Funding and Fundraising

 

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The 2017 Global Trends in Giving Report. 13/9/2017

Published by #GIVINGTRENDS17

Nonprofit Tech for Good and the Public Interest Registry are pleased to announce the first edition of the Global Trends in Giving Report!

Based upon the survey results of 4,084 donors worldwide, the 2017 Global Trends in Giving Report summarizes donor data across six continents about how online and mobile technology effects giving. The report also explores the impact of gender, generation, and ideology upon giving and volunteerism.

The report is available in English, French, and Spanish and is a sister report to the 2017 Global NGO Online Technology Report. The data from both reports is meant to help non-governmental organizations (NGOs), non-profit organizations (NPOs), and charities worldwide better understand if they are using technology in the ways that their donors prefer them to and where they need to improve.

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Understanding Capital Campaigns. 2/2017

Published by FUNDFORNGOS

Most of those associated with the Finances in a NGO would know that budgeting is not just about the project being implemented for the donor, but also entails the costs required for the day to day running of the organization. This includes the cost for paying for non project staff, maintenance of assets and purchasing new equipments. Charity organizations do not generate revenue by conventional methods as they usually do not generate marketable products or services. Here the revenue is generated by submitting proposals and concept notes to donor agencies to solicit donations. For a charity organization the majority of resources come in form of donations, gifts and grants. Hence it is important to understand how donations work and what sort of campaigns can be undertaken to generate funds for organization.

Charity organizations and NGOs raise funds for their operational and administrative expenses through what are known as capital campaigns and endowment campaigns. In this section we will learn ways to raise funds for the NGO to manage its capital resources and non project expenditure through a capital campaign.

What is Capital Campaign?

A capital campaign raises money to cover the cost of capital assets that cannot and should not be part of a non-profit organization’s annual operating budget. This is a campaign designed to raise funds for a very urgent cause on behalf of the organization. This may be to meet an immediate need such as repairs for the building in which the organization is run, or upgrades to the existing office space to meet new building guidelines. It may also be used to upgrade equipment within an organization which is essential for the organization to deliver consistent quality of services. Most of the time capital campaigns are designed to meet tangible needs of a charity organization which can be measured clearly in terms of cost and implications of investing in the same.

A capital campaign will have a fixed payment schedule and waypoints for cash-in hand required to be made against a capital asset that is being acquired. Construction of a building is a prime example for this. In cases where the capital asset is acquired prior to projected completion date, the prospects are not informed of the completion, should they think that their money is any less needed at this point. For such funds, even though it is not advisable to seek deferred gifts actively, it is wise to accept them as they come, so that they can be added to associate endowment campaigns. The income generated in the future by such gifts may be sufficient to cover operating expenses for future capital asset acquisitions.

What all qualifies for Capital Campaign?

By definition Capital Campaign are all expenses pertaining to the capital asset column of balance sheet of an organization. Buildings, machines, equipments, and all other physical assets that the organization acquires for its operations form part of capital assets of the organization.

For a trust managing a Cancer Hospital, the Hospital building, medical machines, equipments, ambulance etc. qualify for capital assets. Hence a campaign that aims at raising money for either of these things will qualify for a capital campaign. It could be different for different organization according to their needs. For a charitable school it could be to finance a new building. It is different from when the school requires funds to pay for education, food and living expenses for the students.

How to Plan for a Capital Campaign?

Now that we have identified what financial need qualifies for Capital campaign we can now focus on how to plan for it. The following steps may be followed by an organization to run a successful capital campaign.

  1. Conduct a Feasibility Study: Conducting a feasibility study helps you determine if your organization is ready for undertaking a capital campaign or not. Organizing a capital campaign is very different from other fundraising campaigns and therefore you need to diligently plan the process by undertaking a feasibility study. Many small and mid-sized organizations initiate capital campaigns without giving due attention to the feasibility study and therefore miserably fail in raising the desired financial goal.

As part of this feasibility study you should ask a few questions to your board members, staff members and donors to ascertain if your organization is truly prepared to start a capital campaign. Here are few questions that can be part of your feasibility study:

  • Do you have a strategic plan in place?
  • Does your strategic plan require you to have a new building, equipments etc?
  • What is the capital for which you need funds?
  • Do you really need the required capital immediately?
  • Does your organization have sufficient human resource to undertake a capital campaign?
  • Do you have a strong donor base that will be willing to support you in the capital campaign?
  • Do you have a list of prospects?

You will be required to interview around 25-30 people, their response will help you determine if you truly need a capital campaign. The feasibility study forms an integral part of a capital campaign as it will determine the campaign design and format.

  1. Planning: If the feasibility study indicates that your organization requires a capital campaign you need to start planning. Capital campaigns will drain you off your time and energy as unlike other campaigns, capital campaigns are long and intense undertakings. You need to plan each and every aspect of the campaign before rolling it out. Some of the aspects that you need to carefully plan are:
  • Financial Goal: Setting the goal for the capital campaign forms the most important element of the entire campaign. The entire campaign activities will depend on the amount that you plan to raise through the campaign. To reach to a final amount it is important for the board to discuss with the project staff and settle on a goal that is realistic and within the capacity of the organization. The feasibility study will also throw light on the amount of money that should be raised through the capital campaign. Before setting the final goal of the capital campaign make sure that you calculate for all the expenses. While setting the capital campaign goal it is also important for you to assess the current resources within the organization.
  • Duration of the campaign: An important characteristic of a capital campaign is that it has a fixed duration. Your capital campaign should have a clear time frame for achieving the goal. This will largely depend on the goal and the list of prospects. If you have a large donor base and are certain that the present donors would support the capital campaign you can run the campaign for a shorter duration, however if you have a small donor pool then instead of running an endless campaign, it would be better to reduce the goal of the campaign.
  • Budget: Make sure to develop a comprehensive budget for the capital campaign. Many organizations spend too much while organizing a capital campaign and often realize it only when the resources get exhausted. Before you start the campaign make a detailed budget of all the expenses that will be incurred during the course of the campaign. This may include costs related to printed material, special events, internet, travel, telephone etc. Most often the expenses should be in the range of 10-18% of the capital campaign goal.
  • Leadership: For the campaign to be successful you need a dedicated leader to get the desired output. You need a person who believes in the cause and has the ability to guide the team efficiently. Identify a person who is confident, expressive and can communicate with donors.
  • Identify Teams: Along with a dynamic leader you would require several teams for successfully executing the different phases of campaign.    Most organizations from the following teams while running a capital campaign:
    • Donor Management: This team will be primarily responsible for identifying and communicating with donors. The team can be further sub divided to deal with individual donors, corporate and  donor agencies to ensure smooth execution. This team will be the face of the campaign as they will directly interact with the donors.
    • Finance: This team will work on ensuring smooth financial management during the course of the campaign. The team will comprise of your financial officer and accountants officer to keep the both the income and expenditure within limits.
    • Marketing and Events Management: As the capital campaign will continue for a long duration, the responsibility of this team will be to organize special events, brochures, social media campaigns etc. for raising funds.
  • Volunteer engagement: Volunteers are a great asset to any organization, as they bring with them energy, experience, knowledge, diverse skills and enthusiasm. They are an important human resource especially for smaller organizations with limited finances and limited staff. Volunteers can be an important resource when you are planning a capital campaign.
  1. Donor Profiling: It is important for your team to have a comprehensive list of donors. This list should have the names of your prospects, present and past donors along with the past donations they have made. This list will give you an idea of who are the donors to most likely support your cause. Donor profiling is most often done by the fundraising manger, as he/she has a good idea of how much a particular prospect will contribute. This will help you in figuring out the exact number of donors you will have to pursue to achieve the campaign goal.
  2. Developing a Case for support: Your capital campaign will be successful only if it is able to connect with the donors. For building a strong connection with donors, you need to develop a strong case of support. A case for support is a narrative of your organization that tells the prospective donors about your funding requirements and the problems you would address on receiving the funds. In other terms it is a document that provides donors with information about your organization, future goals and aspirations, accomplishments, and why should a donor invest in your program. This document is one of the most important tools that would attract donors to support your organization. Key features of a case for support are:
    • Should be attractive
    • Should be donor centric
    • Should clearly illustrate your funding requirements
    • Should showcase your accomplishments
    • Should convince the donors to engage with your organization

One should remember that the case for support should have a human touch to it. Use simple language and be expressive while describing the social problems you will be addressing. You should be careful while writing the case statement as you shouldn’t make it appear like a movie story. Along with making an emotional appeal to the donors it is equally important for you to quote facts and figures to reinforce your case. A fine balance is to be made between quoting factual data and the emotional pitch.

  1. Develop a calendar for campaign: It is important for you to develop a comprehensive calendar for all the necessary events you plan to organize during the course   of the campaign. The calendar should have details of when a particular event should be organized along with major milestones/financial projections that you should achieve. This will help you in monitoring the campaign and making necessary changes if you are lagging behind the projections.
  2. Train your Staff: Make sure everyone involved in the campaign has been trained to solicit funds. Soliciting funds is not an easy task and therefore all people involved in the process should be trained to deal with different situations. Your fundraising manager can take training lessons for the volunteers so that when they approach the donor they are able to confidently ask for funds. You can also develop a pitch to be used by the volunteers or staff while they communicate with the donors.
  3. Involve your Board: Make sure that the board members are involved throughout the campaign. The board will not only provide you the necessary feedback and direction but will also help you to connect with donors. As senior professionals the board members will most likely have better connections with the donor world and involving them in the process will ease your work.
  4. Funding strategies and tools: There are a large number of strategies that can be used for raising funds during a capital campaign. These include:
  • Gift table: A table that indicates different sizes of the donations that will be required to accomplish the campaign goal. It is usually made in close consultation with the board members and is largely based on your past experience.
  • Gift Pyramid: A fundraising tool representing the distribution of different donations.
  • Named giving: While raising funds under a capital campaign, named giving can be an important tool to raise funds. Named gift opportunity is a gesture to honor and appreciate the donor for their support.
  • Pledge Cards: Pledge cards are a fundraising tool for soliciting funds. These cards are filled by donors as an indication that they will be provide a particular amount of money to support your organization’s cause
  1. Campaign Launch: You should launch the campaign once you are confident about the preparations. The first phase of the campaign is referred to as the Quiet Phase as you do not make the campaign public in the very beginning. During the quiet phase you approach close friends, board members and loyal donors of the organizations. Most often maximum donations are raised during the quiet phase itself. The quiet phase gives you an excellent opportunity to test if your case stands a strong chance and is appealing enough to attract donors. In case you do not get the desired gifts during the phase, you can always change your case of support and try out a new strategy. Once you have raised a significant amount of money you should publicize and run the campaign till it achieves the desired goal.

The quiet phase is followed by Public Phase in which the campaign is made public and the case of support is disseminated to a wider audience. During this campaign you reach out to as many donors as you can. You can use a variety of communication tools like – social media messages, radio message, advertisements, special events, dinners etc. to reach out to people. You can also publicize the campaign by organizing a special event or by launching a website. In today’s time when everything is just a click away, it is essential that your campaign is on the internet. There are several benefits that an organization can have through presence on the web; along with enhancing your organizations visibility it also makes you look more professional to donor agencies and potential partners. Making the campaign live on the web will help you get access to several people.

  • Campaign Closure: As the deadline of the campaign nears, you will have to put extra effort to reach the financial goal. Motivate your team members to make the capital campaign a success. If you are a little short of the financial goal revisit your board members and friends to contribute. You should plan a grand campaign closure by organizing an event to thank the contribution of all the donors and team members. This event can also be used as an opportunity to make a roadmap for implementation of the project.

You are answerable to every person that has contributed to your campaign and you should submit a report to them about the project updates. This reporting can be done on monthly or annual basis depending upon your case. You should update the donors about the progress or delays with respect to the project through newsletters. Remember to follow up with donors who have pledged a given amount and request them to continue their support.

Since this is one of the most important ways to raise money for a non-profit organization apart from government funding and grant money, charity organization benefits a great deal from capital campaigns. It is advisable for the organization to design and execute detailed fund raising plan and integrate the above mentioned steps to generate maximum revenue from the capital campaign.

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Storytelling for Fundraising. 2/2017

Published by FUNDSFORNGOS

Stories are powerful tools that define human development, culture and traditions. They have the ability to engage, motivate and inculcate positive attitude in people. It is for this reason that kids are introduced to stories right from an early stage. Stories are an effective communication tool that is liked by people of all ages.

Over the years storytelling has transformed considerably and has evolved as an important tool in content based marketing. No matter what product or service a company offers, their primary concern is to develop humane stories that have an instant connect with people. You might have observed that most advertisements on Television, Internet and Newspapers are build around human characters, which helps us to associate ourselves with them.

As an NGO professional you might be confused, so as to what are you supposed to do with stories and storytelling? You are no script writer, author or a content development company, that you need to write stories. To a certain extent you are right, because as an NGO your primary work is to help people and not write stories. But is that all!! Don’t you think you should share and publish your success stories, so that people know what your organization does?  Don’t you want more people to connect to your cause? Remember that as long as your organization deals with people (donors, project staff, beneficiaries) you need stories.

Storytelling may sound easy but one should understand that it is an art that can be perfected only with practice and hard work.  Using the tips and guidelines in this guide, you will soon master the art of storytelling.  This guide will provide you with all the necessary fuel required for writing effective and viral stories.

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Six Essential Elements of a Successful Grant Proposal. 3/11/2016

Published by PHILANTHROPYDAILY

Writing a grant proposal for a foundation or major donor can take hours, even days. To make sure this time has been well spent, there are six things you should be sure to do:

1) Include a strong cover letter and executive summary.

Most foundations are overwhelmed with proposals, and many smaller foundations—especially family foundations—have no dedicated staff to wade through them. Unless you have been specifically invited to apply, it is likely that the foundation representative who reviews your proposal will be looking for a reason to reject it. You will be making that decision easier if you do not immediately make clear who you are, what you are asking for, and why. Your cover letter and executive summary should accomplish this goal, making a strong, concise case for support and including important details such as the amount and purpose of your request. It’s worth remembering that, oftentimes, the people ultimately making grant funding decisions—the foundation’s board members—never see your full proposal. Instead, they may receive a summary of the proposal prepared by foundation staff, which is combined with other request summaries into a board book. Sometimes, the proposal’s cover letter or executive summary is included along with this summary—this is another reason to make these elements count.

2) Give context for your request.

Many proposals dive straight into nuts and bolts—what you’re going to do and when—without first answering the critical questions, “Why are we doing this? Why should you care?” You need to make sure you’re giving adequate background for your request. Take a step back and set the scene. What’s the problem you’re addressing? Why is it important? How is your organization well-suited to addressing said problem? Are there other organizations involved in similar work? If so, how is your work different? If you’re unsure of whether you’re answering these questions well, try giving the proposal to someone outside of your organization who’s relatively unfamiliar with your work. Does it make sense to them? Do they care about what you’re pitching? Is the solution you’re proposing connected with the problem? Are there significant gaps in your proposal, questions that you haven’t answered? Get candid feedback and modify the request accordingly.

3) Customize the request to the foundation’s requirements.

This starts with your research process. Have you looked at the foundation’s giving history, website, and other resources to see if your organization’s work falls within the foundation’s giving areas? If so, let your application reflect the fact that you’ve done your homework by mentioning specifics about the foundation’s mission and giving and how you might fit into that picture. And if a foundation has given you application forms or guidelines, don’t just ignore them and do your own thing. That’s just annoying and gets you off on the wrong foot from the get-go. Around here, we like to use the acronym ATFQ: Answer the Frickin’ Question! Follow the guidelines carefully and ATFQ—and make it abundantly clear that you’ve done so.

4) Pass the straight-face test.

It’s okay to accentuate the positive but please, don’t just make things up. Don’t come up with a project out of left field for which you have zero qualifications just because you think a foundation might fund it. Don’t include everything plus the kitchen sink in your project budget. Likewise, don’t shoot yourself in the foot by dramatically underestimating the time and budget needed to execute your project. Have an appropriate sense of humility in your approach and don’t promise what you can’t deliver. If the grant is awarded, remember that you’ll probably have to report back on how well you’ve done and how you’ve spent the money, so make sure that you’re setting appropriate, achievable, realistic goals at the front end so you’re not setting yourself up for failure down the road. 

5) Pay attention to the details.

Few proposals are literary masterpieces, and the proposal genre can be constraining. It is nevertheless vital to invest in good writing, as it can greatly help or hinder your cause. If you’re not a talented writer, it’s worth finding someone who is—even if you have to outsource this task to capture your vision in a clear, concise, compelling way. Be sure to proofread your materials thoroughly before sending to ensure that the text is free of typos and formatting gaffes, and that key information—such as the funder’s name!—is accurate. Pay attention to the visual, too. The design of your proposals should convey a sense of competence and professionalism, highlighting the content and making it easy to skim and digest. That said, don’t go overboard with your design. It should look polished, but not slick. Use headers, bullets, and other visual cues to differentiate sections and make navigation clear. Use legible, grown-up font (pro tip: not comic sans in 8 pt.). Include a list of the requested attachments and actually include them.

