The majority of charities must now fend for themselves, but what are the alternatives to traditional fundraising? Robert Ashton offers some words of wisdom on the phenomenon of a new social impact model.

In these times of austerity almost any fundraising idea is worth a glance. Yes, income generation is the ‘Big Society’ way ahead, but in some cases, capital funding can only come from traditional fundraising. For example how can a small rural pre-school group with modest income and a breakeven budget raise the £100,000 it needs to replace a worn-out mobile classroom? Certainly not by upping its fees to cover a loan repayment.

This is just one of the conundrums I’ve agreed to help solve. As well as the usual appeals to grantmakers and wealthy locals, a bond issue is being discussed. But to succeed by this means alone we’d need to cast our net far wider than is frankly realistic. So what are the alternatives?

Well, there is an encouraging new phenomenon emerging. A number of forward-thinking enterprises are flexing their business model to deliver social impact in return for a clear point of market difference. Here's one example:

EOS Energy is part of Alumet, a successful specialist provider of curtain walling to the construction industry. Photovoltaic panels are increasingly being used in construction and so diversification into this sector was a sensible move. City investment means the company can offer householders and business-owners free solar panels and free electricity -  the capital cost and investor return being repaid by government generation and feed-in tariffs.

But now for the commercial conundrum: How can EOS Energy differentiate itself in its marketplace when at first glance, it's just another company offering free solar panels? Well it chose to offer community groups and projects 4 per cent of the cost of any installations it can introduce. Let’s return to the pre-school group mentioned earlier, which is struggling to raise capital for a new building. If 100 people in their community decide to benefit from free solar panels and free electricity, the fundraising project will receive a £40k boost. EOS call this initiative ‘Community Green’ and I think it’s actually rather clever.

So is this an example of a flash of inspiration that will have shiny PV panels appearing everywhere, or is it simply a flash in the pan that will be quickly forgotten?

My view is that more and more we’re going to see commercial concerns embedding social purpose into their marketing strategy. Businesses succeed when they meet recognised needs and right now, community and voluntary groups need investment to manage the financial transition imposed by funding cuts. Perhaps this is the light at the end of the tunnel!