Why consider alternative sources of funding?
We welcome funding applications from organisations big or small working to help people get more active.
When you apply for one of our funds, however, we expect to see how you've already tried to raise money in other ways.
As it's very rare that we’ll cover the entire cost of a project, it's essential you can contribute to the costs via other methods.
Having community backing and local partners supporting your project will also make the case for investment stronger.
In this section we explain some of the different types of funding available to you.
What are these alternatives?
To help you decide which is best for you, we've developed advice that covers a range of potential funding options.
Click through the tabs above to find out more about the different sources available.
Many will often see all these methods as fundraising, some of them are better seen as raising finance.
The difference may seem like splitting hairs, but it's important when trying to work out what type of funding your organisation needs – and, importantly, how much.
Fundraising tends to refer to raising smaller amounts of money over a longer period of time. It's often for smaller projects or to supplement an annual income on a regular basis. It’s usually seen as raising regular funds to help contribute to the regular day-to-day costs of running the club or providing your activities.
Finance is often used to mean raising capital funding – significant sums of money on one-off projects that lead to a step change in the kinds of activities your club can undertake and the revenue (and impact) you can generate from them. There is potentially more time and effort involved in raising finance – but organisations can also secure more money for bigger projects.
What are they?
Community shares are a specific form of equity capital available to two legal forms – Cooperative Societies and Community Benefit Societies – both of which can be used by sports clubs.
These legal structures are registered by the Financial Conduct Authority (FCA) using model template constitutions sponsored by various organisations, including some national governing bodies. Societies registered before 2014 were called a variety of names, such as Industrial and Provident Society. These are now termed Registered Societies, but are still able to issue community shares.
A quick guide
Community shares give rights to investors, but unlike standard company equity, it cannot be sold to anyone else. As a result, there’s no risk of the equity raise leading to a transfer of power over time.
Like debt, interest can be paid to investors and investors can get their money back (called withdrawal) but unlike standard debt, these returns can only be paid if the board are satisfied it'd be prudent to do so. Returns are available, but only if the enterprise is generating funds to justify them.
The FCA restrict returns on investment to “no more than that required to attract the investment”, meaning that clubs can ensure they fulfil their 'mission' ahead of servicing investors’ returns.
As investors are therefore more likely to only see a return in the event of a surplus, this knits them into working with the club to help grow its revenues as users and supporters, rather than more distant and differently motivated external investors interested solely in getting a financial return. This creates a pool of ‘patient capital’ provided on friendly terms by the club’s users and wider community.
Societies are exempt from the regulations governing financial promotions, so clubs structured in this way can issue equity (or debt) to the public without any concerns of failing FCA regulations, and so are a relatively easy and cheap way to raise patient capital.
HMRC consider investment in community shares as ‘risk capital’ and so it’s eligible for a series of tax reliefs. Community Benefit Societies can seek registration with HMRC as charities and are then able to also claim Gift Aid on donations made to them.
Community Shares have been used by clubs to generate significant investment in new facilities and to provide working capital from members and the wider community. Research by Nesta shows that while fundraising donations average around £50 per person, community shares investment can secure £400 per investor, even though the same people are often the core base providing the funding.
Things to think about
Cooperative Societies must operate on a one-member, one-vote structure and can pay dividends to members. This means they can’t achieve charitable status. It can also render them ineligible for many grant-funding programmes.
They can take on investment by non-users of the services provided, but that non-user investment cannot control more than 25% of the voting strength on resolutions to liquidate the society or convert it to a company.
Community Benefit Societies (CBS) can also operate on a one-member, one-vote basis but can also have restricted memberships (such as club participants only) or fully-open memberships from the general public.
Once a CBS has sold shares, those shareholders become members with whatever voting rights the constitution gives them, though they can exercise those via membership classes weighted differently to other member categories, such as users, or other clubs in a multi-sport club.
What is it?
Crowdfunding means using websites to organise fundraising campaigns. On a dedicated site, you’ll usually have some text explaining what you’re seeking to raise and why, sometimes with images or a video. The website you use should give people the option to donate online using their credit or debit card.
What are the benefits?
- Not asking people for cash makes managing funds easier and less stressful – and by using online payments people can give what they want, not what they have in their purse or wallet, meaning donations can be higher.
