A co-op in Lancaster managed to increase trading by 36% after receiving grant funding through the Community Business Trade Up programme.
Created by the School of Social Entrepreneurs (SSE), match trading is a new type of grant funding that pound-for-pound matches an increase in income from trading. By rewarding sales growth, it incentivises social organisations to develop their trading base.
Nineteen community businesses took part in the Community Business Trade Up programme, run by SSE in partnership with Power to Change. They were offered match trading grants of up to £10,000, which allowed them to double their grant funding allocation if they increased income from trading over and above their previous year’s income.
They also received 12 days of learning over six months, to help them grow their organisations through trading. A control group used in the study also received a typical grant of £10,000 and the same learning sessions.
The match trading cohort could only draw down their £10,000 as they increased their income from trading goods or services. For example, if in 2016 an organisation earned £5,000 in month 1one, but in 2017 earned £7,000 in month one, they would be able to draw down £2,000 of the match trading grant – incentivising the organisation to increase its trading.
The match trading group were allowed to draw down an initial £2,000 of their grant to support the ideas and plans they had to kick-start their trading.
Recent data from SSE shows the the community businesses in England that received the grants, including the Green Elephant Co-operative at Halton Mill in Lancaster, generated a combined £1.7m from trading over the course of the year – £591,000 higher than their trading income from the previous 12 months.
Using match trading grants, these businesses achieved a 92% increase in income from trading. By contrast, the control group, who did not receive match trading grants witnessed an increase of 19%.
For the businesses receiving the match trading grants, their income from trading as proportion of total income increased by 14 percentage points, from 73% to 87%, between the baseline and the programme year, whilst for the control group there was no change.
Sara Buchanan, joint head of open programmes at Power to Change, said: “This innovative new way of funding supports community businesses to think differently and learn how to generate more income from trading, rather than be reliant solely on the money they can raise through grant applications.
“Combining learning with match trading grants has proven to be a winning combination and we look forward to seeing more community businesses benefit from this funding model in the future.”
Halton Mill, run by Green Elephant Co-operative, offers private and shared low carbon workshop, studio and office space as well as classes, performances and events.
Director Fiona Frank says: “The match trading grant, alongside the learning sessions, really helped us to take risks and try new things. We trialled a new learning programme, put on more events ourselves and produced a brochure for the first time, which has really increased our profile.
“Not everything worked, but it gave us a much better idea of what does work for the business, and how we can continue to build a working community and provide stimulating classes and events for the locality. Our trading income grew by £26,000 during the year of the programme, an increase of 37%. We are not now reliant on grants to cover our running costs. We also learnt a lot from other social entrepreneurs involved.”
Alastair Wilson, chief executive of the School for Social Entrepreneurs, added: “We know that at the heart of these organisations are driven, passionate individuals, who given the right support, can build thriving businesses delivering real social impact in their neighbourhoods.
“Match trading grants are by no means a silver bullet but initial data from both the pilot project and the Community Business Trade Up programme in partnership with Power to Change is showing that this type of funding is helping to build more sustainable business models.”
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