6) Remember that foundations are run by people.

Foundations aren’t staffed by ghosts in a machine—they’re run by people. They may be run by the donors themselves, by family members, or by professional staff, but they’re still people. Think about this as you approach them and cultivate your relationship. As with any human relationship, you want to be polite, to listen, to be honest, to remember what they like and dislike, to show appreciation, and not take their support for granted. This means communicating effectively. Ask questions if you’re confused. Say thank you if they give you a grant. Don’t talk to them only when you want something. Take note of proposal and report deadlines and be timely. If something goes awry on a project, don’t wait until your report is due to say that things didn’t work out—contact your funder and figure out an alternative path forward.

Many foundations are flooded with proposals. Following these tips will help ensure that your nonprofit’s proposal stands out for its quality and gets your funding relationship off on the right foot.

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Pay-What-It-Takes Philanthropy. 5/2016

Published by SSIR

A new grantmaking approach is needed - one that provides enough money for nonprofits to pay for all their operations, not just programs and services. The first step toward achieving that is for grantmakers to realize that different types of nonprofits have different cost structures.

Pay_what_it_takes_philanthropy

Illustration Oliver Monday

For years, nonprofits have campaigned for funders to end their widespread practice of providing full financial support for programs and services, but scrimping on overhead costs. This practice gives rise to the vexing “starvation cycle” that constrains nonprofits’ ability to invest in essential organizational infrastructure and creates tensions, and even dishonesty, between grantmakers and grantees.1

Recently, a handful of major funders and important intermediaries have joined nonprofits in declaring that it’s time to develop a new approach to grantmaking. The model they collectively support centers on an idea that we call “pay-what-it-takes” philanthropy—a flexible approach grounded in real costs that would replace the rigid 15 percent cap on overhead reimbursement followed by most major foundations.

Ford Foundation President Darren Walker is among the most outspoken funders calling for a new grantmaking approach. “All of us in the nonprofit ecosystem are party to a charade with terrible consequences—what we might call the ‘overhead fiction,’” says Walker. “The data included in this article along with comparable data for our grantees convinced us that we had to make a change.” Beginning January 1, 2016, Ford doubled its “overhead rate” (the percentage above direct project costs that can be used to pay indirect costs) to 20 percent. In doing so, it hoped “to encourage more honest dialogue about the actual operating costs of nonprofit organizations,” adds Walker.2

To begin that dialogue, it’s important to understand exactly how much nonprofits do spend on all aspects of their operations. The Bridgespan Group recently examined the financial records of 20 well-known, high-performing nonprofits to determine their actual indirect costs—those not attributed to a specific program or service.

We discovered that indirect costs make up a much larger percentage of a nonprofit’s total costs than is widely understood. Of the nonprofits we surveyed, indirect costs made up between 21 percent and 89 percent of total costs. The median indirect cost rate for all 20 nonprofits was 40 percent, nearly three times the 15 percent overhead rate that most foundations provide. To be clear: Higher or lower is neither better nor worse. These figures are not measures of either effectiveness or efficiency. Rather, they reflect the mix of direct and indirect costs required to deliver impact.

That current reimbursement policy falls far short of covering nonprofits’ real costs came as no surprise. The real insight came from seeing that different types of nonprofit organizations have clearly different cost structures. Nonprofit research labs, for example, have a median indirect cost rate of 63 percent, two and a half times the 25 percent median rate of direct service organizations in our survey.

This variance in indirect cost rates mirrors the industry segmentation long recognized in the for-profit sector. Among firms in the S&P 500, for example, consumer staple companies have a median indirect cost rate of 34 percent, whereas information technology companies reach 78 percent.3 Unfortunately, an equivalent taxonomy of industry segments does not yet exist in the nonprofit sector.

Even without a taxonomy, it’s clear that philanthropy’s prevailing 15 percent indirect cost reimbursement policy does not take into account the wide variation in costs from segment to segment. Doing so would have far-reaching effects on philanthropy and grantees. If nonprofits committed to understanding their true cost of operations and funders shifted to paying grantees what it takes to get the job done, the starvation cycle would end.

Assessing Indirect Costs

Before beginning our research into nonprofit cost structures, we had to be clear about what exactly we were looking for. We quickly set aside the term “overhead” because it lacks a standard definition. We opted instead to use “indirect costs.” That term typically includes all costs that are not directly attributable to a specific project. “Indirect cost” is more inclusive than “overhead,” which is typically understood as only administrative costs. And it has an analog in the business world, where the term “SG&A” (selling, general, and administrative expenses) covers all non-production costs, such as executive salaries, staff training, office space, equipment, research, travel, and technology—all reasonable and necessary costs of doing business. Likewise, in the nonprofit world, indirect costs are necessary and inextricably tied to a nonprofit’s ability to accomplish its goals.

Substituting the term “indirect costs” for “overhead” still is a losing semantic battle, contends Roger Martin, former dean of the Rotman School of Management at the University of Toronto. “The language is a problem,” he says. “Who would want to support overhead or indirect costs?” He favors adopting more descriptive terms like those used in the for-profit world, such as research and development, administration, or distribution—“things that sound useful.” We agree that language is a problem—we just don’t have a better solution yet.

With indirect costs as our guide, we examined the financial records of a sample of nonprofits that included domestic and global organizations with annual budgets ranging from $2 million to $650 million. Regardless of their missions, which varied greatly, indirect costs fell into four general categories: administrative expenses, network and field, physical assets, and knowledge management. Because nonprofits can have very different funding models, we decided not to include fundraising costs as indirect costs.

 

The nonprofits in our sample can themselves be grouped into four segments: US-based direct service organizations, policy and advocacy organizations, international networks, and research organizations. (See “Participating Organizations” on page 39 for the names of most of the nonprofits that were surveyed.) There are, of course, other types of nonprofits that have different cost structures, but these four segments represent a diverse and broad group.

What becomes clear is that different segments of the nonprofit sector have different indirect cost structures. In addition, expenditures of otherwise similar organizations in the same segment vary because of different strategic choices. (See “Actual Indirect Costs as a Percentage of Direct Costs” below.) To better understand how costs vary by segment, let’s compare two nonprofits. One is an innovative biomedical sciences laboratory that employs researchers tasked with finding cures for lethal diseases. For this organization, direct costs are researchers’ time and materials to conduct complex experiments. In addition, this institution must make a significant indirect investment to conduct its work—it must pay for large facilities and sophisticated equipment capable of performing to the strictest biosafety standards. Required physical assets claimed 57 percent of this organization’s spending, more than double the amount (24 percent) spent on administration. Another 8 percent went to knowledge management, bringing total indirect costs to 89 percent.

The cost structure was very different for a large international NGO where network management is the salient capability. It takes a wellmanaged organization at global, regional, and local levels to translate funding from an international development agency into, for example, well-nourished children in India’s Bihar state. This organization’s largest indirect expenditure category, network and field at 17 percent, sustained the field office operations infrastructure. Physical assets for all those offices absorbed 12 percent of indirect costs, followed by 8 percent for administrative costs and 4 percent for knowledge management. Total indirect costs for this NGO came to 41 percent.

The cost and segmentation data derived from our research lead to two insights. First, flatrate reimbursement for indirect costs is conceptually wrong because it doesn’t take into account the differences by segment. Second, the magnitude of actual indirect cost rates of the nonprofits we studied demonstrates that 15 percent—the typical reimbursement rate—is too low. It doesn’t represent the actual indirect costs it takes to run any of the nonprofits we analyzed.


Actual Indirect Costs as a Percentage of Direct Costs

Bridgespan examined the cost structures of 20 nonprofit organizations across four different segments. At those organizations, indirect costs ranged from 21 percent to 89 percent of direct costs.

 


Creating a New Conversation

Armed with data about the actual indirect costs incurred by a wide variety of nonprofits, we can begin to build a framework for a new approach to philanthropic grantmaking. Starting with an organization’s segment, and then identifying the associated component costs of achieving desired impact, reframes the grantmaking conversation. It shifts from an emphasis on what it takes to fund a program to what it takes to achieve impact. This is the essence of the pay-what-it-takes approach to grantmaking.

Today, this kind of meaningful conversation doesn’t happen often. The CEO of a girls’ mentoring program painted a stark picture of her reality: “It’s very difficult to have honest conversations [about finances] with our city, county, and philanthropic funders,” she says. “They don’t want to listen. So we have to have two budgets: one that has the real numbers, and another that shows the funders what they want to see. If you don’t give them what they want, they won’t give you any money.”

Funders need to take the first step. Don Howard, president of the Irvine Foundation, already has initiated a deeper conversation. “At a minimum, we have committed ourselves to have a conversation with every grantee about what their indirect costs really are,” says Howard. But nonprofits also need to be prepared to discuss what it costs them to create real value, not just to fund programs. “Nonprofit leaders will benefit greatly from having a new shared language and way of thinking about this issue,” says David Dodson, president of MDC, a Durham, N.C.-based nonprofit that publishes the State of the South reports and is dedicated to improving economic opportunity and mobility in the region.

The Consequences of Underfunding

The advantage of a pay-what-it-takes policy is that it eliminates the need for the shadow economy in which funders and grantees purposely obscure financial data and quietly craft end runs around the arbitrary indirect cost spending caps imposed by most foundations. Foundation program officers, for example, often team up with grantees to recategorize underfunded indirect costs as direct costs that the funder covers. Other times, funders approve capacity-building or general operating grants to close the indirect cost gap. As a result, we do not know as a sector what it really costs to achieve impact.

“We know that for a grantee, 15 percent is not enough, so we give general operating support and capacity-building grants to compensate the grantee,” explains one program director. “One of our grantees is a very important partner,” says a foundation deputy director, “but we had to do a number of work-arounds, including creating a separate institute that the foundation could fund directly.”

A Bridgespan analysis of 10 grantees of one major foundation found that seven received additional financial support via work-arounds—the shadow economy in action. Work-arounds, particularly if under the table, create their own problems. They are inconsistently applied, and the time-consuming negotiations they entail increase complexity and raise transaction costs while distracting nonprofits and foundations from programmatic work. The pain inflicted by all these financing schemes, in both hard feelings and valuable time lost, is a major source of irritation for grantees and funders alike.

 

“I had two hours in my calendar yesterday booked for science, but I ended up spending that time on indirect cost negotiations,” says the CEO of a research nonprofit, who is also one of the world’s leading scientists in his field. “Is that really the highest and best use of my time?” A sympathetic foundation director agrees: “There’s an opportunity cost incurred by focusing on these issues versus the programmatic side of the grant, and this has an overall cumulative effect on impact.”

Work-arounds also create an environment that drives some nonprofits away and even discourages some organizations from applying for grants in the first place. “The best organizations don’t want to work for us, and the ones who want to work for us are not the best,” laments a foundation director about the impact of the organization’s 15 percent cap on indirect costs. A leader at one of the world’s largest global NGOs told us that the organization will no longer work with a foundation that fails to cover indirect costs.

Ultimately, if work-arounds don’t sufficiently cover indirect costs, organizations scramble to make up the difference. And they often end up short of funds. Some nonprofit CEOs, for example, report spending up to 40 percent of their time dealing with indirect cost reimbursement issues, between negotiations and fundraising to cover the gaps. Others resort to tapping unrestricted funds, forgoing institutional investments that improve effectiveness and efficiency.

“We had to spend $12 to $18 million of our own unrestricted dollars to fund forgone indirect costs in 2014,” says Carolyn Miles, president and CEO of Save the Children USA. “If we did not have to spend that money on indirect costs, we would redeploy these funds to initiatives such as helping push promising practices through the R&D pipeline.”


Federal Rules for Indirect Costs

The US federal government uses what it calls a negotiated indirect cost rate agreement (NICRA) to guide how it allocates billions of dollars in indirect costs to domestic nonprofits, international NGOs, and universities. The government’s goal is to pay its fair share of grantees’ costs of doing business. To the extent that indirect costs are reasonable, allocable, and allowable as defined by federal rules, the government considers them a legitimate cost of doing business payable under a government contract. A nonprofit works with the federal agency that supplies the majority of its funding to develop its negotiated indirect cost rate. The resulting NICRA is binding on every government agency that funds the organization.

Large domestic nonprofits that receive significant funding from federal agencies tend to have a NICRA. Smaller nonprofits, especially those that receive federal grants administered by a state or local government, typically don’t have a negotiated rate. In the past, many nonprofits without a negotiated rate never received any federal reimbursement for indirect costs. But federal contracting rules that took effect December 26, 2014, for the first time ensure that all nonprofits receiving federal grant money—either directly or passed through state or local governments—receive at least 10 percent reimbursement for their indirect costs. Nonprofits that already have a NICRA will continue to receive that amount. The new mandate is embedded in grantmaking rules called the Uniform Guidance issued by the US Office of Management and Budget.

Universities operate under somewhat different rules. The indirect costs associated with a federal grant are incurred by the institution, not the professor who receives the grant. It’s the institution that maintains the buildings and equipment and provides operational support (utilities, janitorial services, and the like). With federal grants, universities rely on NICRAs, typically resulting in rates upward of 45 percent for on-campus grants and around 25 percent for off-campus work.

The rules vary across the landscape of federal grantmaking, but the goal remains the same: acknowledge and fairly reimburse indirect costs. For foundations, this general principle is more useful than the actual negotiated rates their grantees may have with the federal government. The rates reflect idiosyncratic ways grantees define indirect costs that may not align with how a foundation defines those costs. Nonetheless, the federal government’s negotiated rates are useful guideposts for foundations to factor into their own indirect cost decision-making.


Tough Questions for the Sector

Moving to a pay-what-it-takes approach to grantmaking won’t be easy. But some funders are rethinking their approach. For them, paying what it really takes to run a nonprofit would send a powerful message to grantees: We want to solve society’s biggest problems and recognize that we must build strong, effective organizations to do so—not just contract for projects and services.

For nonprofits, pay-what-it-takes means doing their homework to be clear about their operational needs and how those needs relate to desired impact. Some funders are already working with grantees to accomplish this goal. At the William and Flora Hewlett Foundation, Daniel Stid, director of the Madison Initiative on good governance, has modified the initiative’s grant application form to provide grantees with links to resources to calculate their indirect costs when applying for project grants. “In our experience, the typical issue in grantee submissions is not that the overhead cost estimates are too high, but rather that they are too low,” says Stid. The president and CEO of the Weingart Foundation, Fred Ali, believes that more funders should help their grantees in a similar fashion. “We have the opportunity to provide grantees with better tools to understand their costs,” he says.

 

Some funders are joining forces to influence a change in funder policies about indirect costs. The newly formed Real Cost Project—comprising Northern California Grantmakers, San Diego Grantmakers, and Southern California Grantmakers—is exploring what it takes for funders to develop grantmaking practices based on what it really costs to deliver desired outcomes. A logical place for foundations and nonprofits to start is to work on collecting, reporting, and analyzing accurate information on actual indirect expenditures. Good data are essential for everyone involved to learn and improve, but they are hard to come by.

IRS Form 990, filed annually by most US nonprofits, is the best current source of information about a US nonprofit’s expenditures. Unfortunately, 990s don’t shed much light on actual indirect costs. The form has categories for “program” expenses and “management and general” expenses, but it gives nonprofits little guidance on defining the terms. That vagueness leads to widespread reporting inconsistencies as organizations apply their own definitions. As part of our research, we compared Form 990 management and general expenses to the indirect costs we identified in our analysis of nonprofit expenditures. Among the eight nonprofits we sampled, the 990 data frequently did not match our assessment of indirect costs. As one nonprofit executive says: “If you think you can analyze a nonprofit through IRS filings, you are in outer space.”

Accurate, comparable data on indirect costs would, for the first time, make it possible to create a set of benchmarks that foundations and nonprofits could use to gauge costs for organizations of comparable size and focus. The indirect costs for food pantries, for example, would look different from the cost structures of nonprofits with regional networks, like the YMCA. And arts organizations would differ from those serving the homeless.

Benchmarks could also lay the groundwork for identifying best practices and setting target indirect cost expenditure levels for most nonprofits. And they could create a basis for a shared understanding between nonprofits and foundations of a new approach to grantmaking that accounts for nonprofits’ real costs. Broad benchmarking across the sector lay beyond the scope of our project, but the segments and cost components we identified can be the basis for a joint effort by funders and nonprofits to develop benchmarks to advance sector-wide understanding of indirect costs.

An alternative to benchmarks for indirect costs is a custom, external audit, like those required by the federal government’s funding process. This approach would be cost-effective for foundations’ large grantees, and what we learn from custom audits may inform further segmentation and benchmarking.

Skeptics of benchmarking, however, maintain that it’s an attempt to rescue a flawed and outmoded funding model. As alternatives, some favor grantmaking based on paying total real costs per outcome, and others advocate a shift to greater general operating support. Although both approaches have their place, we believe benchmarking holds more promise for the majority of nonprofits.