- Crowdfunding can broaden the reach of a campaign beyond people or users in your local area. People who you might have once been in contact with could find out about your campaign online, through social media for example.
- As well as getting an online donation, you also receive that person’s email address and other details which, if they agree to receive it, means you can keep in touch with them.
- Eligible organisations can also claim Gift Aid as part of a crowdfunding campaign.
A quick guide
There are lots of online crowdfunding platforms you can use – most charge around 5% + VAT of what is raised on a no-success, no fee basis.
The majority of these sites work on an ‘all or nothing’ basis. This means that if a project fails to meet its target by a set date, supporters who have pledged to back your campaign get their money returned.
Some websites also have a ‘keep what you raise option’, so regardless of your target, all pledges of support will be valid. But experience suggests donors don’t engage as strongly with campaigns which have hedged their bets in this way.
It’s a good idea to see what organisations similar to yours have used successfully. Some crowdfunding sites specialise in certain types of projects, while others have funds available from other partners at a national or local level to top-up what you might be able to raise.
Check out what Nesta learned from there CrowdingIn directory of crowdfunding platforms.
Things to think about
Crowdfunding is a powerful tool, but it’s not a magic bullet. You need to work hard at promoting your campaign both on and offline to give it the best chance of success. But it terms of effort, it can be less time-intensive than things like organising events.
As activity is driven online, it can connect with younger or busier audiences who might not attend events or respond to more traditional fundraising. But it can also alienate older and less connected communities, so think about whether it works for your likely donors.
Having a strong social media presence or email list is vital to achieve the reach you need to connect with people. If you want to crowdfund and don’t have a website, a Facebook page or regular newsletter, then consider developing this first.
People are bombarded with requests for funding online, so make your appeal stand out. Make it as professional as you can, but it doesn’t need to be too slick – ultimately, you need donations to be able to do something important, and that ambition should shine through.
What is it?
Fundraising can be a critical way for many sports clubs and community clubs to keep their heads above water. But it’s worth researching how it can be done more effectively.
A quick guide
There are a few general things which can apply to all types of fundraising:
- Have a clear vision of what it is you’re raising funds for and why
- Consider if funds are going to be raised from one big event or lots of small ones
- Think about different events you can organise and space them out over three to six months
- Be realistic about what each event can raise
- In a difficult financial climate, try to make it possible for people to give as little or as much as they’re able to
- Don’t go to the same people every time to both help and give money – fatigue can set in
- Community amateur sports clubs and charities are able to claim Gift Aid on all donations from UK taxpayers, which is worth an additional 25p on every £1 donation.
Things to think about
- It’s important to thank people who donate to your cause, and communicate the difference that money will make – it’ll make them much more more likely to donate to you in future.
- Think about how best to utilise volunteers who are helping you to fundraise – could they be using less of their time for something which could have a much higher return?
- Too much regular fundraising can lead to donor fatigue or, even worse, suggest your club is unsustainable, which might impact on your bigger plans if you’re looking to expand or reach out to a new audience.
Find out more
The Code of Fundraising Practice, from the Fundraising Regulator, sets out the standards expected of fundraisers.
What is it?
Only clubs structured as companies ‘limited by shares’, or societies registered with the Financial Conduct Authority and with the right clauses in their constitutions, are able to issue equity.
If they have the right legal structure, clubs can sell shares to investors (including club users) and those people then take rights in the club. Those rights can, for example, be over the future profits (dividends) or over the governance of the club (through voting power at annual general meetings).
Things to think about
While flexible, the law governing companies with share capital is built around protecting investors seeking to achieve a financial return, so social purpose can be harder to enshrine.
Clubs seeking to balance the sporting mission with rewarding investors could look at becoming a Community Interest Company to do this. But once rights have been given they’re difficult to remove, and selling equity in a ‘standard’ company structure can start a process that can see control move away from the club’s participants or users.
There are also laws and regulations governing offering share capital to the general public that can make it hard for clubs to use these methods cheaply or without risk.
While exemptions exist for companies raising less than £150,000 from fewer than 100 people, or where there’s already an existing member base in a relationship with a company (such as club members), clubs should take professional advice to ensure they don’t inadvertently commit criminal offences, which can also lose their directors the benefit of limited liability.
What is it?
Finance is defined as the management of money and includes things like investing, borrowing, lending, budgeting, saving and forecasting.
