FUNDRAISING AND SUSTAINABILITY FOR NON- PROFITS IN SOUTH AFRICA !

FUNDRAISING AND SUSTAINABILITY FOR NON-PROFITS IN SOUTH AFRICA!

28 February 2014

Facilitator: Frank Julie

Frank Julie and Associates

Welcome and introductions Defining sustainability Fundraising and fund development Funding trends in South Africa: Government; Corporate social investment; Community philanthropy Elements of a sustainable NPO

Program


How to avoid an external donor crisis Cost effective marketing strategies Strategic communication: How to recruit

donors for life! Professional networking for sustainability Important fundraising tools – the funding

proposal and funding enquiry Elements of good proposal writing A proactive response to regret letters The funding enquiry

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Managing funding gaps in times of crisis Guidelines for a formalised approach and

strategic plan for guarding against funding gaps

Cash flow strategy in times of crisis Getting your board on board The importance of strategic NGO Leadership The Board Skills Audit The Treasure Audit The Time and Trust Audit

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Exploring various definitions Allan Kaplan defines sustainability as: “… achieving the ability to keep moving, changing and achieving one’s

response-ability to inevitably shifting circumstances, rather than assuming that those circumstances will ever be

finally and successfully resolved, once and for all.”

Viewed from this perspective, it becomes clear that sustainability is not only about financial sustainability. It goes beyond finances to strategic organizational issues. Of what use is it anyway

to have a lot of money in your bank account just to find out that you are not making impact in your organizational interventions? Or that you are unable to manage your finances effectively leading to the potential for financial mismanagement and hence a serious lack of donor trust?

Organizational sustainability is therefore a constant interplay between the need, solution and capacity. Those in leadership must constantly check the relationship between the 3 components.

(See the Organizational Fit Model)

Defining sustainability – what do we mean?


Fundraising is probably the easiest of the two terms to define. It is activity that is conducted with the intention of raising money for a non-profit organization or charity. It usually involves asking people for donations, using a variety of communication methods, asking people to purchase a product or service that supports the charity, or having people participate in an event of some sort. Some extend the definition of fundraising to include activities like sponsorship sales, which is essentially a form of advertising, gaming and gambling activities that benefit charity, and application for funds from government programs.

Fund development is the process by which organizations use fundraising to build capacity and sustainability. Fund development is a part of the strategic marketing of a non-profit organization.

Fundraising vs Fund Development


It is the concerned not only with raising money, but doing so in a way that develops reliable sources of income that will sustain the organization through the realization of its long term mission and vision. Fund development usually involves building relationships with people and other organizations that will support the charity. It requires a strategic plan that relates funding to the purpose and programs of the organization. A part of the strategic plan will be a fund development plan that coordinates various forms of fundraising, marketing, communications, and volunteer management.

Article Source: http://EzineArticles.com/460403 A key decision an organization must make is what type of fundraising or

fund development strategy it should use based on the type of organization it is and if it has long-term needs. Many organizations start with meeting their needs through short-term fundraising strategies and at some point must make the transition to fund development strategies. Otherwise, they will flounder, moving from one fundraiser to another without developing sustainable relationships. (Ron Strand)

Article Source: http://EzineArticles.com/460403

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http://ezinearticles.com/460403


In 2012/13 More than 85 000 non-profit organisations were registered

in terms of the Non-profit Organisations Act (NPO Act) at the end of March 2012. From October 2012 until January 2013 more than 23 000 organisations were de-registered by the Directorate for Non-profit Organisations which falls under the auspices of the Department of Social Development. In addition, more than 35 000 organisations were marked as ‘non-compliant’. In contrast, during the 2011 financial year only 468 organisations were de-registered. All organisations were, in the wake of a public outcry, reinstated and reflected as re-registered during February 2013. Organisations have been given a six-month period to become compliant.

Funding trends in South Africa

More international donors exiting – e.g. Cordaid, Novib, Oxfam Solidarity, Broederlijk Delen, Atlantic Philanthropies, Ford Foundation, Pepfar Fund scaling down…etc.

Claim SA is a middle income country Shift towards right wing governments in Europe Shift towards funding bigger NGOs who can

demonstrate impact Medium and smaller size non-profits being

marginalized

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Prioritizing other African countries poorer than SA

Funding request now stipulated in foreign currency, means losing income due to fluctuating exchange rate.

Donors demand networking and eliminating duplications

Retrenchments becoming common in the sector

Trends…


Treasury cut funds to some departments (In 2010 the budget of our National Development Agency’s was cut from R146 million to a paltry R86 million.)

The period 2013/2014 is going to be extremely challenging

Corporate funding stagnant (R7.5 billion) CSI concentrated in Gauteng

Trends …


It is “…the desire to promote the welfare of others or private initiatives for public good.”

South Africa has an established culture of formalised philanthropy.

Also a high density of networks and institutions interested in tracking or reporting philanthropic activity. (e.g. Inyathelo, Community Chest, Grant.net, etc.)

Philanthropy


“In 2011, donors reported $1.2 billion in disbursements to South Africa with $90 million (around R820 million) for “governance and civil society”.

However, upon closer examination, the data clearly illustrates that in terms of donor spending, in the ‘governance and civil society’ sector, donors are not supporting local NGOs. While donors may be committed to the sector in principle, the data shows that more money goes to government and donors' own activities than to local NGOs.

The data shows that of the $90 million, only $21 million went to what the OECD classifies as national, local or regional NGOs at an average payment of $154 000. This means that of the total $1.2 billion disbursed to South Africa, less than 2% is recorded as for local NGOs in the governance sector.”

See http://www.sacsis.org.za/site/article/1623

Alexander O‘ Riordan (Aid Effectiveness and Donor Funding Researcher)

Some good news…


A continuum of effective organizational intervention

From UNDERSTANDING (the big picture, external environment) – BUILD INTEGRITY (practice what you preach, true identity, vision/mission, accountability, transparency, good governance) – expanding networks – effective resource mobilization/fundraising interventions to make impact!

A reactive vs a proactive approach

Elements of sustainable organizations

Planning Staff dev plan

Structures and

systems

Identity

Resources

Leadership and

management


Retain your existing/current donors and get them to give more:

Make sure that your current donors stay with you for as long as possible. Get them to

commit more funds. Make sure that you act as a good recipient to build more donor

trust and hence strengthen your existing relationships. And make sure you deliver on

your promises in terms of impact and delivery. Stop making excuses.

How to avoid a donor crisisExisting/current donors


Make a list of your previous donors and investigate the possibility of recruiting

them again: It is better to invest resources in past

relationships. Ask yourself why the donor contract came to an end. Unless the donor

changed complete focus, approach the donor for renewed funding. If they had problems

with your work, show them that you have addressed these concerns. Show them you

took their concerns seriously.

Previous/lapsed donors


Cultivate your potential donors: Make a list of donors who know about you or that

you know and who fall within your focus area. Find out who is the contact person and set up a consultative meeting or

at least an exchange of information about your organization. Draw up a funding

enquiry where you highlight your funding needs but most of all highlight your track

record. Donors want to buy into solutions/success and not your desperation for funds! And don’t forget to take out all your regret letters. Remember, a regret letter is simply a delayed yes. It is how you read it. You may be sitting on a gold mine!

Potential donors


Market yourself to unknown donors: You cannot create continuous interest in

your organization without a clearly formulated communication and marketing

strategy. I must still find a NGO who can convince me that they have one and more

importantly, that it is implemented. Trapped in survival mode, many NGO’s

forget to raise visibility about their work in the

Unknown donors


form of newsletters (print and electronic), websites, blogspots, articles in

newspapers, brochures, pamphlets, letters, faxes, block e-mails, etc. So trapped in

survival mode, they forget their work is about changing human lives and that they

need to celebrate their successes. And don’t hide your challenges! Let others know

about it! And tell them what you are doing about it.

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CurrentDonors

Unknown donors

Lapsed

Potential donors

Avoiding an external donor crisis


The Resource Mobilisation Pyramid and the 80-20 Ruleis a graphic depiction of the proportion of an organisation’s supporters vis-à-vis their level of involvement in its activities.

Repeat Donor

Donor

Major Donor

Potential Donors/General Public


Major donors make up only 10% of an organisation’s support base, but contribute 70% of total donations received.

Repeat donors make up 20% of an organization’s support base, and contribute only 20% of total donations received.

First-time donors make up70% of an organisation’s support base, but only contribute 10% of total donations received.