A cost-per-outcome policy works for organizations that deliver readily identifiable services, such as vaccinations or daily meals. Many nonprofits that deliver such services are strengthening their impact measurement capabilities to more clearly demonstrate a social return on investment for their projects. This is a welcome trend, enabling the sector to increasingly focus on the underlying value of each dollar invested, instead of simply pure cost. But our work with some of the world’s largest foundations leads us to conclude that this method is not feasible for the majority of their grantmaking. It’s not practical for a significant percentage of nonprofits that would have difficulty measuring outcomes in the near term, say for early childhood programs designed to promote high school graduation. In addition, an outcomes approach broadly applied could stifle investments in early-stage programs and undermine the persistence it takes for social movements to try and fail on the road to eventual success, such as the marriage equality movement. We see a cost-peroutcome approach as complementary, but ultimately not a panacea to the problems with the current funding system.

Providing general operating support offers the flexible, adaptable funding that nonprofits desire. But greater general operating support does not necessarily lead to stronger, better organizations. Nonprofits first need a clearer understanding of their mission-critical capabilities—and what best-in-class execution costs—to allocate general operating funds to the highest-impact use.

For all of its potential benefits, benchmarking may take a toll on some nonprofits. It will inevitably create winners and losers. As the Ford Foundation’s Walker says, “Almost certainly, providing deeper, more intensive support will result in fewer grants, and, most likely, fewer grant recipients.” This is not news for some funders that have a deep relationship with a small number of grantees, such as the Edna McConnell Clark Foundation and New Profit. But it represents a major shift in thinking for the philanthropic sector as a whole.

Of course, just making bigger grants to cover indirect costs does not guarantee the intended results. Our extensive literature review on organizational effectiveness confirmed that the social sector has accumulated anecdotal experience linking fuller funding of indirect costs to greater impact, but not much evidence. So early adopters that engage in benchmarking should work together to measure and learn in a way that will advance the state of evidence about what works for the field.

These open questions underscore the need for foundations and nonprofits to set their sights on a research agenda that tests the practical application of segmentation and benchmarking of indirect costs. Such an undertaking would harness the growing momentum for change in the grantmaking status quo while pursuing a path of proven value in the private sector. A lot of hard work lies ahead for paying-what-it-takes to become the solution to breaking the nonprofit starvation cycle, but this work is crucial to building sustainable, longlasting nonprofits that are real agents of change.

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How to Write a Funding Proposal. 5/4/2016

Knowing how to write a funding proposal properly can make or break your business idea before it even gets off the ground.
Funding-proposal

It is important to know how to write a funding proposal as this is your chance to convince potential funders that your business is run efficiently, that it is accountable and that it can achieve the objectives it sets.

How to write a funding proposal that will have impact

Before you begin to write your funding proposal, you need to do planning and research. You must be clear on the following:

  • Know the requirements of the funder who will receive the proposal.
  • Find a funder who has similar agenda to yours.
  • What need is being met by the product or solution your business offers?
  • What is the product or solution offered by your business?
  • How does your product or solution meet the need defined above?
  • How much will it cost to get your business idea off the ground?

Follow these hints on how to write a funding proposal

writing-a-proposal

  • Be structured. If your proposal is well-thought out and ordered, it says a great deal about how you’ll run your business. The converse is also true.
  • Be persuasive. The aim of writing a funding proposal is to get someone to agree to give you money.
  • Be technically detailed and correct. This means you have to have done your homework.
  • Be brief and to the point. Convey the required information in a concise manner.

Funding proposal must-haves

Your proposal needs to include:

A summary will provide an overview of the project. It must identify the challenge that your business wishes to address, how you plan to address it, why you want to address it, how long it will take and how much it will cost.

The introduction gives an overview of your business that includes what your company is called, where it is based, what it does and who it employs. Include your vision and mission statement and company goals.

Provide detailed background information about the business that shows it is a good risk for the funder. It also provides information about the environment that your business operates in, including the market that it addresses. Here you can include a SWOT analysis of your company.

Project details describe exactly how your business plans to reach its goals. Be clear about your objectives and what it will take to reach them. Also list your resources, including staff and technology, that will help you achieve your goals. It’s also important to include how you will measure your progress. Give the relevant figures and refer to the supporting documents where required.

The conclusion will explain how the funds will be used and accounted for. Include the main budget items and once again, refer to supporting documents for more detail. The budget is the financial plan that will control the allocation of funds. You need to research your costs to work out your budget, remembering to allow for contingencies.

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Communicating in the CSI Space. 24/3/2016

Published on NGOPulse


Effective communication is critical for fundraising, sharing knowledge through advocacy and lobbying and educating grantees and beneficiaries, argues Creative Space Media  

 

 

 

 

 

 

In 2014/15, corporate contributions to Corporate Social Investment (CSI) increased to R8.2 billion – up from R2 billion just over a decade ago. This shows not only the commitment of corporates to the socio-economic development of the country, but that that there still remains much to be done in meeting the challenges of inequality, poverty and unemployment in South Africa.
 
These challenges are addressed on a number of levels and through many initiatives by a multitude of stakeholders from government, the private sector and civil society organisations. However, what is key in the social investment space is communication.
 
Effective communication is critical for fundraising, sharing knowledge through advocacy and lobbying and educating grantees and beneficiaries, while it enhances relationship building with grantees, encourages collaboration and partnerships with other grantmakers and stakeholders, promotes public relations and brand reputation, and improves donor and investor relations. Communication is also critical in sharing monitoring and evaluation findings, whether positive or negative.
 
When designing a communication strategy it is important to understand the target audience and the purpose of engagement with them. The strategy should allow for feedback loops to ensure that communication flows both ways.
 
Tshikululu Social Investments, with support from the FirstRand Foundation (FRF), and in partnership with GrantCraft, has developed a guide that focuses on communicating for impact in the South African context.
 
Entitled ‘Communication That Counts: Lessons from South African Social Investors’, it provides key lessons in communicating for impact from grantmakers, foundations and donors in the social investment space. The guide was be shared at a breakfast event, CSI That Works, be jointly hosted by Tshikululu and the FRF.
 
Some of the guidelines and lessons highlighted in the guide include the following:

  • Collaborating and enhancing partnerships;
    • Communicate clear and consistent messages to target audiences;
    • Emphasise genuine partnerships which provide for win-win scenarios;
    • Keep communication positive;
    • Listen and document all communication processes with partners;
  • Grantee communication
    • Create opportunities to engage with grantees as well as regular feedback mechanisms to get their insights into programme efficacy;
    • Consider how communications might affect power dynamics and incorporate equalising elements into communication strategies;
    • Involve beneficiaries in developing policies around issues like photography and funder visits;
  • Public relations and brand equity
    • Identify all communication channels available to you and determine how you might leverage each to convey an aspect of your message;
    • Develop a public relations plan and communicate with key media to share the organisation’s work;
    • Spend time developing an understanding of your brand – not just your corporate identity, but what you should be known for;
    • Pursue honest feedback from stakeholders on how your brand is perceived (from funder, partners, grantees, the media etc.).
  • Knowledge sharing
    • Choose the right tools for sharing knowledge
    • Share reports, case studies and other research more broadly through online open access platforms (e.g. issuelab.org)
    • Make sure your website has findable and relevant information for various stakeholders
  • Internal communications
    • Ensure that employees are aware of on-going social investment initiatives and be aware of their perceptions of these;
    • Set up a formal employee volunteer programme to invite staff to be active participants in philanthropic work;
    • For smaller teams, brainstorm ways to get and keep communication strong;
  • Monitoring and Evaluation
    • Combine statistics and data with anecdotes to ensure the impact of grantee projects is effectively communicated;
    • Look for effective ways of communicating key findings or trends with the audience, such as using infographics or producing case studies

 Photo Courtesy: Businesspartners.

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Philanthropy Forecast, 2016: Trends and Funders to Watch. 1/6/2016

Published by INSIDEPHILANTROPHY

We recently took a look back at 2015 with our Philanthropy Awards that chronicled the year’s highs, along with a few lows. Now we cast an eye forward, to what 2016 may bring. Here’s our list of the trends and funders we’ll be paying attention to in the coming year. Follow the links to IP articles to dig deeper.

Trends to Watch

Falling Trust in Philanthropy—Last year saw a backlash to the Chan/Zuckerberg announcement, myriad negative news stories on the Clinton Foundation, and ridicule heaped on nine-figure gifts by John Paulson and David Geffen. After years of growing populism and distrust of elites, maybe the real surprise is that philanthropy is only now starting to draw major fire. Get ready for more to come.

Politicized Giving—Funders keep getting more savvy about using “charitable” giving to sway electoral outcomes. Pay close attention in this election year and you’ll see, for example, how grant dollars are used to boost or depress voter turnout among key groups. At a larger level, 2016 will showcase how the wealthy are growing more polarized.

Impact Investing—Looking past the hype, we’ll be watching to see what actual movement there is among foundations to embrace impact investing. While Omidyarism may be conquering the new world of tech philanthropy, blurring lines within the sector, it’s so far been a different story among legacy foundations.  

Fossil Fuel Divestment—On the other hand, we stand by our prediction that the dominoes will soon start falling when it comes to foundations divesting from fossil fuels.

Lean Philanthropy—New donors will continue to have less interest in staffing up their own foundations thanks to the rise of full-service philanthropy shops within the finance world, like at JPMorgan Chase, along with places like Foundation Source and a maturing ecosystem of intermediaries like NEO Philanthropy.

Donor-Advised Funds—You don’t need a crystal ball to know that 2016 will be another boom year for DAFs, as they continue to draw armies of new donors thanks to their convenience. But maybe it will also be the year that DAF critics get traction with federal policymakers.

Tech Philanthropy—As wealthy tech philanthropists like Mark Zuckerberg urge their peers to give more and earlier in life, look to this sector to continue to lead the new philanthropy in 2016. Unless, that is, the tech bubble bursts.

The Giving Pledge—The most important fundraising push in history is almost certain to keep attracting new signatories this year, including more younger donors and overseas billionaires.

Inequality—Last year’s conversation about inequality seems likely to fade, since few major funders—Ford aside—are much interested in challenging contemporary capitalism in a confrontational way. Still, keep an eye on a few interesting big picture efforts, like this and that.

Economic Inclusion—Meanwhile, watch for the acceleration of narrower and safer grantmaking that aims to raise the fortunes of low-income people through asset building, workforce development, and STEM education. A great example: Rockefeller’s employment work.

Cities—We’ve reported on a ton of urban-focused philanthropy in the past two years, and expect funders to remain excited in 2016 about boosting cities and also addressing big problems like climate change at this level.

Post-Reform Ed Philanthropy—Signs exist that ed philanthropy has been moving into new terrain, away from the polarizing debates on choice and accountability of the past decade. A mirage? Perhaps. We’ll keep watching the horizon.

Criminal Justice Reform—This funding area was on fire in 2015, fueling a push to roll back harsh and destructive policies enacted decades ago. We’re betting that more major funders will join the fight in 2016.

Women and Girls—Global development funders have long understood the importance of empowering women and girls. Look for more domestic U.S. funders to adopt this idea in 2016, building on new work begun last year.

The Great Health Crusade—This year will likely see growing momentum behind an ambitious effort by an array of funders to improve public health and the efficiency of America’s dysfunctional $3 trillion healthcare system.

Dementia and Diabetes—While we’re on the topic of health, here’s another prediction: Yet more big money will go toward the twin healthcare cataclysms now predicted as a result of dramatic rises in neurodegenerative diseases and diabetes.

Climate Change—We’ve been beating the drum for funders to put much bigger resources into the climate fight given how fast the clock is ticking. Our bet is that at least one new mega-donor will jump into this space in a game changing way in 2016.  

Campus to Career—Various higher ed donors are increasingly worried that too many kids leave college without strong career prospects. We saw a string of gifts addressing that challenge in 2015 and expect more this year, including yet more funding for entrepreneurship programs.  

Philanthropists to Watch

Steve and Connie Ballmer—The former Microsoft CEO and his wife, who control one of America’s largest tech fortunes, have stepped up their giving. Now we’re waiting for them to unveil a larger plan.

Michael Bloomberg—For all his big giving, Bloomberg isn’t moving money fast enough to make a real dent in his $35 billion fortune. Expect Mike to keep ramping up in 2016.

The Buffetts—We’ll say it again: This is the most powerful family in U.S. philanthropy, and plenty of Buffett money is not going to Gates. Keep a close eye on what Warren’s three kids are up to as they collectively give away over $800 million a year.

Steve and Alex Cohen—The couple has made a string of large gifts, drawing on a vast hedge fund fortune that’s only grown since an insider trading probe. Where’s it all leading?

Ray and Barbara Dalio—The hedge funder and his wife are among the most important philanthropists to emerge from Wall Street in years. It seems only a matter of time before a more professionalized and transparent grantmaking operation materializes.  

Jack Dorsey—Last fall, the billionaire chief of Twitter and Square set aside a big chunk of stock to create a new foundation. We’ll be interested to see what comes next.

Judy Faulkner—She made her billions in healthcare IT systems. Now, the recent Giving Pledge signatory is turning to philanthropy in a bigger way. She exemplifies the growing clout of independent women donors.

Bill and Melinda Gates—The Gateses are broadening their agenda. They’re embracing early childhood education funding at a larger level, and Bill recently put together a new energy coalition. Remember, this couple still has nearly $80 billion sitting on the sidelines.

Lyda Hill—The Dallas oil heiress and entrepreneur has shown she has an ambitious philanthropic vision. This is another powerful woman donor we’ll be watching in 2016.  

Brad and Kim Keywell—These recent signatories of the Giving Pledge exemplify a younger generation of donors intent on leveraging their wealth to achieve “creative disruption.”

Seth and Beth Klarman—Another Giving Pledge couple that’s worth keeping an eye on as they step things up, both with national giving and wide-ranging funding in Boston.

Jan Koum—The WhatsApp co-founder put over a half-billion dollars into a donor-advised fund after selling his company to Facebook, and has billions more. But what causes will he favor?

Laurene Powell Jobs—Her giving has long been super-opaque, but she’s lately emerged as a more public philanthropic leader with a plan to reinvent high school. She has a $19 billion fortune. What’s next?

Gordon and Betty Moore—These Giving Pledge signatories—well into their 80s—are sitting on a $6.8 billion Intel fortune. Is this the year that the bulk of that money finds its way to the foundation that bears their name and is already among the biggest in the U.S.?

Sean Parker—The tech leader made waves last year with his manifesto on “philanthropy for hackers,” and a $600 million gift to his foundation. We’ll be watching to see how he operationalizes his ideas.

The Walton Family—They’ve only given away the tiniest fraction of their vast inherited fortunes, but a recent donation of over $400 million suggests the spigot may open more widely.

Mark Zuckerberg and Priscilla Chan—Just how fast will all that Facebook wealth flow for grants and impact investments? And how much will the couple expand their agenda beyond their core causes of education and health? Some answers are sure to come in 2016.

Foundations to Watch

We never get bored watching the Laura and John Arnold Foundation as it tackles one hot issue after another. Most interesting is its wide-ranging, and perhaps quixotic, quest to advance evidence-based policymaking.

This is the year that the Atlantic Philanthropies finally wraps things up. Look for fireworks as it dumps its final loads of money overboard through more giant “culminating grants.”

We can think of two reasons to keep tabs on the Barr Foundation: It’s one of the more sophisticated regional funders around, and it’s been engaged in a strategic review, including of its climate change funding.

Another local foundation we watch closely is the Colorado Health Foundation, whose work exemplifies the creative new approaches funders are taking to healthcare. Ditto, by the way, for the California Endowment.

Now that the Ford Foundation has finished its strategic review, and the big decisions have been made, a lot of people will be watching to see how this translates into day-to-day grantmaking. Another question mark: Whether Ford will move into impact investing in a big way.

Good Ventures continues to be one of the most fascinating works in progress in the foundation world, backstopped by a $9 billion Facebook fortune. It’s starting to make some bold and big bets. Look for more to come.

With an agenda that includes the environment and education, not to mention a line into one of America’s largest hedge fund fortunes, expect the Heising-Simons Foundation to grow more interesting and visible.

The Conrad N. Hilton Foundation doesn't just have a new president, Peter Laugharn, it's set to double its assets at some point, to around $5 billion, thanks to a bequest from Barron Hilton. Look for this place to sharpen its priorities in 2016.

The JPB Foundation has huge assets, big ambitions, and nearly no public profile. We’re thinking that 2016 is the year that the curtain gets pulled back on this important operation.

Last year the MacArthur Foundation streamlined grantmaking and made some new big bets. But the story of a hard-charging CEO revitalizing a legacy foundation is still unfolding.

If you don’t work on global development, The MasterCard Foundation won’t be on your radar. It’s an increasingly important funder with very deep pockets and ambitious ideas for reducing global poverty.

The Nathan Cummings Foundation has modest resources relative to the huge challenges it's tackling, climate change and inequality. How will its promising new president, Sharon Alpert, align NCF’s ambitions with its assets?

The Nellie Mae Foundation recently unveiled an ambitious plan to reinvent K-12 education for the 21st Century, focusing on New England. We’ll be watching to see how that goes.

A billionaire heir to the Gap fortune is fueling the Pisces Foundation, which has lately emerged as one of the more notable new funders on the environmental scene.  

The S&G Foundation is the most well-endowed foundation you’ve never heard of, with around $1 billion in assets. What are its founders—Shelby MC Davis and his wife Gale—going to do with all that money? We might ask the same question about another low-profile billion dollar outfit, the Brin Wojcicki Foundation.

The Harold Simmons Foundation was created with the fortune of a late billionaire GOP mega-donor, but it’s controlled by two heirs with progressive views and is still sorting itself out. Stay tuned.

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21 "How-to" Resources on Fundraising for Community-Based Organizations. 23/01/2015

Published by Aidscompetence
Written by Jennifer Lentfer
8 December 2014


Fundraising Resources for Community-Based Organizations

 

  1. Basic Fund-Raising for Small NGOs/Civil Society in the Developing W..., from Coyote Communications
  2. Core Costs Funding Strategies, from BOND’s Guidance Notes Series
  3. Developing a Financing Strategy, from CIVICUS
  4. A Few Good Online Tools for Friend-to-Friend Fundraising
  5. Find Partners is a helpful organization supporting local community-based organizations in resource mobilization in Uganda and elsewhere in sub-Saharan Africa.
  6. Funding 101: the art of giving and receiving grants, discussion on Guardian UK Global Development Professionals Network
  7. Fundraising, from the Southern African NGO Network (SANGONeT)
  8. Fundraising Guide, from Tearfund’s ROOTS series (Chapter 4 on characteristics of different funding sources is really useful.)
  9. Fundraising Guide for Women’s Community-Based Organizations, from Women Thrive Worldwide
  10. Fundraising Handbook, from Global Fund for Women
  11. Fundraising & Proposal Writing, from IDASA’s Handbook Series for Community-Based Organizations
  12. fundsforngos.org is an online initiative, working for the sustainability of NGOs by increasing their access to donors, resources and skills.
  13. Globalgiving.org or Globalgiving.co.uk
  14. Guide to Key Resources for Funding Peace and Conflict Workfrom the Peace & Collaborative Development Network. See also this article from Craig Zelizer, “12 Key Steps to Obtaining Funding for On the Ground Work
  15. How To Guides from the The Resource Alliance, Building Fundraising Capacity Worldwide
  16. The NGO Café Fundraising Strategies
  17. Raising Funds and Mobilising Resources for HIV/AIDS: A Toolkit to S..., from the International HIV/AIDS Alliance
  18. The Resource Alliance, a global network for building fundraising capacity and inspiring philanthropy worldwide
  19. The SOFII Collection, the Showcase of Fundraising Innovation & Inspiration, “aims to be the most comprehensive, best organised, and most inspiring collection of fundraising related content from around the world.”
  20. Tips on Local Resource Mobilization, from the World Bank’s Small Grants Program
  21. Wikifund, from the International Fundraising Consultancy
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67 Fundraising and Marketing Tips for NPOs. 17/07/2015

Published at NGO pulse
15 July 2015


Trialogue, a consultancy focusing on issues of corporate social responsibility, shares 67 fundraising and marketing tips for NPOs in celebration of Nelson Mandela Day.

Since its establishment in 2009, the global Mandela Day movement has inspired people across the world to contribute at least 67 minutes of their time towards changing the world for the better. As we play our part, we also want to celebrate the organisations that spend every day doing good.

Trialogue is a consultancy that focuses on issues of corporate social responsibility. We host regular forums with corporates and nonprofit organisations (NPOs), and our much-anticipated annual CSI conference facilitates in-depth engagement between the sectors. Drawing from the insights we have gained from our vantage point, understanding the needs and demands of both sectors, we have rounded up 67 fundraising and marketing tips for NPOs, in celebration of Mandela Day.

Fundraising 

  1. Diversify your funding base with dedicated strategies for high net worth donors, public mass donors, and corporates. Individual funders should be further segmented based on their level and type of giving.
  2. Have a clear strategy for maintaining each donor type, not a ‘one-size-fits-all’ approach.
  3. Appoint a driver – while it is good for all staff members to contribute to fundraising, there should be someone dedicated to bringing in donors.
  4. Ensure that the organisation’s leadership holds the primary relationship with your funding partners.
  5. Share your vision with partners and potential funders. Nothing sells better than passion and commitment.
  6. Make sure that your organisation is visible to funders by signing up to the Trialogue Funders Guide to social development in South Africa, by 31 July 2015.
  7. Identify well-known and reputable brand ambassadors. This relationship should not just be about their popularity - be sure that your philosophies are aligned as well.
  8. Take time to research and understand the Broad-Based Black Economic Empowerment (BBBEE Codes), and the opportunities these may present.
  9. Companies’ corporate social investment (CSI) budgets may not be the only possible source of revenue. Consider how you can tap into marketing budgets, skills budgets or other elements of the BBBEE scorecard.
  10. Explore whether companies who want to support your organisation, but do not have the money to do so, could possibly contribute professional skills and expertise in kind. 
  11. Enquire about companies’ redundant assets that could either be donated or purchased at minimal cost, to help meet your organisation’s needs.
  12. Ask corporates to fund your organisation holistically, emphasising what it takes to function sustainably, and packaging your administration and marketing costs within your total value proposition.
  13. Ensure the tick-box qualifying criteria are properly met. Your application will not get through the screening process if it does not comply with funder requirements. 
  14. Ensure that you can provide corporate funders with documentation that enables them to fully claim SED points on their BBBEE scorecard. Make this process easy for the companies by ensuring that the points claimed are irrefutable. 
  15. Adopt a targeted approach, investing time in understanding funding patterns and agendas of target companies and customising your pitch, rather than flooding the market with generic funding requests.
  16. It is important to maintain your organisation’s current fundraising efforts, but remember to also stay open to innovations in the funding arena, so that your organisation will be prepared for the next frontier. 

 Credibility 

  1. Your reputation as a credible partner rests on your ability to deliver. Ensure that your marketing is underpinned with credible stories of success.
  2. Be transparent. Organisations that publish their financials and account for their work gain the confidence of funders.
  3. Share challenges as well as successes. We all know development is not easy. Those that tell it like it is rather than only showing their good news will gain greater trust.
  4. Make sure you have a credible monitoring and evaluation (M&E) framework and do the monitoring wherever you can to ensure you are able to share metrics on progress and outcomes with your funders.
  5. Engage your funders about what feedback they need so that you can provide one comprehensive report, rather than different feedback reports for different funders.
  6. Ask your leading funders to share the cost of developing a robust M&E framework. After all, it is in their interests that this be done.
  7. Invite external experts to reviews your methods. Not only will this allow you to refine your approach, but it will build trust as well.
  8. Get involved with others who work in your sector. There is more to gain through collaboration than operating in isolation.
  9. Write up case studies of your work, highlighting both achievements and challenges. Do not restrict these to anecdotal stories or isolated examples of success.
  10. Understand and communicate your relationship with government. You are more likely to attract funding if you support the work of government rather than function as an alternative solution.
  11. Consider how you can leverage your impact, for example by sharing lead practice and influencing others in the developmental sector, or replicating initiatives that work.

Crowdfunding 

  1. It can feel like a lot of work for smaller amounts of money, but if you develop a strong and memorable campaign, it can be as valuable for building your brand as it can be for raising funds.
  2. Be relentless about the marketing.
  3. Find a strong hook - think creatively to get people to join the campaign.
  4. It does not have to be complicated - remember how trendy those simple yellow Livestrong armbands became?
  5. Steer clear of false marketing – remember how quickly those yellow Livestrong armbands faded?
  6. Set targets - for both your overall campaigns and for the charity champions/brand ambassadors involved.
  7. Make sure that your organisation’s campaign is asking for something as tangible as possible – be clear about what it costs per beneficiary to your project, for example. This motivates champions and backers to reach the target.

Marketing and Branding 

  1. Start with building your brand by strengthening it in the communities and amongst the people that your organisation already works with.
  2. Ensure that your brand is recognisable and memorable.
  3. Stand the chance to win a full-page, professionally designed advertisement worth R42 000 – participate in this research survey by Monday, 27 July 2015, to assist in creating valuable benchmarks and trends in the social investment and development arena.
  4. Information about your organisation should be coherent and aligned across various marketing material and platforms. For example, the language and tone may be adapted, but your organisation’s brochure should say the same thing as your website and social media pages.
  5. Embrace the tagline - sum up what your organisation does in one line, to make your organisation’s work feel accessible and relevant to the general public.
  6. Make sure that your logo is user-friendly, not just for your own organisation, but for partners. Have it available in different formats, including JPEG, PNG and GIFF, high resolution and low resolution, full colour, black and white, and transparent (for printing on darker backgrounds). The more places your logo is featured, the more brand recognition your organisation could earn.
  7. With #41 in mind, ensure that your logo is not misrepresented and that you control which project partners have access to it and on what terms.
  8. Pull up a banner at all your events and always have brochures and business cards on hand.

Social Media 

  1. It is here to stay. In fact, social media platforms will continue to diversify as user popularity grows. Instead of newspapers, this is where many social media users are consuming their news from. So, if your organisation has news that it wants to share with the general public, it is worth developing a strong social media presence.
  2. This does not mean that you should be on all social media platforms. Consider the nature of the content that your organisation will be sharing, and which social media platforms will best support those.
  3. Facebook and Twitter are still the most popular platforms among South African NPOs.
  4. Facebook should be updated daily, at least.
  5. Since Twitter moves much faster, it may require a little more attention. The more Tweets you are able to send out per day, the better.
  6. If you are pressed for time and resources, use a social media management application, such as Hootsuite, to help schedule your organisation’s posts.
  7. Your posts are more likely to be spotted between 7am and 9am, as people are getting settled at their desks, scrolling through their newsfeeds over their morning cuppa. Lunchtime, between 12pm and 2pm is also a popular time.
  8. Follow peer organisations to help build a network of collaboration, rather than competition.
  9. A ‘tweet’ or ‘tag’ can be more attention-grabbing than a standard email. If your organisation has been trying to make contact with someone, with no success, try their social media channels.
  10. Tweet live from your organisation’s events to ensure that those who cannot be there can still participate in the exchanges.
  11. Cross-market - share links to your organisation’s social media pages on other platforms, including your organisation’s website, newsletter, staff email signatures and business cards, and any other marketing material, such as banners and brochures.
  12. Do not be controversial for the sake of it. If you are going to start a debate on social media, be sure that your organisation has the capacity to fully and insightfully engage the debate.
  13. Words are wonderful, but images really enliven posts. The more colourful and thought-provoking, the better.
  14. Stock photos are fine, but original photos that authentically depict your organisation’s work is much better.
  15. Get as many staff members and supporters to Tweet about your organisation from their own accounts - the more people tweeting at or tagging your organisation, the more familiar your brand will become.
  16. Have fun! Use social media posts to push you to get creative and excited anew about the work that you do.

Media Relations 

  1. If you read, watch or hear interesting media that’s relevant to your organisation’s work, save the name/s of the journalist/s responsible for the piece, so that you can share information about your organisation’s work with them. It may get your organisation direct media attention, or it may help to deepen the way an issue is presented in future.
  2. Deepen existing media conversations or debates by publishing opinion or insight articles.
  3. If articles are too daunting or demanding, shorter letters to the editors of newspapers could be an easier alternative for expressing views.
  4. A quick Google search of any media house will pull up contact details that you can use to help research how best to get your piece published.
  5. Media releases can help to spread the word about your organisation’s position on a controversial issue, an event you may be hosting or an initiative you may want to encourage public participation in.
  6. If your media release is about a specific project, be sure to include information about the ‘who’, ‘what’, ‘where’, ‘when’, ‘why’ and ‘how’ of the initiative. The last line of your media release should include the contact information of your organisation’s spokesperson. 
  7. Invite media to your events. If it gets coverage, the topic will remain relevant well after the event has ended.
  8. Review the news regularly to find links between current affairs and the ongoing work that your organisation does, to help keep up to date with possible linkages and opportunities.

Bonus tip! 

  1. Congratulate yourself for making it all the way down this list, and be sure to visit www.trialogue.co.za regularly, to stay abreast of CSI developments and insights.
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Five reasons Donors Give for not funding local NGOs directly. 02/12/2015

Published at bong.org.uk

19 November 2015



Only about 1% of all official aid, and an even smaller portion of humanitarian assistance, goes directly to the global south.

Unpublished research into private foundations suggests that they, too, channel the majority of their funding through what I call "fundermediaries" in the global north. While more resources do find their way eventually to southern actors, this "trickle down" approach creates inefficiencies and undermines agency.

Our annual State of Civil Society Report this year focused on resourcing for civil society. In the weeks leading up to its publication, and in the weeks since, I have been asking almost every donor I meet why they seem unable, or unwilling, to fund the frontline directly. Here are the top five reasons they give me:

  1. Lots of southern and smaller CSOs do not have the capacity to fill in all our forms, let alone spend our money effectively.
  2. We do not have the administrative capacity to give smaller amounts of money.
  3. We need to channel money through a few, trusted partners so that we can manage risk and comply with our own rules.
  4. We have strict anti-terror and anti-money laundering rules that make giving directly difficult.
  5. We are under domestic political pressure to fund through CSOs in our home country.

As one may expect, these reasons are less than well received by southern organisations, as evidenced publicly recently when the gloves came off in a heated exchange in Geneva.

The good news is that the more thoughtful donors are trying to address these issues. For example, USAid under Raj Shah committed to a localisation strategy (although the agency is apparently struggling to meet its targets) and in private philanthropy organisations like the Stars Foundation have called on others to "Fund the front line". Meanwhile, the UK’s Department for International Development (DFID) is currently conducting a wide-ranging civil society partnership review that includes looking at more direct funding of southern CSOs, although DFID’s FAQ response on this question clearly aims to continue representing the needs of UK CSOs.

For me, the issue here goes beyond the question of "development impact" – we know local actors offer more efficient and often more sustainable solutions. Instead, it comes down to how prepared donors and others are to disrupt the current development model; how prepared we all are to smash the "charitable industrial complex", as Peter Buffet once called it.

Part of the problem is that the science of delivery has been strangling the art of social transformation. Driven by the need to measure results, donors have helped to nurture a cadre of contracted civil society organisations, who are excellent at "accounts-ability" but less good at disruptive change.

Naturally, this kind of funding has favoured larger, professionalised CSOs. Most have been founded and are based in the north; they have the capacity to plan, deliver and monitor, regurgitate the latest jargon, prepare a plausible logframe, and be visible in high-level development forums.

Meanwhile, smaller and southern-based CSOs, particularly change-seeking bodies, have struggled to find resources to support their work. Domestic state funding is often not an option, or, when it is available is deeply problematic, and southern private foundations are few and far between, especially those prepared to fund advocacy or social change.

Donors need to accept that one of the roles of civil society is to challenge power

All of this has served to deep-freeze existing power imbalances: global civil society now seems to be lagging behind the global economic and geopolitical changes that have started to disperse power and influence. As I have argued elsewhere, we need to work out how to build a more multi-polar civil society.

Even the relatively little money that does go to southern civil society is being increasingly regulated or restricted by governments worried about foreign funding of dissent.

Unless donors are brave enough to begin funding in a different way, that fundamentally reconfigures current structures and systems, then we will continue to undermine our efforts towards sustainable development unnecessarily.

Donors need to fund diversity; they need to make available a diversity of funding sources to a diversity of civil society forms and actions at different levels, over different time periods and with different levels of risk. Some donors need to support core funding of CSOs, particularly change-seeking CSOs in the global south. They also need to devolve resource decision-making as close to the ground as is feasible.

The good news is, there are different ways in which civil society "fundermediaries" can help: by disbursing smaller grants to smaller organisations in the global north (as Forum Syd does in Sweden), by using regional mechanisms (like the African Women’s Development Fund) or by tapping into community foundations close to the ground (like the grantees of the Global Fund for Community Foundations.

Donors also need to acknowledge that funding decisions always have politics embedded in them; they’re always about more than just efficiency and effectiveness. Donors need to accept that one of the roles of civil society is to ask difficult questions and to challenge power; they then need to ask themselves, are they enabling that role?

In the longer-term, increasing direct funding to southern-based and smaller CSOs will be a necessary (albeit not sufficient) condition for a range of things that need to happen: whether it is allowing communities to determine their own solutions to their own problems, or building effective institutions that can survive and thrive long after the "development" project is over, or sending positive signals to inspire and reassure local funders.

Most importantly, if we are to push back effectively and sustainably on threats to civic space, we need to build a cadre of confident local actors that have a diverse, and reasonably secure, resource base to work from. A community of weak CSOs, reliant on sub-grants and contracts, will hardly deliver the changes we need.

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Resource Mobilization I-Kit is live. 01/10/2015

Published at Campaign Archive


The Health Communication Capacity Collaborative is pleased to announce the launch of its latest Implementation Kit (I-Kit), focused on Resource Mobilization.

Resource mobilization refers to all activities involved in securing new and additional financial, human and material resources for your organization, as well as making better use of, and maximizing, existing resources.

This I-Kit was created to guide organizations that seek to broaden their funding base to reflect a hybrid of revenue streams including fees from clients, funding from donors, corporate sponsors, public sector subsidies, charitable contributions and other funding or investment mechanisms. This will allow for a diversification of risk and not threaten the effective implementation of critical programs that improve the lives of their beneficiaries.

Taking you through each step of the resource mobilization process, this I-Kit describes the fundamental elements of a strategic plan as the source of new business opportunities, to the detailed phases of drafting a proposal for a donor, writing a business plan and preparing some smaller business development documents, such as a business opportunity brief.

Access the Resource Mobilization I-Kit here.

Questions? Please contact Eliana Monteforte or Judy Seltzer.

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11 Questions Every Donor Asks (Or Should). 24/5/10

Everything from a fundraiser’s job title to patience and timing come into play when soliciting a gift of any size.

The Non Profit Times

By Kate Rogers
24 May 2010

No fundraiser has a crystal ball. Although, it would be nice. Everything from a fundraiser’s job title to patience and timing all come into play when soliciting a gift of any size.

During the Association of Fundraising Professionals’ recent annual conference in Baltimore, Md., Harvey McKinnon, CFRE and president of Harvey McKinnon Associates in Ontario, Canada, gave fundraisers the burning questions donors have when being solicited, and just how to handle them.

1. Why Me? McKinnon said all donors want to understand why they are being pinpointed for giving, and should be made to feel they can inspire others by contributing. “Your job is to figure out how you can break into their circle of concern,” he said. “Show you care, make sure you have met. That personal meeting makes an enormous difference with people.”

2. Why are you asking me? The actual person who is doing the ask is extremely important in this situation, McKinnon said. Those who are higher up in the organization will be more successful than their subordinates, or those who have not been with the charity for as long. “Some organizations will give people titles to make them sound more senior than they are,” McKinnon said. “Trust is something that is partly earned because they see your passion and your commitment to the cause.”

3. Do I respect you? Donors always want to know about the person who is doing the ask, and if they are able to pick up on visual cues. If a fundraiser has done volunteering, or has proved they are committed to the community or a cause themselves, it gives them more clout with prospective donors. “Preparing answers to those types of questions (from donors) is critical,” he said. “Integrity helps to gain respect, and there is a real pressure.”

4. How much do you want? Many times, a donor will not give what they think they should give, but instead, will give what you ask them to give, McKinnon said. Also, those who are wealthy often are approached by charities, so it is best to seek major gifts from donors who have their priorities straight. “You want them to give enough that they still feel good,” he said. “Most donors make their largest gift between the seventh and ninth donation. People have a great giving capacity, way more than we think. Over time, you learn what is appropriate and what’s not.”

5. Why your organization? Fundraisers have to distinguish their groups from other organizations to show donating will be impactful. This can be done though showing authentic visuals such as videos or photos, he said. “If you can’t define what your unique selling proposition is as an organization, you have a big problem,” McKinnon said. “The practical successes of your organization need to be shown. This is critically important.”

6. How will my gift make a difference? Giving allows the donor the opportunity to feel great joy, and charities should tap into that, McKinnon said. Show the donor they have the chance to make a substantial difference by giving.

7. Is there an urgency to make a gift? Many donors respond well to deadlines, McKinnon said, therefore they should be made and followed. “People like deadlines. It refocuses the passion and why you are doing what you are doing,” he said.

8. How easy is it to give? A donor will be interested in contributing if you make it easy for them to do so. Catering to the donor audience, and taking out unnecessary steps will bring money in more quickly.

9. How will I be treated? Good copy makes a huge difference in inspiring to give, McKinnon said. Potential donors want to feel appreciated when engaging with an organization. “A personal touch from the people at the back end of the organization helps a great deal,” he said. “Job hopping is really tragic from a donor relations standpoint,” because it does not allow for continued communication.

10. How will you measure results? Honesty with donors is the best policy. A charity must be truthful about where the money is going, and whether or not it was used for something that proved to be successful, McKinnon said. “One really effective way to do this is to talk about your organization’s successes and failures,” he said, “and what you have learned from them.”

11. Will I have a say in how you use my money? Allowing a donor to feel included in the process, and giving them time to make the decision is necessary. Give them information about how the money is being used while it is happening, not just the results. 

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18 Ideas to Avoid a Funding Crisis! 8/2/10

It may only need about 2-3 hours per week over 3 months

Kubataba.net

By Frank Julie
Published 8 February 2010

We live in difficult times with most NGO’s and CBO’s trapped in the grip of a severe financial crisis. The causes are varied. Some organizations think that using fundraising consultants will get them out of this crisis. Here is what your organization can do without having to use a consultant. And you don’t even have to be an expert to do all this. It may only need about 2-3 hours per week over 3 months to develop all the ideas and then to maintain it. Get a serious team together who believe in what you do and get them to work on some if not all of these ideas

Download this here(6pg)

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20 Top Corporate Fundraising Tips for Fundraisers

The Resource Alliance

"I want to share with fundraisers worldwide a short list of subjective tips on corporate fundraising, which is based on my 11 years spent at Levi Strauss working as a corporate donor. This list is very much what I covered during my recent workshop titled - ‘Put Yourself in Their Shoes’ at the 9th IWRM held in Bangalore, India this June, and is based upon the questions participants raised throughout the event. I hope this proves useful for fundraisers involved with Corporate Fundraising worldwide."
Author Zoltan Valcsicsak

1. First of all, think twice before getting into corporate fundraising. Why? Because it can be hard work with questionable results. Bear in mind: globally corporate support represents only around 4% of the total income of charities. And companies on average give away only 1% of their precious profit. Still interested? Keep reading.

2. Know yourself. No, it’s not philosophy. It’s very practical advice about knowing your organisation’s values, work, impact, and limits. Knowing means valuing and believing. You will not convince companies to work with you unless you fully believe you bring value to the table. And you do, believe me.

3. Know the company. But know them well. Put yourself in their shoes (or trousers _ ) What are their products, markets, and brands? Who are their consumers and what are their concerns? Who are their employees, senior managers, owners and competitors? Where are they located and what are their concerns? What is the Corporate Responsibility inspiration and track record of the company? What are their weaknesses in this field? What do they have to give to the community – apart from cash? Would you buy their products?

4. Think beyond cash. Companies don’t like giving away cash. Especially nowadays. Don’t forget they have been created to make cash. However, they have lots of other resources and sometimes you and they don’t think about using them in the partnership. Why not? Products, services, employees’ time and expertise, office space, used machines, business networks, popular brands, access to consumers and employees, dreams of CEOs to change the world. I’m sure you can continue the list. Take your list with you when meeting with companies.

5. Focus on common values, instead of looking at what divides the company and your organisation. Ask the question: How can we create partnership to use resources of the company and our organisation to achieve common goals?

6. Find the right person at the company and transform him/her into your advocate, story teller and warrior within the company. It can be the CSR Manager, the head of the company’s foundation, a marketing manager, a PR person, the CEO’s assistant or the CEO him/herself. Doesn’t matter unless they shape and make the decision you are interested in. Meet them face-to-face and help them sell your cause to others at the company, including, of course, the Finance Manager

7. Dare to be different when competing with other NGOs to grab the attention of companies. I have received thousands of grant requests in my life, but I still remember the ones that were different in some way. Either with the idea or the language or the project presentation. Or simply because they used humor or nicely surprised me.

8. Tell your story combining hard facts with emotions. Facts and figures are critical, but sometimes people from nonprofits become too business-like when meeting with companies. Don’t fall into this trap. Be emotional. Be human. They are, too. And they will respond. However, don’t try to shock them with painting all the miseries of the world on their wall. Then they will simply stop listening.

9. Most people at businesses love making decisions and taking actions. Use this capacity of them. Involve them in decision making and give them things to do. They will love it. Given that it doesn’t require too much time.

10. Always bring partnership options to the table. Be flexible when discussing the project to fund, be open for their advice, but negotiate hard and know your interests and limits when contracting.

11. Be specific when you’re asked what you want. Never say you would be happy with anything they can give.

12. Listen to your heart when it comes to ethical questions. Would you be proud of telling about your corporate partnership to your friends, Mom or children? If not, don’t get into it.

13. Be honest and transparent with your corporate partners. Under-promise and overdeliver. Tell them if you experience difficulties with the project and propose to renegotiate. Invite them to your office for a coffee with the staff. Hopefully, they will treat you in the same way.

14. Communicate, communicate, and communicate. First of all, with your contact person. S/he has to be updated and regularly fed with information and visual materials on the supported program. Secondly, with your staff and your clients. Thirdly, with the media. Use the company’s resources to spread the word and create media buzz.

15. Have a good website which is regularly updated and provides the right amount of information. I don’t mean a fancy site. Just a clear, working one.

16. Give a K.I.S.S. to each communication with your corporate partner. Keep It Short and Simple. Test it with a friend who has no clue about what your organisation does (it could also be a board member _ ) If your friend understands your grant report, everybody will.

17. Be patient and build your partnership step by step. But don’t devote more energy and resources to this area than income from it deserves.

18. Never forget that you are there to serve your community. Be their voice throughout the process. Your organisation doesn’t really matter until your clients are well-served. That’s what matters to your partner company, too. 19. Not convinced? Create your own company to make enough money to achieve your social goals. In this case, you no longer need to bother about corporate fundraising _ 20. And by the way: enjoy and have fun. I always do.

Download this resource as a pdf here (80.20 KB, 3pg)

 

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Basic Fund-Raising for Small NGOs/Civil Society in the Developing World

Published by Coyote Communications

Revised 17 August 2010

Some of the most frequently asked questions (FAQs) to online forums for community-based organizations (CBOs) in developing countries, whatever the subject, are regarding funding, particularly grants.

In addition, the first impulse of many such non-governmental organization (NGO) seeking funding is to request the contact information for possible funders, and once such information is received, these NGOs often write immediately to the potential funder, stressing how desperately funds are needed. Sadly, this approach often harms the NGO, rather than garnering support. Not only does it rarely attract funding, it can turn funding sources against the NGO altogether.

With all this in mind, I drafted basic tips for fund-raising for such organizations. I am offering my own significantly-revised version of the document for free to any who ask for it. When I began offering it more than a year ago, it was 15 pages long; now, it is 27 pages. It is a PDF file.

The document is meant to provide very basic guidelines for small NGOs in the developing world regarding fund-raising and adhering to the basic principles of good governance, and to point to other resources. By small NGOs, I mean organizations that may have only one paid staff member, or are run entirely by volunteers; and may or may not have official recognition by the government. These organizations are extremely limited in their resources, and are often in unstable environments and/or serving profoundly poor populations.

Please note that this document is NOT written for nonprofits serving the "developed" world -- organizations serving communities in North America, Western Europe, Australia, New Zealand or Japan would probably not find this document particularly helpful, as it has been prepared to make recommendations relevant for nonprofits serving in a developing country.

THIS DOCUMENT IS NOT A LIST OF FUNDERS/DONORS.

Let me repeat that: THIS DOCUMENT IS NOT A LIST OF FUNDERS/DONORS.

It is, instead, a set of guidelines on how to prepare an organization to be attractive to donors, how to search for potential donors that support organizations in the developing world and how to approach such potential donors.

The document includes:

-A list of activities an NGO should NEVER do regarding fund-raising
-How to network and establish credibility to insure fund-raising success
-The absolute essential preparations to solicit donations
-What to do before making a funding request
-Establishing credibility and a reputation of integrity, transparency and accountability
-How to find donors & make contact
-A warning about fund-raising scams
-Online resources for further information
-Online resources for detailed tips on writing funding proposals

Once you have received this document, please do NOT distribute the document via a web site or on an online discussion group without my written permission. I frequently update the document, and want to ensure people are getting the most recent version.

Suggestions for improvements to this document are welcomed, particularly from NGOs in the developing world.

Want to adapt the document? You are welcomed to translate it into another language, edit it, change it, and republish it or distribute it, per certain requirements, detailed in the document itself.

The version currently available is dated August 17, 2010. If the document is updated, a notice will be posted to the page you are reading now, as well as to my blog.

You can access the document either by contacting me via email, or, by subscribing to my newsletter, Tech4Impact (it's free to subscribe); the latest version of the document is in a private online area accessible only to subscribers.

To order the document via email, please contact me with

-your full name
-the organization you represent
-your city and country
-the developing country/countries your organization supports
-details on how you found out about this document
-a pledge that you will NOT post this document to a web site or network without first asking my permission and ensuring you have the latest version.

Your information will not be sold, traded or given to any other organization as a result of your submitting this information.

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Core Funding Strategies. Guidance Notes No 6

Published by London Voluntary Service Council

March 2005

This document describes the core funding strategies and its components
Contents:
-Core Funding Strategies
-What are core costs?
-Why develop a core funding strategy?
-The five core funding strategy model
-SA case study in developing a core funding mix
-Resources

Download this documetn here (PDF, MB, 8pg)

 

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Donor Deductible Status’

AttachmentSize
Plain text icon DONOR DEDUCTIBLE STATUS.txt8.15 KB

 This document describes Section 18(a) of the Income Tax Act.

Find the attachment below. (Text document, 20 KB, 7pg)

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Fundraising

Develop a fundraising strategy

Published by Tearfund 2004

Author: Rachel Blackman
ISBN 1 904364 28 4

This book shows how to develop a fundraising strategy and contains ideas to help organisations diversify their funding base.

Contents:
-Introduction
-Glossary
-Section 1 Christian fundraising
-Section 2 What the Bible says about money
-Section 3 Developing a fundraising strategy
-Section 4 Characteristics of different funding sources
-Section 5 Appendices

Download this document here (MB, PDF, pg)

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Fundraising Guide for Women’s Community-Based Organizations

Outlining the basic concepts of professional fundraising

Published by Women Thrive 2009
Author(s): Ann Corbett, Anisa Ali, Catherine Lockman

Local organizations have difficulty navigating the often complex world of international assistance and fundraising. This guide was written to help bridge that gap. Outlining the basic concepts of professional fundraising, the guide seeks to assist our community partners through a collaborative process to increase access to effective resources. From practical advice based on years of experience in professional fundraising in the United States to detailed instructions on how to write grant proposals, budgets and reports, the principles and methods we introduce are applicable globally and can be tailored to local environments.

Contents:
Introduction
Chapter 1: What is Fundraising?
Chapter 2: Building Relationships with Potential Donors
Chapter 3: Not Just Foundations: Where to Find Money
Chapter 4: What to Do Before You Apply For a Grant
Chapter 5: Applying for Foundation Grants
Chapter 6: What to Do After You Get the Grant
Appendixes

Download this document here (MB, PFD, 56pg)

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How to Develop a Grant Proposal Writing Process

Taking the Long View of Grant Proposal Writing

By Joanne Fritz

If you're thinking that writing a grant proposal is a quick way to solve your organization's funding problem, you should probably go into another line of work. Writing a grant proposal should not be a one-shot experiment. You don't write a grant proposal...you write many grant proposals. Grant proposal writing should be an ongoing process and an integral part of your overall fundraising program. Here are the parts of that process:

Click here to access this online toolkit

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How to Find Funders

How to find information about potential funder

Resource Alliance

The following pages explain how to find information about potential funders and how to research and approach donors. There is a great deal of information available about funding organisations, the challenge is identifying organisations which provide funding for the type of work you wish to undertake

This paper covers the following areas:
-What information should I look for?
-The Internet
-Sources of information about potential funders
- Directories
-Other useful Publications
-Approaching potential Donors

Download this document here (DOC, 37KB, 6pg)

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How to Organise Events to Raise Money

The benefits can be more than just money.

Resource Alliance
Author: Michael Norton

Organising an event can be a really great way to raise money for your work. It provides you with an opportunity to reach out to people who might not give you a donation – they may be much more interested in attending the event rather than in supporting the cause. Your challenge is to maximise the return you get from your event. The benefits can be more than just money.

Download this document here (Doc, 311 KB, 12pg)

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How to Write a Fundraising Proposal

The Resource Alliance

Extracts from the Worldwide Fundraisers Handbook 2nd edition (2003) by Michael Norton in association with The Resource Alliance.
Writing a proposal is probably one of the most important skills in the fundraiser's repertoire. For many smaller organisations, the difference between a good and a bad proposal will be the difference between success and failure. The fundraising proposal communicates the needs of the organisation to its potential supporters. And it is largely on the basis of the written proposal that many funders will decide whether or not to make a grant.

Content:

-Planning your approach
-Targeting your proposal
-Content of the proposal
-Writing the proposal
-Get in Touch!

