How the Bronte rebuilt its operating model after losing its primary funder.

You are in a series of meetings where a worrying budget deficit has developed. A long-term funder has ended its commitment, given notice, or shifted priorities. The steps for action that follow are some version of “we need to diversify our income”, and you are now responsible for making that happen.

You are probably talking to a fundraising consultant. You may be exploring trading subsidiaries, fee-for-service models, or whether the organisation has assets it could use more effectively. In other words, you are treating this as a fundraising problem.

But no one has yet asked whether the organisation is legally permitted to generate income as discussed, and whether the governance structure can support trading activity. This piece is for the moment just before that question lands on your desk.

The Bronte Youth and Community Centre has been in Liverpool city centre since the 1960s, in one of the most deprived areas in England. For decades, it had maintained a long-standing and stable relationship with its primary funder, the John Moores family. 

The organisation had no Chief Executive, and it was run by trustees. Andrea Deary joined as a trustee in March 2022 and immediately began writing grant applications pro bono. "As a new person to the organisation, the minute I got involved in it, I felt wedded to it," she explains. Adrienne Taylor managed governance, HR, and youth development.

Then the John Moores funding ended.

But the organisation did not close. Trustees kept it alive on minimal resources, writing applications and maintaining the building, while working to secure its future. 

What came next was a £3.4m Youth Investment Fund grant to refurbish the building. However, by January 2025, inflation had driven costs over budget by £750,000, so The Bronte launched a public fundraising campaign to close the shortfall. At the time of writing, the building continues to be under renovation.

Research published in VOLUNTAS, the international journal for voluntary and nonprofit organisations, found that, among UK charities, dependence on grant funding is associated with a higher risk of organisational failure, and that this vulnerability persists regardless of whether income is concentrated in a single source or across several sources. 

The 2024 Status of UK Fundraising Benchmark Report corroborates the implications of relying on grant funding. Nonprofits that rely on grants as their primary source of income are significantly more likely to report decreased income. By contrast, growing nonprofits have intentionally diversified their income streams, turning away from grant-only dependency and building income from grants, trusts, legacies, individual giving, and earned income in roughly equal measure. The implication is that organisations facing major funder loss may need to focus less on replacing the funder and more on replacing the income model.

The problem that presented itself to The Bronte was income replacement. A funder had left, and new income was needed.

But the real problem was different. “Diversify our income” sounds like a fundraising instruction, but in practice, it can be a redesign of the operating model. In losing its primary funder, The Bronte discovered that every element of the organisation had been structured to rely on a single source of income. 

The charitable objects did not permit trading, and there was no Chief Executive to own commercial development. Governance structures had never been formally documented, and when specialist support arrived, they were able to articulate leadership structures and role responsibilities for the first time. 

The dependency ran deeper than the income line. The legal architecture, governance, and operational accountability had all been arranged around a world in which one funder provided and the charity deployed. Nothing in the organisation was built for a world where it had to generate income. 

As with The Bronte’s situation, funders across the sector are reassessing priorities and long-standing relationships. Established charities can find themselves exposed when foundations shift geographic focus, change beneficiary groups, or time-limit their commitments. And this is what stalls many charities that have rationally built organisations in stable environments that have now changed; they never needed a backup plan until they did.

The Bronte secured a £3.4m Youth Investment Fund grant to refurbish their building, with the application written pro bono by Deary in her capacity as trustee, before any paid staff were in post. The building will become a mixed-use space, including coworking offices, an events venue, a café, community rooms, and a sports pitch. 

They commissioned three concurrent workstreams from an external specialist, covering income generation strategy, governance review, and leadership structure.

The charitable objects were amended to permit trading income, a change that required a formal application to the Charity Commission.

Deary moved from her role as trustee and pro bono grant writer to paid project manager for the refurbishment, which was not a shortcut around governance, but rather a governance decision that needed to be handled carefully. In November 2023, Lesley Lee, previously Chair of Trustees, moved into a new paid role as Business Manager, alongside Laura Cain as Youth and Community Manager. Together, they manage all parts of the operation. They also documented leadership structures and role responsibilities for the first time.

Five tools have been identified in The Bronte’s work that any charity facing a similar situation could use. In The Bronte’s case, specialist support and capital funding made the project viable.

The Bronte’s first move was to create parallel workstreams focused on obtaining legal permission to trade, establishing the right governance structure to exercise that permission, and defining the leadership structure to sustain both. If these had been delivered sequentially, the organisation would have been left with legal permission it could not govern, or governance structures with no one accountable for making them work.

The second was Deary's appointment.

Bringing in an external project manager for a refurbishment of this complexity would have required significant knowledge transfer, including the grant conditions, the building history, the funder relationships, and the community context. Deary had this knowledge, so her move from trustee to paid project manager was a governance decision that enabled the organisation to implement the project more quickly and effectively. It ensured that institutional knowledge remained accountable at the very moment the organisation most needed it to be.

The lesson is not that the person who knows the organisation should automatically get the role. In a transition like this, the first question is often “who can we recruit?”, when sometimes it should be “where does critical knowledge already sit, and what structure would make that knowledge accountable?” Deary’s move from trustee to paid project manager turned informal organisational knowledge into a defined, accountable role. That kind of move has to be handled properly, with no governance shortcuts. But the key idea is transferable to other charities: when an organisation is rebuilding, the knowledge held in people’s heads has to be incorporated into its operating model. Otherwise, the organisation remains dependent on memory at the very moment it needs structure. 

The third is much harder to replicate, as it was unique to The Bronte.

The Youth Investment Fund grant created both external pressure and external resources. The refurbishment required the legal, governance, and operational changes the organisation would not have made without the funding, which meant the grant became more than just income; it created the condition under which renovation and a change of strategic direction became possible. Most charities facing a funder exit do not have that combination available, but they can manufacture a version of this internally through a board resolution with a deadline, a governance review commissioned before it is needed, or a decision to change the objects now.

Underlying all of this was a commercial approach to the problem. The Bronte asked: what vehicle do we need, what income streams does this asset support, what does the legal and governance architecture need to look like? Most charities facing funder exit ask fundraising questions instead.

The Bronte can now legally generate trading income. Before the objects change, a café or coworking operation would have been outside its permitted purposes. 

The governance structure and decision-making authority are documented, which means an organisation that operated informally for six decades, where everyone knew what they were doing because they had always done it, now has a structure that does not depend on collective memory.

There are now named senior leaders in post with defined responsibilities. The chicken-and-egg problem that kept The Bronte trustee-led - no Chief Executive because it cannot afford one, cannot afford one because it didn't have enough income - was addressed by having trustees in place with the right knowledge who moved into paid operational roles. As Deary put it: "We've basically reinvented the business from scratch to future-proof it so that we can scale."

What has not yet shifted is the trading income. At the time of writing, the café, coworking offices and events venue are under construction.

A charity without a physical asset cannot replicate The Bronte’s income strategy directly, though the governance and legal architecture apply regardless. For those with a building, the risk is twofold. First, renovation projects can overrun. Second, the building can be ready before the operating model is. Opening the doors is one milestone; being ready to run the income model that the building depends on is another. 

Royal Institution of Chartered Surveyors data from 2023 shows that 64% of small UK building firms only discover cost or time overruns after the job is finished. The Youth Investment Fund’s own programme evaluation noted that Relationship Manager support was least effective when grantees faced construction challenges. But the operational risk is less about the overrun itself; it is about the gap between build completion and revenue generation. An organisation that has spent its grant, taken on the operating costs of a mixed-use facility, and is waiting for commercial income that has not yet materialised may be financially precarious before the new model has had a chance to prove itself.

The second risk is capability. New income streams create new operating requirements. A café means hospitality staff, food safety, perishable stock, cleaning standards, rota management, margin control and extended opening hours. Coworking means facilities management, occupancy targets, tenant relationships, service standards and a different kind of customer relationship. These activities may support the mission financially, but they also create operational complexity. The early warning sign is when weekly operations meetings start to spend more time on the café rota or coworking bookings than on the programme.

The third risk is mission drift. Trading income is not the problem. The question is whether the commercial activity is sustaining the programme or slowly becoming the work everyone is managing around it. Mission drift often appears in slow motion, so the question to ask before an asset becomes operational is: is this income model designed to sustain the programme, or has the programme become the justification for the income model?

For charities without assets, the breaking point appears earlier, as income diversification can stall before implementation because there is no obvious strategic route. The Bronte had a building, which made the strategic choice more simply defined. For organisations without that kind of asset, diversification discussions can become workshops, strategy documents and pilots that never scale. The test is whether the organisation has a structured process for deciding what diversification should look like for its assets, audience, mission and market. Without that process, income diversification becomes another management distraction.

After almost six decades, The Bronte is still an important presence in Liverpool. It survived its financial crisis and continues to serve young people from one of the most deprived areas in England. In the meantime, the building renovation work continues, and the commercial income model waits to be tested.

"We want to do that sustainably, without being heavily reliant on grant income," says Deary. That balance has to be managed in real time. A café needs staffing. Coworking needs marketing. Room hire needs bookings. The building needs managing. All of which is the operating reality of building a different income model.

When "we need to diversify income" becomes yours to deliver, what question will you ask next? Where will the money come from? Or what will it cost the organisation to generate it before the income has arrived - in staff time, management attention, governance, systems and decisions?

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