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Financing your project

Funding options

If you are looking for funding for a property it is likely that you will be looking for ‘capital’ rather than ‘revenue’ funding. Capital projects include buying land, building a new facility, or refurbishment of existing facilities whereas revenue funding will typically cover day-to-day running costs such as salaries, heating, lighting and insuring premises. Capital fundraising can range from small amounts for installing a new ramp to improve disabled access to millions of pounds for acquiring a new building.  It is important to note that some funders prefer to provide capital, others revenue and some will fund both.

You will need to consider what type of funding will best suit your project and your resources.  The principal forms of funding which we will outline here are:

•    debt finance (loans)
•    grants
•    pre-feasibility and feasibility funding
•    donations (individual major donors or corporate donors)
•    equity and quasi-equity funding
•    social investment

Please note that this section is very much an introduction to the types of funding which you might consider and you should seek professional advice before committing yourself or your organisation to the liabilities which fund raising can involve.

Debt finance


Debt finance usually takes the form of loans, either secured or unsecured, as well as overdrafts and standby facilities. Generally these require a borrower to repay the amount borrowed along with some form of interest, and sometimes an arrangement fee will be charged by the lender.

Secured loans or mortgages will involve the lender taking some form of security, usually a mortgage or charge, either over the property that is being bought with the loan itself, or over other assets held by the borrower. If an organisation defaults on its debt, the lender can sell the secured asset to recover its loan.
Unsecured loans do not take security over the borrower’s assets, such as the property being acquired. However interest rates are usually higher for unsecured loans since the lender is taking a greater risk if the borrower defaults. 

The main advantage of loan or debt finance is that loans are usually quicker to obtain than grants, particularly if you already have the requisite business plan and financial information available. Loans are generally more flexible than grants and will allow you greater control over how you use the money.  Your loan application will also be assessed on its own merits rather than in competition with others in the context of a grant application.  The principal difference between loans and grants is that loans must be repaid.

Defaulting on a loan can have serious consequences, particularly in the case of a loan secured on the property which is at the heart of the project. 

Please also see the section on

Buying- the financial side

for more information on issues such as the size of the loan to be obtained.


Non-exempt charities will need to consider the requirements of section 124 of the Charities Act 2011 before entering into an agreement for secured funding. The provisions require charities to obtain Charity Commission consent before graining a mortgage unless the trustees have obtained and considered property written advice on a number of matters before doing so. These include the necessity of the loan, the reasonableness of the loan terms, and the charity’s ability to repay the loan.




There are a number of advantages to grant funding; the key features being that grants need not be repaid and interest is not payable on them. There are however disadvantages in grant funding. Grants will usually have conditions attached to them, so restricting their use and your ability to apply them as you see fit. If a project or your needs change, it can be difficult to change the terms of a grant.

Grants can also be short-term which can make long-term and cash-flow planning difficult as they are often paid in arrears. Applying for, managing and reporting on grants can be very  time-consuming and expensive and can take up valuable time which could otherwise be spent in running your organisation and delivering your charitable or community goals.


If you are relying on grant funding to enable you to pay your rent under a lease, it would be useful to ensure that you have rights to terminate that lease should the grant funding end or be withdrawn.


Pre-feasibility and feasibility grants


A range of grants is available to those running a local service or taking over the management of a local building or land of community value through asset transfer. These grants should be distinguished from the loan or grant for a property acquisition itself since they are designed to fund the research and preparatory work which must be undertaken in order to establish whether a particular project will be viable.   

Pre-feasibility grants will typically cover the costs of the preliminary and preparatory stages of the project during which you will develop your organisation’s capacity to deliver services or take on the ownership of buildings and land. For example, training and mentoring staff in order to build necessary skills in property management or ownership.

Feasibility grants will cover the cost of detailed work in developing the organisation’s plans for asset development and ownership.  The types of costs which would be covered would include drawing up detailed business plans, professional fees, such as architects’ fees, surveys, planning applications and lease negotiations. 



The secret to success is to focus your fundraising efforts on the most favourable prospects, in particular those who have shown an interest in or concern for the project or area in which you are operating. This will ensure that the sums required are raised from the minimum number of major funders rather than a large number of small donors, saving you both time and energy.

Equity and quasi-equity funding


Equity investment usually takes the form of shares issued to an investor in exchange for the provision of capital.  Unlike debt, equity finance is permanently invested in the organisation, which then has no legal obligation to repay the amount invested or to pay interest on it. Equity investors usually invest in organisations that they believe will grow and in return expect to receive dividends paid out of the organisation’s earnings and/or capital gain on the sale of the organisation or on selling their shares to other investors. For this reason, equity finance is less commonly used than debt finance by social sector organisations, primarily because the legal structures of social sector organisations will often prevent the issue of shares or distribution of profits. However, some types of social enterprise can issue shares, and co-operatives (industrial and provident societies) can raise finance by selling shares to members.

Quasi-equity investment gives an investor the opportunity to benefit from the future income of an organisation through a fixed percentage royalty payment. This is similar to the conventional equity investment mentioned above, but does not require an organisation to issue shares. The investor’s royalty is usually linked to income and not profit, as social sector organisations are not usually structured to make profits for distribution.

Social investment


Social investment is an investment made on the condition of both a social outcome and a financial return. Social investment can take many forms, including loans, overdrafts, investment and bonds and is an umbrella term used to describe any form of investment that combines the investors' financial objectives with their commitment to social concerns such as social justice, economic development, peace or a healthy environment. It aims to make investment available to individuals or communities unable to access loans and other financial services from mainstream banks. You can follow this link to a useful guide to social investment.