A quick guide
There are various sources of finance that can help get your project off the ground:
Debt finance is money lent to an organisation in return for which the organisation undertakes to repay the lender both the interest and the original amount lent. It can be lent from a variety of sources.
Mainstream finance is where loans come from mainstream banks and building societies in the form of finance to help your club do something very specific and transformative. As the lenders need to get their loan back with interest, you’ll need to show how you’ll use the money to generate new cash to service the debt.
Social finance involves specialist lenders focused on organisations that deliver a tangible social impact, as well as a financial return.
Angel investors are people who provide capital, typically for a business start-up, usually in exchange for some form of share in the company. For sports organisations, angel investment is usually in the form of loans.
Peer-to-peer funding is using debt from members or users. Because security is hard to achieve, the ability of organisations to access this is usually dependent on having community or locally-based lenders who understand the organisation and its aims.
What is it?
Gift Aid is an income tax relief designed to benefit charities and community amateur sports clubs (CASC), by allowing them to claim back 25p for every £1 donated by UK taxpayers.
To be eligible, organisations must be recognised by HMRC as a charity or a CASC and need to ask donors to make a Gift Aid declaration when they donate. But there are special exemptions when you don’t need a declaration for small amounts of fundraising.
A quick guide
Payments to organisations which are not strictly gifts can be treated as donations for Gift Aid purposes if the value of the reward is minimal – this means that under certain circumstances organisations can claim Gift Aid even when donors get some benefit in return.
Gift Aid can be claimed if the value of the reward doesn’t exceed:
- 25% of the donation for contributions up to £100
- £25 for donations of between £101 and £1,000
- 5% of the donation (up to £2,500) for donations of £1,001 and over.
You may be able to claim 25% on cash donations of £20 or less, even if you don’t have a Gift Aid declaration from the person who’s donated the money. This is called the Gift Aid small donations scheme. You can claim up to £2,000 in a tax year.
Things to think about
There are lots of guidelines from HMRC on what’s needed to ensure you’re claiming Gift Aid on genuine donations for a charitable purpose. It can be quite complicated, so it’s worth making sure you fully understand the regulations before starting in earnest so you don’t get nasty surprises further down the line.
What are they?
Grants are non-repayable funds that let clubs and community organisations provide services or activities.
They usually take two forms; capital grants to help build or improve a facility, or revenue grants to help deliver activities.
Things to think about
- As revenue grants rarely last longer than three years, you’ll need an exit strategy for how activities and posts will be supported when the grant ends if you want your project to continue.
- Funders mainly consider specific activities like sport or education, or a target audience. Others might fund the employment of staff.
- Grants typically don’t support day-to-day running costs.
- There's real competition for funding, with most application processes for both capital and revenue grants heavily over-subscribed. Only the best applications have a chance of being successful, so be realistic about whether it’s worth the investment in time.
- Grants usually have conditions attached to their use, so it’s likely you’ll have to report back on how you used the grant and what difference it made to the organisation and its customers.
- It takes time to research and develop an application that meets the programme criteria and it can take time to find out if you’ve been successful or not. You’ll spend the same amount of time regardless of whether you’re successful or not.
Find out more
There are thousands of grant funders in England. We’ve included links to help you find what could be right for you, including to some of the grant search engines which have information on the latest grants available.
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Grant search engines
Grant search engines hold a host of information about possible grant opportunities.
Read moreRead less- Directory of Social Change
- Funding Information (a pay-to-register site)
- Grants Online (free trial and then pay-to-register)
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- Bowls England - Help for affiliated clubs to find out more information on local, regional, national and even European funding opportunities.
- Cash 4 Clubs - Cash 4 Clubs offers all sports clubs in the UK the chance to win grants ranging from £250 to £1,000. It's a simple scheme aimed at giving community clubs a helping hand and provide the opportunity to raise the money they need to invest in their club.
- DSC Sports Funding Guide - The Sports Funding Guide is a practical guide aimed at helping organisations and individuals looking to raise money and win support for their sport. Available from Amazon, and Directory of Social Change.
- Educational Grants and Charitable Trusts - EGAS offers students, especially disadvantaged students, expert guidance and advice to enable them to secure funding for education and training.
- England & Wales Cricket Board - Raising the money to carry out your plans is without doubt the most challenging task faced by cricket club committees and members. This guide will help steer you through many of the grant aid and development funding agencies which exist and to give you an insight into their respective funding criteria.
