A groundbreaking charity shop, one of the first of its kind in the country, is in the running for a major national award.

Birdcage, in Skipton High Street, which opened in October 2011, is competing in the UK Citi Microentrepreneurship awards taking place in Bristol, on Wednesday. It stands to win £5,000.

The shop was the first venture into retail business for the Leeds-based charity, Behind Closed Doors, which supports victims of domestic abuse.

It was launched with a start-up loan package of £25,000 in 2010 from the Key Fund – the UK’s largest regional community development finance institution working in the north of England.

So successful has the shop been that the organisers are now looking at replicating it elsewhere.

It received a further £20,000 last year from Key Fund to develop and expand the business.

At its heart are products that are recycled, “upcycled” or mended and it relies on volunteers sharing their creativity, skills and talent.

Louise Tyne, organisation director for Birdcage, said: “The shop was a reaction to the economic climate our charity was facing.

“Funding streams were drying up but the needs of the victims of domestic abuse continued. We decided to diversify our income streams by creating a trading arm so it wasn’t dependent on one source of funding.

“What’s made Birdcage such a success is it’s more of a brand than a traditional charity shop. We chose Skipton despite our charity being based in Leeds, because we recognised location was key to success. It’s become a centre for the local community as well as a shop for tourists.”

Birdcage would not exist if it was not for Key Fund support offering unsecured development loans to a charity with no track record in retail. It ensured access to money and expertise and business plans to enable a small organisation to make the leap to trading, she added.

Garry Brown, investment officer for Key Fund who nominated Birdcage for the award, said: “Not only does Birdcage help generate revenue for an important charity, it’s a beacon of innovation and creativity that shows how social enterprise can play a vital role in a community.

“We hope their story inspires others to come forward to speak to the Key Fund about how we can help them set up their own social enterprise.”

To date, it had invested over £29 million and supported more than 2,000 organisations across the north.