Download this document here (DOC, 46KB, 7pg)

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How to write Logical Framework Analysis (LFA) in Grant Proposals –A Simple Guide for NGOs

Developer: Funds for NGO's June 2009

In various proposal  formats, we come across a table or a framework required to be filled by us to give more detailed information about our project. This table is referred to as a Logframe or Logical Framework or Logical Framework Analysis (LFA) or Logical Framework Matrix. This framework is the most important part of the proposal, yet it continues to be the most complicated one. Here we are providing some simple explanations to help NGOs and other development professionals on how to understand and develop this framework in an easier manner.

View this online resource here

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It’s Time to Move Beyond Overhead 01/10/2013

"The experts have spoken: the percent of charity expenses that goes to administrative costs—commonly referred to as  “overhead”—is a poor measure of a charity’s performance" : The Overhead Myth

OverheadMythLetterIn a historic move, the leaders of the country’s three leading sources of information on nonprofits – GuideStarCharity Navigator, and BBB Wise Giving Alliance – penned an open letter to the donors of America denouncing the “overhead ratio” as a valid indicator of nonprofit performance.  

The letter, signed by all three organization’s CEOs, marks the beginning of a campaign to correct the common misconception that the percentage of charity’s expenses that go to administrative and fundraising costs—commonly referred to as “overhead”—is, on its own, an appropriate metric to evaluate when assessing a charity’s worthiness and efficiency. The nonprofit sector, which all three organizations provide information to and about, has too often erroneously focused on overhead over the past few decades, which has starved nonprofits from investing in themselves as enterprises and created what the Stanford Social Innovation Review calls, “The Nonprofit Starvation Cycle.”

We need your help in eradicating the Overhead Myth once and for all. In doing so, we will help to ensure that nonprofits have the resources to invest their own sustainability and success!

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NPO Funding Cuts Survey 2013. 11/03/2013

The Non Profit Job Losses and Service Cuts Survey in 2012 found that 80% of non profits had experienced significant funding cuts in the previous year. Over 64% reported having to cut services to their beneficiaries as a result and respondents reported a 21% loss in jobs. To find out what, if anything, had changed, GreaterGood SA conducted a follow-up survey in October 2013.

Although fewer organisations report funding cuts (54%) – and the scale of the cuts has reduced, the overall funding environment does not appear to be significantly better for most NPOs surveyed.

DOWNLOAD A SUMMARY OF THE 2013 FINDINGS >

NPO Funding, Job and Service Cuts Survey 2013


Posted on in Publications

 
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Fundraising Challenges for NGOs in the Age of 'Digital Darwinism'. 12/10/2016

Published by BIZCOMMUNITY

Technological changes impact virtually every aspect of our personal and professional lives. It has fundamentally changed the face of how we transact and the pace at which we expect things to happen, and more efficiently than ever before. But finding and retaining the skills-sets to embrace and exploit the technology remain a key challenge for all business, and even more so cash-strapped non-profit organisations (NPOs) and non-governmental organisations (NGOs).
Michelle Govender, director of Strategic Marketing at B-Cause
Michelle Govender, director of Strategic Marketing at B-Cause

In an age that has been dubbed ‘Digital Darwinism’, the pace of technological change is advancing so rapidly that individuals and organisations are struggling to adapt to the changes, let alone learn enough to exploit them. More than ever before NGOs are under huge pressure to adopt new technologies as a vital mechanism to survive and fund their work.

Allocating share of wallet

Cloud, crowdfunding, mobile, social communication, augmented reality, instant and mobile payment mechanisms – these are just some of the technologies that have dramatically changed consumer behaviour and how they allocate their share of wallet.

If fundraising strategies are to generate the hard-earned cash needed to fund NGO work, then NGOs need to figure out how technology is changing the face of fundraising, and how to engage donors beyond a 10-second attention span. Technology is changing consumer behaviour dramatically, and that means NGOs have to change with them in the manner that they fundraise, market, and share information.

Key tech trends that non-profits need to engage with:

Mobile: The future is all about mobile, and that means transacting needs to follow suit. More and more people are moving away from their PCs to being more mobile and ‘on the go’. That means you have to ensure your content and message is optimised for mobile functionality, especially when you consider that almost 50% of all emails are read on mobile devices. Being mobile-savvy has never been more important.

Data and analytics: Data is by far the most valuable asset of any organisation. This means that the quality of data going into an NGO has to improve, and we have to move away from a ‘capturing’ mindset to an ‘analysing’ one. More than ever NGOs can research which communications channels their donor base prefers, which messages and approaches are more effective, how to increase recurring giving and understand the donor's propensity to donate. The ability to extract ‘intelligence’ from data and translate this into actions will determine which NGOs are successful and sustainable in an increasingly discerning consumer market.

Cloud: Cloud provides a secure, highly available, managed, cheaper environment for organisations to operate without the costs associated with cumbersome IT infrastructures. This becomes even more important when you consider the move to mobile and the need to access your critical documents on the go, anywhere, anytime, as well as sharing data and information from any place. Cloud could prove to be a gamechanger for NGOs to access services that may have proven too costly a few short years ago. To this end, Microsoft has long promoted the development of cloud services and the use of innovative technologies by NGOs. Microsoft is donating over $1bn in cloud services to 70,000 NGOs around the world in the next three years as part of its ‘Public Cloud for Public Good’ initiative, supporting NGOs to enhance operational efficiency, network security and overall service quality, so that they can provide even better community services to countless people.

Social media: From live tweeting of events to sharing of donor pages, social networks have become the communication channels of choice for emerging generations who will become your future donors. They have become pervasive across business and personal use with channels like Facebook, LinkedIn and Twitter providing access to huge networks of potential donors, volunteers, supporters, media and so on. Make sure your website and marketing communications integrate seamlessly with social channels and put an intelligent, consistent and impactful social content plan at the top of your priority list.

Crowdfunding: Of all the innovations in fundraising over the past decade, one of the most impressive has to be crowdfunding. Crowdfunding websites allow your non-profit to set up an online fundraising campaign based around a fundraising page, and accept money directly from that page using the website’s own credit card processor. This approach taps into the collective efforts of a large pool of individuals — primarily online via social media and crowdfunding platforms — and leverages their networks for greater reach and exposure. For NGOs, the ability to collaborate and network beyond their immediate borders is a massive benefit.

Video: Tell compelling visual stories that capture the hearts and imagination of your audience with video. The use of video in content marketing is on the rise, evident in the fact that YouTube is now the second largest search engine on the web. It also demands more consumer attention than any other medium. Statistics also show that audiences are also 10 times more likely to engage, share and comment on video posts than any other content. Video is also the most powerful way of evoking emotions online.

These are just a handful of technologies that are impacting the NGO space. While we’re not suggesting that the tried and trusted traditional channels are no longer relevant, they need to be augmented with greater digital integration. NGOs need to engage a far more diverse audience of donors than ever before. Some are comfortable in more traditional media, while a much bigger and perpetually growing number are happier with the speed and agility that digital platforms provide. The point is that NGOS need to engage across multidisciplinary channels, and ensure an integrated approach to engaging their current and future donor audience.

Attracting and retaining in-demand, experienced digital experts in the cash-sensitive NGO environment is a key challenge, which is why NGOs need to collaborate with partners that can deliver the new skills that they demand. Internally, a new culture of fundraising innovation is also needed so that by thinking ahead, NGOs can take a more proactive response to digital technologies that allows them to actively shape their futures, rather than be shaped by it.

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Proposal Rejection: Saying Thank You is Critical. 06/10

Your grant wasn’t funded, but it doesn’t mean the grant process is over and that all opportunities are lost.

By April Northstrom

June 2010

I’ve received a great deal of interest lately from novice and experienced fundraisers about what happens after you receive a rejection letter for your proposal. I have never hesitated to tell people that I’ve received plenty of rejection as a grant writer. What this rejection has done is made me a better, more strategic fundraiser without fear to ask for suggestions or help.

Your grant wasn’t funded, but it doesn’t mean the grant process is over and that all opportunities are lost.

Did you follow the guidelines? Did you make a good case? Did you answer each and every question that the funder asked? Did you spell the names of the contact person correctly? Nothing can be overlooked and the smallest error (yes, even a typo or misspelled name) can lead to rejection.

If you think you did everything correctly and cannot see an obvious reason for your rejection, then it is a good idea to search for more details about your proposal.

It’s fair to say that your rejection letter will offer little or no feedback. Assuming you have a strong relationship with a program officer, you can ask for feedback directly. Government agencies may provide comments or feedback with their rejection, but be careful not to overstep your relationship in this area.

Program officers are busy and may not have time to get too involved with organizations that didn’t receive their foundation’s funding if they don’t have a pre-established relationship or your proposal clearly did not meet the foundation’s criteria. A short phone call is the most appropriate way to reach out for feedback. Make your conversation brief. Ask for suggestions. Ask if they would welcome another proposal from you in the future. Is there a time frame for resubmission? Take notes and thank them for their time. Then, write your thank you letter and get it in the mail!

Thanking a funder even when you didn’t get funded is a critical part of the grant process. Especially if a funder spent time helping you prepare your proposal for submission. A “thank you” can go a long way with anyone. Write a letter thanking the potential funder for their consideration and if you are still a good fit, even include an invitation to visit during an upcoming event at your organization.

Don’t lose sight of a worthy funder just because they didn’t write you a check the first time around. Include them like you would any prospect into your fundraising strategy. Make sure funders receive newsletters, invitations to events, annual reports, etc. Be mindful of the things you mail to them…you don’t want to look like you are wasting resources. However, if it matches the funders interest, make sure they see it.

A good foundation will value your efforts to keep them aware of your organization. Develop a strategy to build your relationship and if their feedback gives you an opportunity to apply again, don’t let the chance pass you by.

 

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The Good Guide to Online Fundraising. Fundraising Futures. 8/11

Published by GreaterGood August 2011

The Fundraising Futures guide is designed to help build the capacity of South African non profit organisations to raise funds in an efficient and sustainable way into the future.

The guide will:

- Help you understand the basics of fundraising
- Give you tips and resources to support your strategic fundraising planning
- Show you how to make the most of your website and the internet for fundraising
- Provide guidance on creating an interactive Cause Space on our Myggsa.co.za online giving community – to attract and retain new givers.

Contents:

-1. Fundraising fundamentals
-2. Fundraising online
-3. Online giving community
-4. Resources

Download this document here (PDF, 564.49 KB, 22pg)

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The Irony of Overhead 01/10/2013

The Business Case for 21st Century Charities
Jacob Harold
Writes Jacob Harold in the Huffington Post

Click here to read an original op-ed from the TED speaker who inspired this post and watch the TEDTalk below.

 

Allow me to begin with a back-of-the envelope estimate: every year nonprofits have one billion interactions with donors in which they prominently focus on their "overhead ratio" -- the proportion of their expenses that goes to administrative and fundraising expenses.

Thus, nonprofits find themselves telling the story of work to house abused children or fight climate change... through an accounting ratio. They are responding to the tragedy of the "Overhead Myth": the common belief that such a ratio is a proxy for nonprofit performance (instead of a filter for rare cases of fraud.)

But, worse, nonprofits find that they are reinforcing that myth every time they communicate with a potential donor. Unlike Alanis Morisette's famous song, this actually fits the classic definition of "ironic": in order to raise money to do good, nonprofits highlight a ratio that constrains their ability to do good.

Indeed, the focus on overhead is more than ironic: it has very practical consequences for nonprofits. As described in a seminal article in the Stanford Social Innovation Review, the overhead myth creates a "starvation cycle" that undermines nonprofits' capacity to solve our world's most fundamental problems. Nonprofits find themselves choked by explicit or implicit funding restrictions, and sometimes even starved to death by under-investments in infrastructure.

And yet, there are glimpses of light. We've seen multiple examples of work to shift donor behavior. This summer, I joined with the CEOs of Charity Navigator and the BBB Wise Giving Alliance to write an open letter to the donors of America denouncing the "overhead ratio" as a valid indicator for nonprofit performance.

We will continue our work to educate donors and change this conversation. But we need nonprofits' help. We understand if they -- temporarily! -- feel compelled to continue sharing the overhead ratio in their fundraising materials. But if we're going to move beyond the Overhead Myth, we need to begin to offer donors an alternative. Help donors pay attention to the factors most relevant to nonprofit performance: transparency, governance, leadership, strategy, measurement, and results.

In particular, nonprofits can join the 95,000 organizations that have shared information through the GuideStar Exchange -- with 43,000 achieving one of our three levels of participation (Gold, Silver, or Bronze). Gold-level participants answer the five Charting Impact questions to populate the impact tab on their GuideStar nonprofit report. And through their own materials, nonprofits can begin to cite meaningful data about results instead of the overhead ratio. (Donors have other great resources available, too --they can find top nonprofits identified by Philanthropedia, Great Nonprofits, or GiveWell.)

The shift to a results-based approach to philanthropy will take time, but the path ahead is clear. Instead of promulgating the myth that low administrative costs are associated with high performance, let's focus on helping donors give with both their hearts and their heads.

It's time to retire the overhead ratio in favor of a multidimensional, impact-oriented framework to achieve what really matters: getting more money to the best performing organizations.

Ideas are not set in stone. When exposed to thoughtful people, they morph and adapt into their most potent form. TEDWeekends will highlight some of today's most intriguing ideas and allow them to develop in real time through your voice! Tweet #TEDWeekends to share your perspective or email tedweekends@huffingtonpost.com to learn about future weekend's ideas to contribute as a writer.

 
 
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The Nonprofit Starvation Cycle 01/10/2013

A vicious cycle is leaving nonprofits so hungry for decent infrastructure that they can barely function as organizations—let alone serve their beneficiaries. The cycle starts with funders’ unrealistic expectations about how much running a nonprofit costs, and results in nonprofits’ misrepresenting their costs while skimping on vital systems—acts that feed funders’ skewed beliefs. To break the nonprofit starvation cycle, funders must take the lead.

Writes Ann Goggins Gregory & Don Howard in the Stanford Social Innovation Review

Organizations that build robust infrastructure—which includes sturdy information technology systems, financial systems, skills training, fundraising processes, and other essential overhead—are more likely to succeed than those that do not. This is not news, and nonprofits are no exception to the rule.

Yet it is also not news that most nonprofits do not spend enough money on overhead. In our consulting work at the Bridgespan Group, we frequently find that our clients agree with the idea of improving infrastructure and augmenting their management capacity, yet they are loath to actually make these changes because they do not want to increase their overhead spending. But underfunding overhead can have disastrous effects, finds the Nonprofit Overhead Cost Study, a five year research project conducted by the Urban Institute’s National Center for Charitable Statistics and the Center on Philanthropy at Indiana University. The researchers examined more than 220,000 IRS Form 990s and conducted 1,500 in-depth surveys of organizations with revenues of more than $100,000. Among their many dismaying findings: nonfunctioning computers, staff members who lacked the training needed for their positions, and, in one instance, furniture so old and beaten down that the movers refused to move it. The effects of such limited overhead investment are felt far beyond the office: nonfunctioning computers cannot track program outcomes and show what is working and what is not; poorly trained staff cannot deliver quality services to beneficiaries.

Despite findings such as these, many nonprofits continue to skimp on overhead. And they plan to cut even more overhead spending to weather the current recession, finds a recent Bridgespan study. Surveying more than 100 executive directors of organizations across the country, we found that 56 percent of respondents planned to reduce overhead spending. Yet decreasing already austere overhead spending (also called indirect expenses) may jeopardize organizations’ very existence—not to mention their ability to fulfill their missions. And although the Obama administration’s stimulus package may fuel rapid growth among some nonprofits, many will lack the infrastructure to manage the windfall and may well be crushed under the weight of all those well-intended funds.

Why do nonprofits and funders alike continue to shortchange overhead? To answer this question, we studied four national nonprofits that serve youth. Each organization has a mix of funding, including monies from government, foundation, and individual sources. We also interviewed the leaders and managers of a range of nonprofit organizations and funders, as well as synthesized existing research on overhead costs in the nonprofit sector.

Our research reveals that a vicious cycle fuels the persistent underfunding of overhead.1 The first step in the cycle is funders’ unrealistic expectations about how much it costs to run a nonprofit. At the second step, nonprofits feel pressure to conform to funders’ unrealistic expectations. At the third step, nonprofits respond to this pressure in two ways: They spend too little on overhead, and they underreport their expenditures on tax forms and in fundraising materials. This underspending and underreporting in turn perpetuates funders’ unrealistic expectations. Over time, funders expect grantees to do more and more with less and less—a cycle that slowly starves nonprofits.

Although several factors drive the cycle of nonprofit starvation, our research suggests that taking action at the first stage—funders’ unrealistic expectations—could be the best way to slow or even stop the cycle. Changing funders’ expectations, however, will require a coordinated, sector-wide effort. At a time when people need nonprofit services more than ever and when government is increasingly turning to nonprofits to solve social problems, this effort is necessary to keep nonprofits healthy and functioning.