- The Football Foundation - The Football Foundation directs £40 million every year into grassroots sport.
- Funding for sailing - Tips on putting together a funding bid and points you in the direction of some of the key funding sources that sailing clubs have been successful.
- Grantsnet - Grantsnet is a search engine for grants available to UK organisations.
- Lottery funding - A free website run by all National Lottery funders in the UK. The site allows you to search for information on current funding programmes across the UK.
- NCVO Funding Central - A free grants search database.
- One Family Foundation - Pools together and redistributes profit to fund projects that will benefit families and communities.
- Premier League and FA Facilities Fund - Providing grants for building or refurbishing grassroots facilities, such as changing pavilions and playing surfaces for community benefit, with money provided by the Premier League, The FA and Sport England, and delivered by the Football Foundation.
- The Rob George Foundation - Provides financial support to young people who demonstrate exceptional commitment/ability in the world of sport but are held back by their financial situation from pursuing their goals.
What is it?
The principle is that a person eligible for tax relief makes an investment eligible for tax relief in an organisation eligible for tax relief. Investors who receive the reliefs can claim a percentage of the amount they’ve just invested against their income tax liability.
A quick guide
There are three forms of tax relief relevant to sports clubs seeking finance:
Seed Enterprise Investment Scheme relief is worth 50% to the investor, so someone investing £1,000 will get £300 off their tax bill. Businesses can offer relief on up to £150,000 of investment, but as it’s restricted to start-ups undertaking a new trade, most sports clubs won't qualify.
Enterprise Investment Scheme relief is worth 30% to the investor, so someone investing £1,000 will get £300 off their tax bill. Sports clubs will only be able to claim this if they’re seven years old or younger. If they’re eligible, they can offer relief on up to £5 million of investment. If they’re older than seven years, they have to be raising, in investment, a sum equivalent to half of their average turnover for the previous five years (to work this out, add your last five years' turnover and divide it by 10).
Social Investment Tax Relief offers a 30% return to investors who lend or buy shares in an eligible business (a charity, Community Interest Company or asset-locked Community Benefit Scheme). There's no age limit on this, though businesses older than seven years are restricted to offering relief on around £300,000 of investment, but younger organisations can offer it on £1.5m of investment.
Things to think about
- Tax reliefs have been difficult to claim via PAYE, but tax codes can now be provided.
- Tax reliefs require all the conditions in place at the start of the investment, to be in place for at least three years. If the club inadvertently changes things significantly in that time and becomes an ineligible body, HMRC can reclaim the tax relief already awarded.
- The rules are fairly complicated for tax reliefs and you’re better off seeking some help from a business advisor. Lots of sports clubs will face a hurdle if they’re seeking to use the investment to develop facilities which can be hired to the public. HMRC class hiring facilities – even if only for an hour – to be 'leasing'. So, if you’re looking to bring in more than 20% of your turnover through hiring, you'll not be eligible.
What is it?
Social sector funding has become increasingly common in recent years and can be made as either grants or investment.
Grant funding will typically be available to help on organisations that are set up primarily to deliver social objectives.
Investment from the social sector, on the other hand, uses repayable finance to achieve social impact as well as delivering a financial return to the investor.
If you'd like to understand more about social investment, the Good Finance website has plenty of information and resources.
We've also put together some information about the various types of social sector funding below.
Social sector grants
There are a large number of grant providers in the social sector, both nationally and locally.
These grants can come with conditions such as how it's used and what it helps to deliver.
Read moreSome providers include:
Social sector loans
In addition to mainstream finance providers, there are also specialist lenders focused on organisations that deliver a tangible social impact, as well as a financial return.
Read moreExamples of social sector banks include:
There are also a number of local Community Development Finance Institutions that provide loans to community focused and socially-driven organisations.
A list can be found here.
Social sector bonds
Social sector bonds offer an alternative to loan funding for larger organisations looking to raise finance of more than £1 million over the medium term.
Read moreExamples include:
Social investment funds
Social investment funds provide and use capital to generate social, as well as financial, returns. This can be in the form of both loan funding and equity investment.
Read moreTypically, social investment is used to help an organisation grow by covering costs needed to deliver new activities and income streams.
These funds are managed by Social Investment Finance Intermediaries. With examples including: