In this ‘particle’, I take a quick ramble around my head on one of the most taken-for-granted terms in social enterprise discourse: “traded income”. These are simple words and relate to income derived from selling goods and services but I seldom see the topic discussed in academic literature or in the social enterprise eco-system. So, here I try to give the subject of traded income a bit of an airing.
My first thesis is that ‘traded income’ is more than the money you earn from selling goods and services. In trying to pin down what constitutes “traded income” I start with monies from the state – too often assumed to be ‘just’ grant funding. Sometimes this is clearly earned income when a contract is subject to competitive tender and can be considered a commercial transaction. Conversely, funding is equally clearly not earned income when awarded by the state to a nonprofit as a grant or from a service contract agreed on an, ah, historic basis (health and social services funding seems to be full of these). But in the middle of this apparent clarity there are other state funding streams that involve an element of competitive selection and a specified service level – but is this enough to constitute a market transaction of the provision of goods and services? And then, I also come across nonprofit managers who, when they have a new idea, they’ll be off to pitch to funders in government departments and agencies; they treat the state as marketplace for their services. Where are the boundaries here?
Do subscriptions count as traded income? If you pay a subscription to a trade union or a professional body or a historical association, I bet you won’t be thinking of it as traded income. But a subscription may refer to a direct transaction: I have bought newspapers, wine and coffee on subscription. More subtly, an arts ‘membership’ subscription may present as a philanthropic donation but involve a transactional benefit – a discount, say, or admission to member-only events. Where are the boundaries here?
I’ve come across nonprofits who enjoy “sponsorship” income. This may not sound like earned income. But sponsorship in the community radio sector is mighty close to advertising income – and that sounds like earned income to me. And in sport sponsorship – is there no mutual benefit or effective transaction? Where are the boundaries here?
And just what do we mean by “fees”? Doctors, schools, childcare facilities, architects, lawyers, mental health counsellors, all charge fees and that seems to be based on a clear transaction of services. Yet, I’ve come across nonprofits that charge fees – childcare providers for example – who consider this as a contribution to a service but do not believe that they have a market-based relationship with the fee-payer. Where are the boundaries here?
Rent. No argument here. The payment of rent for work space or for the casual hire of a meeting room is clearly traded income. But my point is that it is often incidental to a main social purpose and, so, overlooked by companies when reporting their traded income.
Finally, I’m concluding this particle in a small crisis of confidence. Should I be writing about “trading income” rather than traded income? Or earned income? And can anyone tell me the difference?
© Danielle Byrne, 2023
Social Economy Investigator 