Social investment tax relief introduced in April 2014 will give individuals who invest in qualifying social organisations a reduction of 30% of that investment in their income tax bill for that year. Read more information here.

Sources of funding

A good starting point when looking for potential funding is to check whether your local authority has an ‘external funding officer’.  If they do, they will be well placed to advise you on Council and other sources of local funding as their role includes researching possible sources of funding, maintaining a funding database and attending meetings with relevant and interested parties.

Details are given below of potential funders for capital projects.

Databases and websites

There are many fundraising databases and websites that can help you to identify appropriate funding sources. GRANTnet is an online database. To undertake an online search you will need to register as a new user. A much more extensive range of sources is available through GRANTfinder. Other useful websites are Funding Central and Big Society Capital.

Government funding

The main source of information on Government streams of funding on the web is This website enables you to undertake an online search. Futurebuilders is one of the main sources of government funding for property schemes at the moment. The fund provides a combination of grants and loans for organisations that deliver public services and earn revenue by forming contracts with public sector agencies.

The National Lottery

The Lottery is one of the most important funding opportunities for property projects. Funding is channelled by activities including sports, heritage and the arts through a number of UK distributors. The Joint Distributors Helpline on 0845 275 0000 can advise you which one you should be approaching. The Big Lottery Fund is a key distributor for community organisations. Grants are provided under a number of funding programmes like the Reaching Communities Programme and it is recommended that, once you have looked at their website, you contact the Big Lottery Fund Helpline on 0845 410 20 30.

Grant making trusts and charities

Many grant making trusts have a remit or priority to give to property or capital projects. The larger trusts now have comprehensive websites that allow you to focus on their priorities, for example The Tudor Trust. In London, a major trust supporter for building related schemes is the City Bridge Trust. As part of their Access For Disabled People priority, the Trust can provide grants up to £5,000 for access audits, feasibility and consultation.  The Quartet Community Foundation is an independent charity that provides grants to support a diverse range of activities that help to build strong, vibrant communities across Bristol, Bath and North East Somerset, North Somerset and South Gloucestershire.

Loans and investment

In recent years there have been a growing number of financial institutions that are giving loans to charities. The reason why some charitable organisations are now considering borrowing include the growing difficulty in funding expansion through grants and donations and the move towards a more entrepreneurial approach in which new income streams are being developed. In addition to Futurebuilders, potential sources of loan finance include BIGinvest, Unity Trust Bank, Co-operative & Community Finance, London Rebuilding Society, Charity Bank, Triodos, Venturesome and the Social Investment Business Group, one of the UK’s largest social investors. The Adventure Capital Fund is a Government initiative that provides organisations with a combination of finance, grants and mentoring to enable them to become more self sufficient.

Venture capital is a type of funding provided by specialist firms in return for a proportion of the company's shares. Bridges Community Ventures Ltd , a venture capital company with a social mission, is currently managing two community development venture funds. British Business Angels Association (BBAA) is the National Trade Association for the UK’s Business Angel Networks. Business Angels are high net worth individuals who invest on their own, or as part of a syndicate. The BBAA has an online member's directory where you can search for a potential investor. Triodos also run a Social Enterprise Fund that provides equity finance to social businesses.

Eco funding

A number of grant making bodies exist to provide grants to charity and voluntary organisations looking to install small scale renewable technology in their premises or to develop other sustainable eco-projects. EDF Energy’s Green Fund is available to non-profit and charitable organisations or organisations involved in education and work at community level. Funding is provided for the installation of small-scale renewable technology, some money is available for educational purposes and also for feasibility studies into the installation of small-scale renewable technology. Community Action for Energy (CAfE) provides a database listing funding sources for community groups, charities and non-profit organisations looking to develop sustainable energy projects. The Low Carbon Buildings Programme – Phase 2 offers grants to public sector buildings and charitable bodies for between 30% and 50% of the cost installing approved micro generation technologies, and the Carbon Trust offer Energy Efficiency Financing from as little as £1,000 to enable businesses to reduce energy waste and costs and become greener.

European funding

EU funding should not be overlooked.  The European Funding Network (EFN) is run by NCVO and helps charities and organisations access EU funds. EFN is an England-wide network of voluntary, community and social enterprise organisations active in the European Social Fund (ESF) and other EU funds.

Heritage funds

The Heritage Lottery Fund and the Architectural Heritage Fund support a wide range of projects involving the local, regional and national heritage of the UK, such as conserving historic buildings and bringing them back into active use for the benefit of the local community.

Community Asset Transfer and Community Right to Bid

Pre-feasibility and feasibility loans are available from the Social Investment Business Group which runs the Community Assets and Services Grants programme made available by DCLG for organisations wanting to take over the ownership or management of a local building or land of community value. 

Local Impact Funds

The Local Impact Fund model was created by the Social Investment Business Group to provide simple investment for social enterprises and local charities, with the aim that a locally led solution to social investment will target resources where they are needed most. Local Impact Funds will be led by local sector bodies and will bring together local and national partners and investors to provide tailored support for charities and social enterprises. The funds are designed to work closely with Local Enterprise Partnerships so that EU funds will form part of the funds available. For more information please see the prospectus "Growing a local social economy" published by the Social Investment Business Group.