Trading is an important source of funding for the voluntary and community sector.  It can be used to generate additional income for organisations.  Increasingly, many charities are developing trading activities that directly relate to their charitable objects. 

There are lots of benefits associated with trading, especially when it is aligned with the social purpose of the organisation.  Trading can enable voluntary organisations to expand their customer base, and reduce their dependency on a small number of funding sources. Income from trading is unrestricted, which means that you are free to choose how you use any surplus.  Combined with other sources of income, trading can contribute to the long-term sustainability of your organisation. 

However, trading can also expose your organisation to risks and liabilities. These risks are not just financial; there are also risks to the reputation of the organisation if the trading activities are in conflict with its social purpose.  Some groups may be concerned about the ethical dilemmas posed by trading.  Competing for trade can have an impact on the culture of the organisation, and require board members and employees to develop new skills. 

So before committing yourself to a new trading activity, it is worth spending some time helping your organisation get ready to trade.  Any voluntary group that earns most of its income through trade and contracts could choose to call itself a social enterprise.

Benefits and Challenges of the Trading Funding Stream

• Unrestricted income stream
• Exchange of goods or services for money
• Requires product quality control
• Marketing and financial knowledge essential
• Developing a good relationship with the consumer is vital in ensuring continued custom
• Can be used to generate profit or contribute to costs of other work

Thinking about Trading?  What to Consider?

Getting Ready to Trade: taking on new trading activities could have a major unintended impact on your organisation unless you plan how to address some of the key issues associated with trading:

• What impact will the trading activity have on the mission, purpose  and values of your organisation? Developing new trading activities can enhance the mission and purpose of your organisation if you concentrate on generating ideas that are related to your mission, express the values of your organisation, and fully exploit its strengths. 
• How will it affect the organisational culture?  It is important that the development of trading activities has the full support of your organisation.
• Do you have the right organisational structure to start trading?  If your organisation is a registered charity, you need to check that it is allowed to trade in the areas you are considering.    You may need to change the structure of your organisation, or adopt a legal form better suited to trading activities. 
• How will you identify the best opportunities for new trading activities?  The most important   part of getting ready to trade is to make sure you select and develop the best trading activity.  Start by identifying all the opportunities open to your organisation.  Sift these ideas and select the most promising for a full feasibility study.

How to Trade - there are five key issues that need to be addressed by voluntary and community organisations developing new trading activities, namely

• be competitive
• know the rules
• establish a trading subsidiary
• develop commercial skills
• manage risks

Access Help - from NCVO (including Only Connect: a funded scheme to enable you to visit other voluntary and community organisations engaged in trading and their Tools for Trading Toolkit, details available from www.ncvo-vol.org.uk) and from Social Enterprise East (www.seee.co.uk).