grants and donations” has become a familiar refrain. But in an increasingly competitive funding environment, where grants are oversubscribed and donations fluctuate with the economy, relying on just one or two income sources is risky.
Sustainability doesn’t mean cutting costs or waiting for another funder to say “yes.” It means building a balanced, resilient income model that allows your organisation to survive uncertainty and plan confidently for the future.
At Third Sector Experts International, we’ve helped hundreds of UK-registered charities and CICs develop income diversification strategies that protect their mission and strengthen financial independence.
Here’s how to move beyond short-term fundraising and build sustainable income that lasts.
Why Sustainability Matters More Than Ever
The landscape has changed. Funders are demanding more evidence of financial resilience, while trustees are being urged by the Charity Commission to reduce over-dependence on single income streams.
Meanwhile, cost-of-living pressures have affected donor giving, and many charities working internationally are facing currency fluctuations and rising transfer costs.
A sustainable organisation can:
Continue delivering impact when one funding stream ends.
Invest in innovation and growth.
Demonstrate strong governance and strategic foresight.
Attract partnerships and larger funders who value long-term planning.
In short, sustainability is not just a financial goal; it’s a governance responsibility.
The 5 Core Pillars of Sustainable Income
At Third Sector Experts International, we use a five-pillar framework to help organisations diversify effectively.
Grants and Trusts, Still Important, but Not the Whole Story
Grants remain a cornerstone for most charities. However, they should be seen as seed funding rather than the foundation of your long-term model.
To make grants work for you:
Build relationships, not just applications.
Prioritise multi-year or unrestricted grants.
Develop strong impact reporting and compliance, funders back confidence.
Use grant funding to create assets or income-generating capacity (e.g. setting up a training arm or social enterprise).
Trading and Social Enterprise
Many charities and CICs now generate unrestricted income through trading activities, selling goods, services, or expertise.
Common examples include:
Training workshops or consultancy linked to your mission.
Selling ethical products (e.g. handmade crafts, fair-trade goods).
Charging fees for certain services (e.g. community classes, therapy sessions).
Renting out space or facilities.
Trading is legitimate under charity law, as long as it aligns with your charitable purpose or uses a trading subsidiary for non-primary activities. The advantage? It provides unrestricted income that can fund your core operations, something grants rarely do.
Corporate Partnerships
Corporate social responsibility (CSR) is no longer about one-off donations; it’s about shared value.
Businesses want partnerships that align with their brand values and demonstrate measurable social impact.
Successful corporate partnerships often include:
Payroll giving and matched funding schemes.
Sponsorship of events or campaigns.
Cause-related marketing (e.g. donating a percentage of sales).
Staff volunteering or skill-sharing programmes.
The key is to position your organisation as a credible, professional partner, not just a cause asking for money.
If your charity operates internationally, corporate partners can also help with logistics, visibility, and access to new markets.
Community and Individual Giving
Even with digital giving and AI-driven platforms, the most powerful form of fundraising remains human connection.
Sustainable individual giving strategies include:
Regular giving programmes, encouraging monthly donations with consistent communication.
Legacy giving, inspiring supporters to leave a gift in their Will.
Membership schemes, where donors feel part of a “movement,” not just a mailing list.
Peer-to-peer fundraising, empowering supporters to raise money on your behalf.
Donors who understand your story and impact are more likely to give again, and give generously.
Institutional and International Partnerships
For charities working overseas, partnerships with institutional funders (e.g. FCDO, UNICEF, UNHCR, Comic Relief) can unlock large-scale, multi-year funding.
However, these opportunities come with higher expectations around governance, safeguarding, and impact measurement.
Third Sector Experts International supports clients to build compliance-ready organisational structures enabling them to access international funding confidently while managing risk and reporting obligations effectively.
How to Build a Diversified Income Strategy
Diversification doesn’t mean doing everything at once. It means choosing the right mix for your capacity, mission, and beneficiaries.
Here’s a step-by-step approach:
Step 1: Audit Your Current Income
Review where your money currently comes from. Ask:
What percentage of income is restricted vs unrestricted?
How many funders account for over 50% of your total income?
Are there seasonal or geographic risks?
A simple pie chart can reveal dangerous dependencies.
Step 2: Identify Opportunities That Fit Your Mission
Not every income stream fits every charity.
For example, a mental health charity might develop paid wellbeing training, while an education CIC could sell online courses.
Choose opportunities that:
Align with your mission and values
Use existing strengths or assets
Are realistic given your capacity and team skills
Step 3: Build Financial Forecasts
Estimate setup costs, expected income, and breakeven points. Many charities underestimate the time needed for new income streams to mature, typically 12–18 months.
Include risk scenarios (best case, worst case, expected case) in your budget to satisfy trustees and funders.
Step 4: Invest in Systems and Skills
Diversification often requires different skills from traditional fundraising.
Consider training your team in:
Digital marketing and social media campaigns
Bid writing and contract management
Financial forecasting and pricing models
Partnership negotiation
And don’t overlook your infrastructure, CRMs, accounting systems, and impact reporting tools, which are critical to managing diverse income sources effectively.
Step 5: Communicate Your Financial Story
Transparency builds trust. Publish income breakdowns in your annual report and on your website. Show donors and funders how you are reducing risk and becoming self-sustaining.
When you talk about sustainability confidently, funders see you as a safe investment, not a struggling charity.
Common Mistakes to Avoid
Chasing every idea, diversification isn’t about doing more; it’s about doing the right things well.
Ignoring cash flow. Some new income streams require upfront investment.
Neglecting core costs, always plan how overheads will be covered.
Forgetting your team. Diversification requires cultural buy-in, not just board approval.
Overlooking governance. Ensure trading or international activities comply with your constitution and the Charity Commission’s guidance (CC35, CC37).
Case Example: Turning Dependency into Sustainability
A UK-based youth charity we supported relied on three small grants for 90% of its income. When one funder withdrew, they faced closure within six months.
We helped them:
Conduct an income audit and risk assessment.
Launch a small trading subsidiary offering accredited youth work training.
Develop a regular giving scheme with digital automation.
Secure a corporate partnership with a local tech company.
Within 18 months, unrestricted income rose from 10% to 47%, giving them the flexibility to grow and innovate.
Sustainability for International Charities
If your organisation operates overseas, diversification can be more complex but also more rewarding.
Consider:
Local partnerships collaborating with NGOs or community groups to access regional funding.
Diaspora engagement, building relationships with UK-based communities who support your overseas mission.
Digital campaigns that connect beneficiaries’ stories directly to supporters worldwide.
Income from training or consultancy, sharing your expertise with others in the sector.
Sustainability in global operations means balancing UK governance standards with local realities, something Third Sector Experts International specialises in supporting.
How Third Sector Experts International Can Help
We support charities and CICs to move from dependency to durability by helping you:
Assess risk exposure
Identify sustainable income opportunities.
Strengthen grant readiness and reporting.
Design corporate and international partnership strategies.
Whether you’re a small community project or a global NGO, we’ll help you build a roadmap to long-term financial sustainability without compromising your mission or integrity.
Final Thoughts
A sustainable charity isn’t one that just survives; it plans, adapts, and thrives.
Diversifying income isn’t about abandoning your values or chasing profit; it’s about ensuring your cause continues to deliver impact long into the future.
As we often tell clients: “A grant can start your story, but sustainability keeps it going.”
Download our Sustainable Income Planner
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