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Develop your own voice – newsletter Use local newspapers Develop a website and negotiate links with partners Contribute articles to relevant websites/magazines Use radio/TV Block emails/SMS’s Murals at strategic places Pamphlets, brochures, t-shirts (use churches/schools/taxis) Use your annual report Develop a profile doc for presentations/DVD (10 minutes) Word of mouth Host open days Host breakfasts/lunches/suppers Information boards Use social media effectively (Facebook, Twitter, LinkedIn) Branding of vehicles/training materials Door to door campaigns Public exhibitions/schools/libraries

Cost effective marketing strategies


1. Have a strategy 2. Training for all staff and volunteers 3. A focal person to drive networking 4. Resources (time and money) allocated for

networking 5. It cannot be an after thought in meetings 6. Evaluate continuously

Networking for sustainability

Segmenting your influencers

(Karl Smith)

Accidents

Acquaintances

Associates

Actors

Advocates

Allies

10 essential principles 1. Elevator speech Be able to describe yourself concisely and

impressively 2. Be different (stand out) Differentiate yourself. Aim high. Be the best

at something!3. Help others Help others and you will be helped.4. Personal integrity Integrity, trust and reputation are vital for

networking 5. Relevant targeting Identify groups and contacts relevant to

your aims and capabilities.6. Plans and aims Plan your networking – and know what you

want.7. Follow up Follow up meetings and referrals to make

things happen 8. Be positive Try to be a positive influence on everyone

and everything9. Sustained focused effort Remain focused and ever-ready10. Life balance Being balanced and grounded build

assurance

Its about asking/requesting the right THING PERSON TIME – MANNER RESULT IMPACT Step 1 – awareness Step 2 – develop interest Step 3 – action stage Step 4 – taking ownership Step 5 – becoming an advocate!

Strategic communicationHow to recruit a donor for life!

Strategic communication

ADVOCATE FOR THE ORGANISATION

AWARENESS INTEREST ACTION OWNERSHIP


Be open and honestRegular reportsGo the extra mile to keep donor informed

Realistic budgets Invite donors to eventsNever bad mouth a donorAcknowledge your donors all the time

How to keep your donors on board


Name building/space after your donor

Send thank you cards/sms/faxes/emails

Buy small gifts Get to know your donors as friends Refer your donors to good projects Never deviate from agreements; first get donor approval

Send back funding not being used

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Share both successes and failures Tell your donor what you will do about your

failures Don’t distort reports/lie to donors by

omission Submit audited financial statements on time Spend more time to build relationships face

to face State clearly how you will monitor your own

progress and evaluate yourself Acknowledge funds received

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Document to introduce your organization Identified a need/problem – you propose how you will

address it Request for an investment You are selling:

◦ Your understanding of the problem and beneficiary needs◦ Innovative solution ◦ High level of success◦ Expertise◦ Institutional reputation and integrity ◦ Ability to deliver results

Can be solicited or unsolicited proposals

What is a proposal?

Be clear why and for whom, are you writing Understand the donor for whom you are

preparing it Be clear about your own identity, your

strengths and weaknesses, present a credible track record ito of technical competence, impact, financial management, etc.

Plan the project, i.e. understanding the context, set aims and objectives, design program activities, M/E, etc.

Proposal preparation

THE COVER LETTER TITLE PAGE INTRODUCTION PROBLEM STATEMENT UNIQUENESS OF THE ORGANIZATION OBJECTIVES EXPECTED BENEFITS OPERATIONAL PLAN PERSONNEL EVALUATION THE BUDGET ATTACHMENTS AND OTHER DOCUMENTATION

Elements of a winning proposal

Keep it brief, easy to read, free of typographical errors Simplicity – use plain, concise language Use as few words as necessary to make your point. Don’t repeat yourself; Avoid “filler” words Clarity – avoid jargon, support facts with full references, spell out acronyms

when first used Consistency – ensure all sections of the proposal support one another, ensure all

terminology used are the same, check that nr’s, figures and percentages are the same

Responsiveness – follow all donor requirements as provided, connect with donor desires

Active voice – avoid the passive voice, e.g. “We will do …” not “X…will be done.” Use strong verbs not weak one such as “is, was, does, has, etc.” Format – consistent use of fonts, bold and italics to highlight key points, don’t

try to fit in as much text onto one page, include graphics when relevant Run a spell check, check accuracy, ask others to read and make comments

Presentation and style

Strong proposals Common weaknesses1. Comprehensive and well thought through – aims and objectives clearly stated

1. Objectives not clear – Failure to explain how the project objectives meet clearly defined needs

2. Concise 2. Poor writing style, contains unclear unnecessary language

3. Budget is realistic and justified 3. Budget not realistic and not related to objectivesFailure to explain what the donor is actually purchasing (funding)Failure to convince the donor that the project is value for money

