How to Generate Income & Create Impact

Dear fellow and aspiring social entrepreneurs,

Some of the most common questions I get asked are:
“How do we start a social enterprise?”
“Where do we begin?”
“What do we need to know?”

This blog is my attempt to answer those questions, not from theory, but from lived experience.

Today’s topic? Money.

Let’s talk about what it means to have it, not have enough of it, rely on fundraising for it, and what money really means in an organisation that puts people and the planet ahead of profit.

Here’s tip number 6: How to generate income while creating impact.

The Case for Resources

I’ve written before about why we need more LGBT+ social enterprises (see: “We Need More LGBT+ Social Enterprises – Here’s Why”). In that piece, I made the case for increasing resources to match the rise in hate, violence, and discrimination. At Micro Rainbow, for instance, we’re responding to growing hostility towards LGBTQI people and refugees, from new anti-LGBTQI legislation to hate incidents.

Relying solely on grants and donations makes it difficult to scale our work in response to these challenges. We need a sustainable model, one that includes the ability to earn money.

Donations: Love and Limitations

Let’s be honest, who doesn’t love a donation?

Donations are beautiful. They’re often unrestricted, they allow us to invest where we see the most need, and more importantly, they come with trust and solidarity. Every donation to Micro Rainbow tells us: “I believe in your cause.” We feel a deep responsibility to honour that belief with action.

But here’s the catch: donations alone aren’t enough.

When crises hit, we need to scale our response, fast. And increasing donations is not like boosting toothpaste sales. Our “product” is social change. Our supporters are already stretched. And worse, those who oppose our work don’t just withhold support, they actively try to tear us down.

Yes, donations help, but in most cases they’re not the game changers in times of emergency or long-term planning.

Grants: A Love-Hate Relationship

I love grants, when we get them. I hate the process when we don’t.

Applying for funding can be emotionally exhausting. It’s slow, uncertain, and at times, deeply personal. I still remember when one of our early funding applications to create safe housing for LGBTQI refugees was rejected. The funder said it was “unrealistic.” That hurt. We eventually proved them wrong, the programme became award-winning, but the rejection shook us.

In time, things improved. Our track record helped us attract more support. But even then, grants are cyclical and short-term. You win one, another ends. The cycle continues. They’re helpful, yes, but most grants are limited in their ability to support long-term growth or respond quickly to new threats.

Commercial Income: The Third Sector Taboo

Here’s something that in my opinion we don’t talk about enough: commercial income.

For me, it’s a breath of fresh air. It’s unrestricted. It gives us flexibility. It builds financial resilience.

But it’s hard to secure. The private and public sectors don’t always take us seriously. And many third sector organisations are too small to manage commercial contracts. We need a culture shift, both in how others see us, and in how we see ourselves.

We must ask ourselves:
Could we be part of public service supply chains?
Should we advocate for taxpayer money to fund values-driven providers?

I often ask the following questions to the fellow CEOs I coach:

What can you do this year to earn just 5% more of your budget outside of grants and donations?
Who else can help?
What might get in the way?
What would it take to double that next year?

Social Investment: The Tempting Apple

For us at Micro Rainbow, social investment changed everything. It helped us access capital to scale our safe housing programme for LGBTQI refugees and increase our commercial income. You can read more in: “How Our Failure Led to £4 Million in Social Investment.”

But social investment is tricky for many reasons. Here are three:

Lack of entrepreneurial skills.
Resources are limited and we often can’t offer salaries that attract people with these skills. This is a chicken-and-egg problem, and a strategic one.
Risk-averse boards.
Without trustee approval, no social investment can happen. We need the right skills, and mindset, at board level.
A mindset shift.
Social investment is debt. It must be repaid. In my opinion, this shift from grants to investment requires coaching, training, and confidence-building, not just for CEOs, but for entire organisations.

So Where Do We Go from Here?

Donations and grants are important, and we must keep pursuing them. But in my experience, the real game changers are commercial contracts and social investment. They give us the freedom and scale to meet challenges head-on.

This isn’t a complete list. I haven’t touched on corporate sponsorships, fundraising events, or pro-bono support. But I hope this gives you at least one idea to take back to your team or board.

Here are some coaching questions I often use with clients which might be helpful:

How financially resilient do you want your organisation to be?
How could you increase commercial funding?
What’s already working?
What could you do differently?

I hope you enjoyed this blog! Let me know if it sparked any reflections. If you’d like to stay updated, feel free to sign up for my monthly newsletter on LinkedIn as well.

With my very best wishes on your social entrepreneurship journey,
Sebastian

PS. For more tips, see the Build a Social Enterprise Blog

@sebastianrocca @buildasocialenterprise