Before considering the type of trading activity you want to
establish, you must first consider the reasons behind your
organisation wanting to trade. Will you be trading to further your
mission or simply to make money?
The best trading ideas are usually those which emerge easily
from the current work of the organisation or from the skills or
capacity already in house.
Income can be generated through trading goods and services using
a number of approaches:
Selling 'core' related goods or services which are directly
related to an organisation's aims and objectives. As well as
furthering an organisation's mission, this form of trading can also
generate valuable surpluses.
For purposes of charity law, there are two categories of
- Primary purpose trading - trading that
contributesdirectlyto the objects of the charity.
- Ancillary trading - trading
thatindirectlycontributes to the charity's primary
When it is not possible for an organisation to combine its
services with generating income, unrelated trading may be
considered; selling goods and services which may have little
relation with core aims, but generates profit which can be used to
subsidise core work.
For charities, unrelated trading is referred to asnon-primary
purpose trading.Charities can only engage in such trading where no
significant financial risk is involved.
If the activity is unrelated to your charity's objects, and
involves significant financial risk, then it should only be
undertaken by atrading subsidiary- a separate company established
for this purpose.
An element of mission-related trading which involves charging
user groups and beneficiaries to cover the basic cost of a service,
not to make a profit but to provide a subsidised service.
This model is often a route into trading, arising from the
nature of an organisation's activities. Social firms aim to create
real jobs and training opportunities for people marginalised from
the labour market or seek to deliver high quality, affordable
services beyond those of the state. www.socialfirmswales.co.uk
Generating income through the provision of goods or services
outlined via a contractual agreement with a purchaser. Income
generated in this way is usually restricted, meaning that the
income must be spent in line with the terms and conditions of the