Funders’ Unrealistic Expectations

The nonprofit starvation cycle is the result of deeply ingrained behaviors, with a chicken-and-egg-like quality that makes it hard to determine where the dysfunction really begins. Our sense, however, is that the most useful place to start analyzing this cycle is with funders’ unrealistic expectations. The power dynamics between funders and their grantees make it difficult, if not impossible, for nonprofits to stand up and address the cycle head-on; the downside to doing so could be catastrophic for the organization, especially if other organizations do not follow suit. Particularly in these tough economic times, an organization that decides—on its own—to buck the trend and report its true overhead costs could risk losing major funding. The organization’s reputation could also suffer. Resetting funder expectations would help pave the way for honest discussions with grantees.

Many funders know that nonprofit organizations report artificially low overhead figures, and that the donor literature often reflects grossly inaccurate program ratios (the proportion of program-related expenses to indirect expenses). Without accurate data, funders do not know what overhead rates should be. Although for-profit analogies are not perfect for nonprofits, they do provide some context for thinking about how realistic—or not—average overhead rates in the nonprofit sector are. Overhead rates across for-profit industries vary, with the average rate falling around 25 percent of total expenses. And among service industries— a closer analog to nonprofits—none report average overhead rates below 20 percent.

In the absence of clear, accurate data, funders must rely on the numbers their grantees report. But as we will later discuss, these data are riddled with errors. As a result, funders routinely require nonprofits to spend unhealthily small amounts on overhead. For instance, all four of the youth service organizations that we studied were managing government contracts from local, state, and federal sources, and none of the contracts allowed grantees to use more than 15 percent of the grant for indirect expenses (which include operations, finances, human resources, and fundraising).

Some foundations allot more money for indirect costs than do government agencies. Yet foundations are quite variable in their indirect cost allowances, with the average ranging from 10 percent to 15 percent of each grant. These rates hold true even for some of the largest, most influential U.S. foundations. And foundations can be just as rigid with their indirect cost policies as government funders.

Many times, the indirect allowances that grants do fund don’t even cover the costs of administering the grants themselves. For example, when one Bridgespan client added up the hours that staff members spent on reporting requirements for a particular government grant, the organization found that it was spending about 31 percent of the value of the grant on its administration. Yet the funder had specified that the nonprofit spend only 13 percent of the grant on indirect costs.

Most funders are aware that their indirect cost rates are indeed too low, finds a recent Grantmakers for Effective Organizations (GEO) study. In this national survey of 820 grantmaking foundations, only 20 percent of the respondents said that their grants include enough overhead allocation to cover the time that grantees spend on reporting.2

Individual donors’ expectations are also skewed. A 2001 survey conducted by the Better Business Bureau’s Wise Giving Alliance found that more than half of American adults felt that nonprofit organizations should have overhead rates of 20 percent or less, and nearly four out of five felt that overhead spending should be held at less than 30 percent. In fact, those surveyed ranked overhead ratio and financial transparency to be more important attributes in determining their willingness to give to an organization than the success of the organization’s programs.

Not only do funders and donors have unrealistic expectations, but the nonprofit sector itself also promotes unhealthy overhead levels. “The 20 percent norm is perpetuated by funders, individuals, and nonprofits themselves,” says the CFO of one of the organizations we studied. “When we benchmarked our reported financials, we looked at others, [and] we realized that others misreport as well. One of our peer organizations allocates 70 percent of its finance director’s time to programs. That’s preposterous!”

In this context, nonprofits are reluctant to break ranks and be honest in their fundraising literature, even if they know that they are fueling unrealistic expectations. They find it difficult to justify spending on infrastructure when nonprofits commonly tout their low overhead costs. For example, Smile Train, an organization that treats children born with cleft lip and palate conditions, has claimed that “100 percent of your donation will go toward programs … zero percent goes to overhead.” Nevertheless, the fine print goes on to say that this is not because the organization has no overhead; rather, it is because Smile Train uses contributions from “founding supporters” to cover its nonprogram costs.

This constellation of causes feeds the second stage in the nonprofit starvation cycle: pressure on nonprofits to conform to unrealistic expectations. This pressure comes from a variety of sources, finds the Nonprofit Overhead Cost Study. The survey found that 36 percent of respondents felt pressure from government agencies, 30 percent felt pressure from donors, and 24 percent felt pressure from foundations.3

Underfed Overhead

In response to pressure from funders, nonprofits settle into a “low pay, make do, and do without” culture, as the Nonprofit Overhead Cost Study calls it. Every aspect of an organization feels the pinch of this culture. In our consulting work with nonprofits, for example, we often see clients who are unable to pay competitive salaries for qualified specialists, and so instead make do with hires who lack the necessary experience or expertise. Similarly, many organizations that limit their investment in staff training find it difficult to develop a strong pipeline of senior leaders.

These deficits can be especially damaging to youth-serving organizations, notes Ben Paul, president and CEO of After-School All-Stars, a Los Angeles-based nonprofit organization that provides after-school and summer camp programs for at-risk youth nationwide. “It is clear to anyone who has led an organization that the most important capital in a company is the human capital,” says Paul. “In after-school we have a saying: Kids come for the program, but stay for the staff. If we don’t hire the right people, we might as well not run after-school programs.”

Meanwhile, without strong tracking systems, nonprofits have a hard time diagnosing which actions truly drive their desired outcomes. “The catch-22 is that, while organizations need capacity-building funding in order to invest in solid performance tracking, many funders want to see strong program outcome data before they will provide such general operating support,” says Jamie McAuliffe, a portfolio manager at the New York-based Edna McConnell Clark Foundation.

Take the case of a well-respected network of youth development programs. To protect the identity of this organization, we will call it the Learning Goes On Network (LGON). Poised for a huge growth spurt, LGON realized that its data systems would be hopelessly inadequate to accommodate more clients. An analysis showed that program staff spent 25 percent of their time collecting data manually. One staff member spent 50 percent of her time typing results into an antiquated Microsoft Access database.

Staff members can become so accustomed to their strained circumstances that they have trouble justifying even much-needed investments in overhead, our interviews revealed. “We [had] known for a long time that a COO was vital to our growth but [hadn’t] been able to fund one,” relates the CEO of one of the four youth development organizations that we studied. But when his organization’s board finally created the COO position, the rest of the staff resisted. “They had lived so long in a starved organization that the idea of hiring a COO was shocking to them.”

Misleading Reporting

The final driver of the cycle that starves nonprofit infrastructure is nonprofits’ routine misrepresentation of how much they actually spend on overhead. The numbers that nonprofits report on their financial statements “[defy] plausibility,” finds the Nonprofit Overhead Cost Study. Upon examination of more than 220,000 nonprofit organizations, researchers found that more than a third of the organizations reported no fundraising costs whatsoever, while one in eight reported no management and general expenses. Further scrutiny found that 75 percent to 85 percent of these organizations were incorrectly reporting the costs associated with grants.

Our study of the four youth-serving nonprofits likewise reported discrepancies between what nonprofits spent on overhead and what they reported spending. Although they reported overhead rates ranging from 13 percent to 22 percent, their actual overhead rates ranged from 17 percent to 35 percent.

Many factors support this underreporting of nonprofit costs. According to a survey conducted by The Chronicle of Philanthropy in 2000, a majority of nonprofits say that their accountants advised them to report zero in the fundraising section of Form 990.4 Limited surveillance of nonprofits’ Form 990 tax reports only exacerbates the problem: The IRS rarely levies the $50,000 penalty for an incomplete or inaccurate return, and generally applies it only when an organization deliberately fails to file the form altogether. According to the Chronicle study, “Improperly reporting these expenses is likely to have few, if any, consequences.”

The IRS’ ambiguous instructions likewise lead to error, report several sources. For example, nowhere does the IRS explicitly address how to account for nonprofit marketing and communications. As a result, many organizations allocate all marketing and communications expenses to programs when, in most cases, these expenses should be reported as administrative or fundraising overhead.

Government agencies likewise have varying and ambiguous definitions of indirect costs. The White House Office of Management and Budget, for example, defines indirect costs as “those that have been incurred for common or joint objectives and cannot be readily identified with a particular final cost objective.” It then goes on to say that “because of the diverse characteristics and accounting practices of nonprofit organizations, it is not possible to specify the types of cost that may be classified as indirect cost in all situations.”5

There is some good news. Currently, the U.S. Government Accountability Office (GAO) is conducting a study of various federal grantors’ definitions of indirect costs. As Stan Czerwinski, the director of strategic issues for GAO, explains, “The goal is to achieve consistency, so that when nonprofits go in for funding, they have clarity (as do funders) about what they’re actually going to get reimbursed for.” The study is in the early stages, but as Czerwinski notes, the need is clear: “We don’t find anybody telling us that we’re barking up the wrong tree.”

Proper Care and Feeding

Although the vicious cycle of nonprofit starvation has many entry points and drivers, we believe that the best place to end it is where it starts: Funders’ unrealistic expectations. Foundations and government funders must take the lead because they have an enormous power advantage over their grantees. When funders change their expectations, nonprofits will feel less need to underreport their overhead. They will also feel empowered to invest in infrastructure.

The first step that funders should take is to shift their focus from costs to outcomes. In the nonprofit world, organizations are so diverse that they do not share a common indicator of program effectiveness. In the absence of this indicator, many funders try to understand an organization’s efficiency by monitoring overhead and other easily obtained yet faulty indicators. Funders need to refocus their attention on impact by asking “What are we trying to achieve?” and “What would define success?” In so doing, they will signal to their grantees that impact matters more than anything else. Even focusing on approximate or crude indicators (for example, “Are we getting an A or a C on our impact goals?”) is better than looking at cost efficiencies, as focusing on the latter may lead to narrow decisions that undermine program results.

Funders must also clearly communicate their program goals to their grantees. Having established that funder and grantee share the same goals, funders should then insist on honest answers to the question “What will it take to deliver these outcomes consistently, or to deliver these outcomes at an even higher level of quality or quantity?”

One of our study participants, for instance, worked closely with its major funder to think through this question, and ultimately determined it needed a sizable investment in technology to support its projected growth. The funder agreed that only by making such an investment would the organization be able to track outcomes uniformly and to make program improvements quickly.

When feasible, funders should help meet grantees’ identified infrastructure needs by making general operating support grants. Grantmakers and nonprofits agree that more operating support is very likely to improve an organization’s ability to achieve results, finds the 2008 Grantmakers for Effective Organizations study. And a 2006 CompassPoint Nonprofit Services study of nearly 2,000 nonprofit executives in eight metropolitan areas reveals that receiving general operating support played a major role in reducing burnout and stress among executive directors.6 Yet although 80 percent of the foundations in this study made some general operating grants, they dedicated a median of only 20 percent of their grant dollars to this kind of support.

Regardless of the type of support they provide, funders should encourage open, candid discussions with their grantees about what the latter need to be effective. Many funders’ grantmaking processes are not set up to consider the full scope of what grantees do, and why. As a result, their grants are not as flexible as they need to be. Yet when funders fully understand their grantees’ operations, they are more likely to meet their grantees’ needs.

Although changing their expectations will have the greatest impact on the nonprofit starvation cycle, funders can also intervene in other useful ways. When making use-restricted grants, funders should commit to paying a greater share of administrative and fundraising costs. Indeed, in 2004, the board of the Independent Sector encouraged funders to pay “the fair proportion of administrative and fundraising costs necessary to manage and sustain whatever is required by the organization to run that particular project.”

Likewise, rather than prescribing an indirect expense rate for all grants, government funders should allow nonprofits to define their true overhead needs in grant applications and, so long as these needs are justifiable, pay for them. For example, some federal funding contracts allow a nonprofit to justify an indirect cost rate (within guidelines), which the organization can then use for all its federal grant applications. Extending such a policy to all federal, state, and local government contracts would go a long way toward helping nonprofits deliver better programs while being able to pay for their grants’ management.

Finally, to foster transparent and accurate reporting, funders should encourage the development of a standard definition of the term overhead. Currently, organizations have to report their overhead differently for nearly every grant that they receive. Standardization would allow funders to compare apples with apples, as well as allow grantees to understand better their own overhead investments—or lack thereof. Having a dialogue about real overhead rates could also help shift the focus to the real target: outcomes.

What Grantees Can Do

The burden of breaking the cycle of nonprofit starvation does not rest solely with funders. Nonprofit leaders also play a role. As a baseline task, they should commit to understanding their real overhead costs and their real infrastructure needs. At LGON, for instance, senior managers spent several months digging into their costs, analyzing their current systems—including the organization’s subpar tracking process—and identifying gaps in capacity. After this strategic planning process, the organization could articulate a clear plan for a new tracking system and a 150 percent increase in nonprogram staff over three years.

Nonprofits must then speak truth to power, sharing their real numbers with their boards and then engaging their boards’ support in communicating with funders. Case studies of organizations that have successfully invested in their own infrastructure have repeatedly noted the need for a shared agenda between the leadership team and the board. The executive director of LGON, for example, communicated early and often with her board members throughout the strategic planning process. She also facilitated several meetings to address infrastructure needs.

For their part, board members should ask the tough questions before funders do, namely: “What does this organization really need to succeed?” “Where are we underinvesting?” and “What are the risks we’re taking by underinvesting in these areas?” Board members should encourage nonprofit leaders to develop strategies that explicitly recognize infrastructure needs. In developing plans for infrastructure, board members can help, notes Chris Brahm, chairman of the board of directors at Larkin Street Youth Services, a San Francisco nonprofit that serves homeless and runaway youth: “The people running agencies are often consumed with programs and raising money. Board members, whether businesspeople or otherwise, can bring external perspective on overhead services.”

At LGON, for example, the executive director identified a handful of board members who were fervent supporters of the emerging strategic vision. These board members then communicated to their colleagues how much overhead this vision would require.

During these discussions, both board members and managers should focus on how investments in infrastructure will benefit the organization’s beneficiaries, rather than reduce costs. Even within the confines of a “cost conversation,” they should emphasize how infrastructure investments may actually reduce the costs of serving beneficiaries over time. One organization in our study, for instance, determined that an investment in technological infrastructure yielded $350,000 per year by freeing up staff time and consolidating “scrappy” systems.

Finally, organizations must attempt to educate their donors. “Donors don’t want to pay for an organization’s rent, or phone bill, or stamps,” notes Paul, “but those are essential components of everyday work. You can’t run a high-performing organization from your car. And there are many ways to explain these types of expenses to donors.”

Both funders and grantees are feeling the sting of the current recession. But this economic downturn is no excuse to cut overhead funding. “If a nonprofit’s leaders are feeling as if they cannot raise money to support overhead, I think they’re confusing the issue,” says Brahm. “The real issue is that they can’t raise enough money, period. Either they do not have, or they have not been able to communicate, a results story that is compelling to funders.”

Rather than being the reason to reduce overhead spending, the recession is an excellent opportunity to redress decades-long underinvestment in nonprofit infrastructure. “There is real potential for change if all of the major stakeholders—government, private funders, and the nonprofits themselves—take steps to acknowledge that capacity building is critical to the health of an organization,” says McAuliffe. And although the forces that fuel the nonprofit starvation cycle are strong, the opportunity to achieve more for beneficiaries in the long term should compel funders and grantees alike to stop the cycle.

Former Bridgespan Group manager William Bedsworth contributed to this article.

Notes

  1. See also Kennard Wing, Tom Pollak, and Patrick Rooney, How Not to Empower the Nonprofit Sector: Under-Resourcing and Misreporting Spending on Organizational Infrastructure, Washington, D.C.: Alliance for Nonprofit Management, 2004. Wing, Pollak, and Rooney are three of the lead researchers on the Nonprofit Overhead Cost Study.

  2. William H. Woodwell Jr. and Lori Bartczak, Is Grantmaking Getting Smarter? A National Study of Philanthropic Practice, Washington, D.C.: Grantmakers for Eff ective Organizations, 2008.

  3. Kennard Wing and Mark Hager, Who Feels Pressure to Contain Overhead Costs?, Paper presented at the ARNOVA Annual Conference, 2004.

  4. Holly Hall, Harvy Lipman, and Martha Voelz, “Charities’ Zero-Sum Filing Game,” The Chronicle of Philanthropy, May 18, 2000.

  5. White House Office of Management and Budget, Circular A-122 (Revised): Cost Principles for Nonprofit Organizations.

  6. Jeanne Bell, Richard Moyers, and Timothy Wolfred, Daring to Lead 2006: A National Study of Nonprofit Executive Leadership, San Francisco: CompassPoint Nonprofit Services, 2006.


Ann Goggins Gregory is the director of knowledge management at the Bridgespan Group and a former consultant in Bridgespan’s strategy area. In her consulting work, Ann’s clients included education and youth development organizations, as well as foundations.

Don Howard is a partner at the Bridgespan Group, where he leads the San Francisco office. His clients have included foundations and nonprofits working to alleviate poverty, end homelessness, revitalize neighborhoods, end inequities in education, and improve the environment.

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The Overhead Myth. 19/6/2013

By Art Taylor, Jacob Harold, and Ken Berger

 

To the Donors of America:
We write to correct a misconception about what matters when deciding which charity to support.

The percent of charity expenses that go to administrative and fundraising costs--commonly referred toas "overhead"--is a poor measure of a charity's performance.

