Out of School Alliance - Help and Support for Out of School Clubs

Funding

Having decided to set up an out of school club, your biggest challenge will be to find funding to help you get started. The type of funding you go for will depend on:

  • Your reasons for starting the business
  • What the money is for
  • How much money do you require
  • How soon you need it
  • Nature of your business
  • Plans for future growth

Funding options

Out of school clubs typically rely on either grants, charitable funds, or the proprietor's own money for start-up funding.

Grants from government and statutory bodies
The government formerly made significant amounts of money available through local authorities to support childcare settings with start-up grants and sustainability funding. The aim was to increase the number of childcare places available. However with the squeezing of budgets within local government and a changing of priorities, the status of this funding is now unclear. Some local authorities still keep some money available for start-up grants, but the situation varies greatly around the country. Contact the Early Years and Childcare department at your local council to check whether they still offer any start-up funding for childcare settings.

In May 2013 the Department of Culture, Media and Sport (DCMS) launched a start-up grant scheme for Ofsted-registered childcare businesses with the aim of getting more women back into the workforce. Under the Childcare Business Grants Scheme, new out of school clubs can claim £500 in start-up costs but only if they are just setting up and have not yet started trading. The scheme was planned to run for just one year initially, but has now been extended until 31 December 2014.
www.childcarebusinessgrants.dcms.gov.uk

Own money
This could include savings, equity or borrowing. External equity is money raised from selling shares in your business, in return for a proportion of the profits and a share of the future value. If borrowing to finance the business the debt is usually secured against assets of the business or is guaranteed by you or others. If the business is funded by borrowing, it needs to make enough money to cover both capital and interest repayments.

Charitable funds
These can come from charitable trusts or from donations. In recent years the lottery has been a big source of charitable funding for voluntary childcare organisations. Many organisations are successful in attracting this type of funding, but it can be time consuming and a drain on valuable time and resources to continually apply for funds in order to keep going.

Government Start-Up Loan scheme
The government set up a new scheme in 2012 to provide start-up loans to new businesses in England, Wales and Northern Ireland. The scheme provides relatively small loans (typically around £6,000 but larger amounts are available) to help new businesses get off the ground. You can apply for a government Start-Up Loan even if you have already started running your business, so long as you have been trading for less than 12 months. The loans are repayable over 1 to 5 years, and currently have a fixed interest rate of just 6% - which is much less than most high street banks.  Once approved, in addition to the loan you also receive advice and mentoring via the Start-Up Loan Company. For more information, see the Start-Up Loan Company's website:
www.startuploans.co.uk

Further information

If your out of school club will be run as a private business, the former Business Link service (now part of the .GOV.UK website) provides some good general information about business funding. They have a Business Finance and Support Finder tool which can be useful:
www.gov.uk/business-finance-support-finder

Learning Exchange has a useful list of grants and funds that could be relevant to you (depending the precise nature of your club and what exactly you need the money for). Many charitable funds are quite restricted either in their remit or in their geographical area, and in addition you may not be eligible if you run your club as a standard business, rather than as a charitable organisation or social enterprice.
www.learning-exchange.org.uk 

The UK Community Foundations website will put you in touch with grants and funding opportunities that are specific to your local area.
ukcommunityfoundations.org

The Funding Central website provides access to thousands of funding opportunities for organisations in England. It has an interactive online tool which helps you to identify which grants or loans your organisation may be eligible for. Most of the grants and loans that it covers are for charitable or voluntary organisations or social enterprises.
www.fundingcentral.org.uk

Related articles

If you plan to raise money through grant funding, see our series of articles:

Your funding project — Tip 1: Learn to speak the funders' language
Your funding project — Tips 2 and 3: Housekeeping and Keep talking!
Your funding project — Tips 4 and 5: Planning and Build your team
Your funding project — Tips 6 and 7: Finding the money and Celebrate!
Developing a funding mix strategy: sources of funding