Contrary to popular belief, charities are able to carry out trading activity – and many do. The income from the sale of goods and services by the voluntary and community sector now makes up over half of the sector’s incoming resources.
If your organisation is to be successful, you will expect to take some risks. However, all good leaders of organisations seek to manage and minimise the risks they take. Using an appropriate legal form is one way to do this.
The most obvious source of finance is an organisation generating its own surpluses to reinvest. But there are a range of further sources of finance available to charities, co-operatives and social enterprises.
An obvious source of finance for any enterprise is retention of profits. If your organisation is likely to be very dependent on its surpluses, perhaps because you are not able to access other forms of finance, then it is worth considering the tax implications of choosing certain legal forms.