By Victoria Butanu
The basis for the creation of many non-profit agencies lies in the enthusiasm of their founders and their desire to do something of value, focusing mainly on the final beneficiary and society at large. However, for these important initiatives to be sustainable, a strategic approach towards their financial health is important. Thoroughly planning a funding model can dictate whether the organization survives or not.
Funding for NGOs can come from a variety of sources and having several of funding streams is the best idea for any non-profit agency. Not all sources will work for all organizations, and sometimes the size and the cause will matter significantly. Let’s have a look at the main ways that a non-profit entity to obtain financial stability in order to continue working towards its mission.
Grants
Non-profits can apply for grants from governments, private and public foundations, as well as international development organizations, such as UNDP, EU, or USAID. Generally, these funds are non-refundable, and in order to qualify a set of requirements and conditions will need to be fulfilled.
The main advantage is that, apart for small projects, donors can fund large-scale and often long-term projects. Another benefit that quite often an organization gains access to expertise that, mentorship, and capacity building exercises that can really strengthen particularly new and small organizations.
There are also some downsides to applying for grants, one of which is the application process itself. This is often, lengthy and requires a particular set of skills to prepare all the necessary documentation. Many funding bodies may request that applicants provide up to 50% of their own funding for a project. This may require you to apply for several grants which, in turn, will involve many human resources.
Grants always come with specific conditions attached, one of these being the reporting procedure with some granting bodies having strict reporting protocols that need to be adhered to by the applicant and their accountant. Other complex conditions relate to the way the money can be spent, limits on overheads, and bidding procedures. Some NGOs choose not to apply for certain funding for these very reasons.
There are pros and cons involved when an organization survives on grants. However, this should not be the only source of funding for any organization for several reasons: receiving a grant is not guaranteed, staff expenses may be capped or not covered at all and grants may come not only with financial but also thematic restrictions that may limit the ability to work towards the organization’s goal.
Corporate sponsorships
Corporate sponsorships are another great tried and tested method by which to raise funds for nonprofit organizations. In today’s world when brands use storytelling to set themselves aside from their competitors, improving their philanthropic or socially responsible image is appealing to most businesses. Corporate social responsibility (CSR) is even becoming mandated by law, in some countries.
When researching a business to approach with a proposal, time should be taken to get to know their values and past good deeds. A customized presentation should then be prepared that profiles you’re the organization, detailing what the project is about, who its beneficiaries will be, what the affinity is between the project and the potential sponsor, and arguing what is in it for the sponsor. The main advantage of corporate sponsorships is that, besides guidelines on visibility, there won’t be much bureaucracy in terms of reporting, unlike grant-fundings.
There are several ways to partner up with a business:
- Philanthropic – no-strings-attached donation, similar to individual giving
- Event sponsorship – episodic or short-term support, typically event-based
- Cause marketing – longer-term thematic engagement
- Pro bono – corporate professionals offering their expertise/services
Social entrepreneurship
Many granting bodies currently use the term “grant eaters” pejoratively, meaning that many nonprofits have become stagnant and dependent on grants alone. In turn, they encourage these organizations to become more proactive and become at least partially sustainable by raising some funds by themselves in a consistent manner. Non-profits are not allowed to retain their profits but they can certainly make a profit and reinvest this back into their own program. One way to achieve this is social entrepreneurship.
For example, if you run a placement center, you could teach your beneficiaries a skill so that they can operate a small business out of your facilities, while the profits made will go into training more people to purchase any equipment necessary. If you are an institution, like a museum, you can set up paid classes or membership fees and generate cash flow every month.
Individual donations
Another classic funding source is individual donations. We often see donation bins in public places and read pitches seeking donations via SMS or mobile apps. Although this really is a great way to raise some serious funds success largely depends on the topic and will often require a big marketing budget.
If you cannot afford a large budget to appeal for individual donations or the cause does not have broad appeal; there is the option of a crowdfunding campaign. There are several websites and social networks, such as Facebook, that are now equipped to raise donations. You will need, to at the very least to write a compelling pitch and at best make a short video that will present the cause and ask for donations.
Another way of raising funds from individuals can be to organize gala dinners, marathons, or auctions. Although many of these do also require a considerable budget to set up, if done properly they may attract large donors and be worthwhile in the end. A key to making these functions a success is to be already pretty well known in the community. In many ways, a non-profit, like a business, is a brand and needs to work towards increasing its following and image.
Consider volunteers
Financial sustainability may involve having both additional funding as well as cutting costs wherever possible. One tested way to cut costs is volunteering. An organization may set up a constantly updating roll call for volunteers for tasks both large and small. You can use your own social media platforms or register with international platforms that will allow you to receive applications from volunteers worldwide. You can start with UN Online Volunteering and Point of Light.
See also| E-volunteer opportunities. Contribute to international development from home
If you are just starting your nonprofit organization or are considering increasing the funding for your NGO, try some or all of the options from this list. To do it properly, consider finding a mentor from a larger nonprofit organization, or take a course on Fundraising for Non-profits from the likes of Coursera.
You should also subscribe to DevelopmentAid to follow country strategies and the major international donors, to spot the right grant opportunity at the right moment.