We ask you to pay attention to other factors of nonprofit performance: transparency, governance, leadership, and results. For years, each of our organizations has been working to increase the depth and breadth of the information we provide to donors in these areas so as to provide a much fuller picture of a charity's performance.

That is not to say that overhead has no role in ensuring charity accountability. At the extremes the overhead ratio can offer insight: it can be a valid data point for rooting out fraud and poor financial management.

In most cases, however, focusing on overhead without considering other critical dimensions of a charity's financial and organizational performance does more damage than good.

In fact, many charities should spend more on overhead. Overhead costs include important investments charities make to improve their work: investments in training, planning, evaluation, and internal systems-- as well as their efforts to raise money so they can operate their programs. These expenses allow a charity to sustain itself (the way a family has to pay the electric bill) or to improve itself (the way a family might invest in college tuition).
When we focus solely or predominantly on overhead, we can create what the Stanford Social Innovation Review has called "The Nonprofit Starvation Cycle." We starve charities of the freedom they need to best serve the people and communities they are trying to serve.

If you don't believe us--America's three leading sources of information about charities, each used by millions of donors every year--see the research from other experts including Indiana University, the Urban Institute, the Bridgespan Group, and others that proves the point.

So when you are making your charitable giving decisions, please consider the whole picture. The people and communities served by charities don't need low overhead, they need high performance.

Thank you,

Art Taylor
President & CEO,
BBB Wise Giving Alliance
overheadmyth.give.org

Jacob Harold
President & CEO,
GuideStar
overheadmyth.guidestar.org

Ken Berger
President & CEO,
Charity Navigator

This letter was originally published here.

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Tips on How to Get Started in Local Fundraising

So you’ve decided that your organisation ought to be developing its fundraising.

Author: Michael Norton

So you’ve decided that your organisation ought to be developing its fundraising. But before you actually get started, there are a number of things you need to do first:

- Check the legal situation, to see whether and how you are allowed to fundraise, and what permissions you might need to obtain.
- Check the tax situation to see whether there are any tax benefits available to donors to encourage giving, and if so, then how to obtain them.
- Find out as much as you can about the state of fundraising in your own country, and what other organisations are doing to raise money.
- You should also try to see what experience of fundraising, if any, there is in your own organisation.

Download this document here (DOC, 224KB, 13pg)

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Top 10 Tips On the Fine Art of Cultivating Donors

Cultivation is what makes solicitation possible.

Joanne Fritz

Cultivation is what makes solicitation possible. Done well, cultivation sets the stage for easy and successful "asks."

Cultivation covers all the communication and contact you have with prospective donors from newsletters and annual reports to special events and presentations.

Cultivation is not haphazard...but carefully planned and strategic.

Kay Sprinkel Grace in her book, Over Goal!: What You Must Know To Excel at Fundraising Today, makes the following points about cultivation:

1. Cultivation involves board members, volunteers, donors, and staff.

Staff sets up and participates in opportunities for board members and other volunteers to meet and talk with prospective donors. It is a cooperative project but is dependent on your volunteers making themselves available for cultivation events. Be sure to include current donors as well. They are excellent advocates for your cause.

2. Cultivation is strategic.

Parties and events mean nothing if there is not good follow-up based on a good cultivation plan. Cultivation planning has two parts: general and specific. General cultivation is all about regularly scheduled events (think tours, coffees, presentations). Specific cultivation activities are those meant for special prospects, those who may or may not also attend regularly scheduled activities and events.

3. Cultivation is systematic.

Every event or activity should have a follow-up plan. Good ways to follow up are adding prospect names to your mailing list and sending thank-you letters. Follow-up can be an email or personal phone call from a board member or event committee member to patrons of the event. At an event, do assign a board member to each table and provide them with confidential lists and short bios of those at their table. If large donors or prospects attend, make sure a board member looks after them.

4. Cultivation should be coordinated.

All interaction with prospective or current donors should be reported to a central person (development director, executive director, or board chair). Set up forms that staff or volunteers can fill out and fax to the coordinator. If you have a donor database, enter this information. Such "intel" can be crucial to good follow-up and future cultivation.

5. Cultivation should not be limited to large gift prospects.

Make sure that everyone who attends an event leaves it with increased knowledge about your organization. This can be a brief presentation, materials at each table, or a packet given out as attendees leave.

6. Not all cultivation involves personal interaction.

Cultivation occurs anytime you communicate with prospects. Your regular newsletter can be very effective as a cultivation tool, but be sure it is communicating the message you most want your readers to receive:

Does it communicate the impact and results of your programs, or does it focus on your needs?
Does it portray-in words and photos-the kinds of people you serve in your programs?
Does it balance volunteer information, donor recognition, and program impact? Or does it overemphasize your special events?

7. Don't forget that cultivation can be unexpected.

For instance, you might receive favorable press coverage that brings prospective donors to you. Board members and other volunteers, who are enthusiastic about your cause, might arouse interest through their own social gatherings or professional contacts.

8. While it is important to cultivate, know when to ask.

The purpose of cultivation is to ease and ensure the success of your eventual solicitation. Learn the signs that a prospect is open to being asked for a gift. Because cultivation is pleasant and painless, it can easily become all consuming and stave off the inevitable: asking for a gift.

9. Cultivation of corporations and foundations is different.

With these entities you usually know what the deadline is for a funding request, and what the process is for closing the gift. It is easier to sequence your activities. With individuals, there isn't such a calendar. But the same rules apply: cultivation must be systematic, coordinated, and strategic.

10. Make sure there is a budget for cultivation.

Cultivation does not have a predictable or immediate return. Consequently, it may be hard to to make the case that these activities are necessary for eventual gifts. Have at hand a few anecdotes about prospects who became donors as a result of good cultivation.

As Kay Sprinkel Grace points out in her book, Over Goal!, cultivation is a process and a tool. It provides opportunities for the donor to learn about your organization, requires coordination, strategic thinking, and great follow-up.

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79 Grant Writing Resources You Can't Live Without.

Online resource. The author says “I'll point you to some of the programmatic, statistical, and productivity resources I find useful and share some tips that contribute to my success. I hope you'll share some of yours, too.” Although focussed on the American market, there are some interesting tools and suggestions.  Some of the categories covered include: Writing Tips; Style; Statistics; Research ; Grammar and Punctuation; and Budgets.

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Basic Tips for Fund-Raising for Small NGOs / Civil Society in Developing Countries.

From the author: Jane Cravens

Some of the most frequently asked questions (FAQs) to online forums for community-based organizations (CBOs) in developing countries, whatever the subject, are regarding funding, particularly grants.

In addition, the first impulse of many such non-governmental organization (NGO) seeking funding is to request the contact information for possible funders, and once such information is received, these NGOs often write immediately to the potential funder, stressing how desperately funds are needed. Sadly, this approach often harms the NGO, rather than garnering support. Not only does it rarely attract funding, it can turn funding sources against the NGO altogether.

With all this in mind, I drafted basic tips for fund-raising for such organizations. I am offering my own significantly-revised version of the document for free to any who ask for it. When I began offering it more than a year ago, it was 15 pages long; now, it is 27 pages. It is a PDF file.

The document is meant to provide very basic guidelines for small NGOs in the developing world regarding fund-raising and adhering to the basic principles of good governance, and to point to other resources. By small NGOs, I mean organizations that may have only one paid staff member, or are run entirely by volunteers; and may or may not have official recognition by the government. These organizations are extremely limited in their resources, and are often in unstable environments and/or serving profoundly poor populations.

Please note that this document is NOT written for nonprofits serving the "developed" world -- organizations serving communities in North America, Western Europe, Australia, New Zealand or Japan would probably not find this document particularly helpful, as it has been prepared to make recommendations relevant for nonprofits serving in a developing country.

THIS DOCUMENT IS NOT A LIST OF FUNDERS/DONORS.

Let me repeat that: THIS DOCUMENT IS NOT A LIST OF FUNDERS/DONORS.

It is, instead, a set of guidelines on how to prepare an organization to be attractive to donors, how to search for potential donors that support organizations in the developing world and how to approach such potential donors.

The document includes:

  • A list of activities an NGO should NEVER do regarding fund-raising
  • How to network and establish credibility to insure fund-raising success
  • The absolute essential preparations to solicit donations
  • What to do before making a funding request
  • Establishing credibility and a reputation of integrity, transparency and accountability
  • How to find donors & make contact
  • A warning about fund-raising scams
  • Online resources for further information
  • Online resources for detailed tips on writing funding proposals

Once you have received this document, please do NOT distribute the document via a web site or on an online discussion group without my written permission. I frequently update the document, and want to ensure people are getting the most recent version.

Suggestions for improvements to this document are welcomed, particularly from NGOs in the developing world.

Want to adapt the document? You are welcomed to translate it into another language, edit it, change it, and republish it or distribute it, per certain requirements, detailed in the document itself.

The version currently available is dated February 3 2009. If the document is updated, a notice will be posted to the page you are reading now, as well as to my blog.

You can access the document either by contacting me via email, or, by subscribing to my newsletter, Tech4Impact (it's free to subscribe); the latest version of the document is in a private online area accessible only to subscribers.

To order the document via email, please contact me with

  • your full name
  • the organization you represent
  • your city and country
  • the developing country/countries your organization supports
  • details on how you found out about this document
  • a pledge that you will NOT post this document to a web site or network without first asking my permission and ensuring you have the latest version.

Your information will not be sold, traded or given to any other organization as a result of your submitting this information.

 

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Basic Tips for Fund-raising for Small NGOs in Developing Countries.

AID Workers Network (2006) .  Very basic guidelines for small NGOs in the developing world regarding fund-raising, on how to prepare an organization to be attractive to donors, how to search for potential donors that support organizations in the developing world and how to approach such potential donors.
-Introduction
- The Problem
- Fund-raising: Some things You Should NEVER Do
- Fund-raising First Step - Networking & Establishing Credibility
- Even More Credibility-Building
- The Absolute Essential Preparations To Solicit Donations
- Details Ready to Share
- Before Making A Funding Request
- Finding Doors & Making Contact
- ESSENTIAL - Respect the Organization's Granting Guidelines
- Online Resources For Further Information
- Online Resources for Detailed Tips on Writing Funding Proposals.

Download PDF (36 KB, 15p)

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Fact Sheets on Financing.

Fact Sheets on Financing. Both ENDS. "The key question all NGO's face is where and how to generate the income necessary to carry out their work and cover all general operational expenses. Which types of grants are appropriate for which activities? How can long term financing be secured through different financial resources? Many NGO’s rely for a large part on grants from (international)donors. However there are many other ways to find money for your activities, and external fund-raising is just one of them."

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Fundraising Toolkit.

Sangonet aims to provide online information resources to assist NGOs with their fundraising activities.  This tool covers Online Fundraising, Sustainability and CSR, Proposal Tips and Research, Donor Interviews and Fundraising Case Studies.

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Fundraising and Proposal Writing - Handbook for CBOs IDASA (2005)

Most community-based organisations (CBOs) and other non-profit organisations depend on donors to provide money to run their organisations and projects. Unfortunately, there is lots of competition for donor money and in many cases the survival of an organization depends on how well it can compete with other organisations to raise funds and on how good it is at finding other ways to make money. Fundraising can be done in many ways, from collecting and selling cans, to cake sales to requesting large amounts of money from governments, individuals and other donor organisations.

The list below gives a summary of the most important sources of large-scale funding:
- Individuals; 
-  Local businesses, companies and corporations; 
- Special government funds, such as the Independent Development Trust (IDT); 
- Provincial and local government departments; 
-  Local trusts and foundations; 
-  Foreign governments; 
-  Foreign non-governmental organisations (NGOs);  and 
- Foreign trusts and foundations.
To succeed in any fundraising activity, an organization must do its homework. This means that the organization must know who it will be approaching for funding. It is useful to have some background information on the funder and its way of working.
The organisation must know exactly what it wants to do with the funding. It must prepare a funding proposal for the donor that clearly states what it is planning, how much money it needs, how it will be managed, who will be involved and what the outcomes will be.
Finally, the organisation must realise that fundraising is not a once-off activity that ends when the funds are received. The manner in which a project is implemented, its success and the way in which this information is conveyed to the donor are also extremely important steps in the process. All of these steps have a direct impact on the current and future relationship between a donor and an organisation.
To a large extent, fundraising is a relationship-building activity. The stronger the relationship between an organisation and its potential donors, the better chance the organisation has of raising the necessary funds. The foundations of this relationship are mutual trust and respect. The best way for an organisation to gain the trust and respect of its donors is by acting professionally and honestly, and by achieving its stated goals.  Download PDF (39p, 1.12MB) here

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Grant Writing

Part of the National Minority AIDS Council “Organizational Effectiveness Manuals Series”.  This manual presents the fundamentals of preparing a successful grant proposal for securing funds from private and public sources. Download PDF (2.7MB, 76 p)

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Guide to Resources for NGOs and Other Organizations. (2003) World Bank.

This publication is a webbased guide to technical and financial resources for NGOs and other organizations of civil society. The second version of this popular publication is in response to the demand for NGOs and other organizations of civil society for a one-stop source to information about funding for development projects.The Guide is in three parts. The Introduction provides a brief overview of how to think strategically about the sustainability of an organization in preparation for resource mobilization. Part I: Grant Resources Supported by the World Bank for NGOs and Other Organizations of Civil Society is a description of grant facilities that are linked to the World Bank. Part II: Other Resources for NGOs and Other Organizations of Civil Society provides web-site links to sources of technical and financial assistance. Download PDF (332.31KB, 70pages)

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Guidelines for Writing Grant Proposals.

International Council of Nurses. For many nurses and nursing organisations grant writing is a new competency and therefore nurses need to develop and enhance their skills in writing proposals that convince the potential funder. Guidelines for Writing Grant Proposals provides nurses and other health professionals with a step-by-step approach to writing a grant proposal, but can also be useful for other programmes.Download
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Raising Funds and Mobilising Resources for HIV/AIDS Work. A Toolkit to Support NGOs/CBOs . (2002) International HIV/AIDS Alliance.

NGOs/CBOs need a range of resources – primarily money, but also technical assistance, human resources, material goods and free services. Mobilising these resources is vital, but it can be daunting and, if it is not planned well, time-consuming.   This toolkit and training resource shares practical technical support developed from the experience of the Alliance, its partners and other organisations. It aims to help NGOs/CBOs plan and carry out resource mobilisation strategically and systematically, to obtain maximum returns for the least effort, while remaining true to their mission. It includes activities such as identifying resource gaps meeting resource providers, and writing proposals. Note: It does not address specific fundraising approaches, such as income generation, although it provides further reading in these areas.  Download PDF ( 1.57MB, 76p)

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Roots 6 Fundraising.

"Adequate funding is always a concern for development organisations. While our aim is to reduce poverty and facilitate change, it is tempting to be money-centred and let our funding direct what we do. Instead, we need to start with our vision, mission and strategy and then decide on a plan to ensure that we have enough funds to implement the strategy. We should think about how we can raise different kinds of support, such as encouraging people to pray, volunteer and take part in advocacy campaigns, as well as approaching donors for funding.  Some Christians think that people are not trusting God if they actively seek funding and have a plan to raise funds. This book looks at a biblical approach to fundraising and shows that, by planning our fundraising work, we can increase the impact that we have." Download (PDF, 967K)

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Supporting Community Based Responses To Aids: A Guidance Tool for Including Community Systems Strengthening (CSS) In Global Fund Proposals. (UNAIDS)

This document seeks to increase understanding about the benefits CSS can bring at national, district and local levels, and to support advocacy and technical support efforts around CSS.  It suggests ways to implement CSS and provides practical guidance on developing proposals for CSS for the Global Fund, which is now actively seeking to support such activities.   Most notably the guidance document aims to: 
- Define CSS in its broader context as well as how it relates to the three core priority areas of funding emphasized by the Global Fund.
 - Highlight/emphasize the role of relevant partners and how they can increase demand for CSS.
 - Identify the specific capacity-building activities for CSS, as well as beneficiaries and recipients.
 - Outline mechanisms to assess community-level needs or to conduct rapid CSS assessments with example templates as well as “dos and don’ts” for conducting community consultations.
 - Suggest indicators to better monitor CSS activities.
 Intended audience: Stakeholders likely to benefit from this guidance include staff in UNAIDS Country Offices and members of key affected populations, as well as civil society organizations, networks of people living with HIV, international and national nongovernmental organizations, academia, faith-based organizations and technical partners. 
 Download PDF (366.87KB, 44p)
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The Raising of Money. Thirty Five Essentials Every Trustee Should Know.

James Gregory Lord. This document focuses on the fund raising role of trustees or board members of NGOs, but also contains useful materials for anyone involved in fundraising. A new edition of The Raising of Money, updated for these unusual times, is soon to be released. Get the latest updates and priority access at http://www.theraisingofmoney.com/. Download LARGE PDF (19.49MB, 124p)

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Writing a Funding Proposal: Its as Easy as 1 2 3.

WHO. This guide has been written primarily for nurses, but it may also be useful to other health professionals as well. Download
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