4. Strong case for your organization managing the project efficiently

4. Failure to explain context and how your organization stand out Failure to convince the donor that there is a high likelihood that the project will succeed within the specified timeframe, that benefits will be delivered, aims, objectives and work plans are realistic

5. Strong case for long term impact –even after the project ends

5. Failure to address issues of sustainability and impact

6. Contains relevant support documentation

6. Failure to provide enough supporting evidence

Elements of strong and weak proposals

You missed the deadline Not following donor guidelines as prescribed in the RFP Proposal not organized so that distinct sections can be easily matched against

RFP evaluation criteria Poor quality of writing; hard to read; sweeping generalizations and jargon;

repetitiveness; too long Lack of attention to detail (typos, pages upside down) detailed monthly or quarterly schedules missing; timetables to accomplish work

too optimistic Management responsibility and capability not clearly demonstrated Proposed project appeared beyond the capacity of the organization to carry out Not a priority topic for the funding agency Rationale for selecting a certain approach not well thought out Nothing unusual or innovative being offered Lessons learnt from previous projects not shown or made relevant to proposed

project Role of the beneficiaries not clear

Some reasons why proposals are not funded

Miss the deadline Funding cycle complete/inadequate

financial resources Too little information Not in their focus area Not in their geographical focus Not legally compliant, etc. Already funding similar organisations

Regret LettersWhy donors regret applications

Look at each reason and decide if it is YES or NO for development (not for your organisation only)

Then look at how to turn a NO into a potential YES

Is it YES or NO for development

Reason Yes No Miss deadline Inadequate fundsToo little information Wrong focus area Not legally compliantNot in their geographical focus Already funding similar organizations

Is it yes or no?

Medium size donors can receive up to 50-100 applications per day

Applications must be assessed according to their criteria

Special staff need ot be appointed and paid to make these assessments – its a cost to the donor

Responding to your application is also a cost

How donors operate in terms of managing applications

Reference nr: an invitation to apply again A file was opened for your organisation Date: indicate urgency and internal efficiency Signature: a direct contact person for future reference All contact nr’s: physical, postal, email, website, cell nr’s,

telephone, fax nr Names of board of directors: people you may be familiar

with in your networks You overcome the first stage of strategic communication

(awareness-interest-action-ownership-advocate)

What “Regret Letters” offer free of charge

Always thank a donor for a regret letter E.g. “Dear donor, it is with great appreciation that i wish to

thank you for the time you took to study and respond to our request for funding. To enhance our own learning of your requirements, it will be appreciated it if you could be so kind and furnish us with the reasons for your response. We can assure you that we will try our best to fulfill these requirements in future applications. Yours in development...”

Update your funding register Make a request to stay in touch to deepen the relationship

e.g. Via your newsletter, invitations, donor updates, etc. Use the “We are very impressed with your work and wish

you well with your future endeavours”

Follow up on “Regret Letters”


HOW TO ACCESS INFO ABOUT DONOR FUNDS QUICKLY

It is a good strategy to draft a funding enquiry as soon as your funding proposal has been

completed. Many donors are aware that there are organizations that do not have access to the

expertise to draft comprehensive funding proposals. They therefore make it easier by designing

their own forms to be filled in by the applicant. A funding enquiry is a way of checking with the donor: 1. What they are funding (their focus areas) 2. The format in which funding should be requested

Funding enquiries


When drafting a funding enquiry, please make sure that you:

• Keep it short (not more than 2 pages) • Give a brief description of your organization, its vision and

mission • Say what you are enquiring about (the project or programme) • Highlight your successes (impact that you make) • Indicate your organization’s ability to deliver results • Give an idea of your accountability structures (governance

and financial) • Don’t forget to request from the donor whether they would

consider a full proposal from your organization.

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Funding gaps: the period when funding is promised (based on your grant agreement) and when it is ACTUALLY paid in.

A funding gap can be managed effectively to avoid disruptions to programme implementation.

You start with: Strategic plan (over 3 years) Annual financial plan (break it down to 12 months) Quarterly financial budget (break it down over 3

months) Monthly budget Weekly and daily cash flow Involvement of key staff is critical in this process. Transparency is vital to make it work. Document all

plans for proper review and analysis.

Managing funding gaps

Frank Julie and Associates - Knowledge is Power but Consciousness is Light!

Skill 1 2 3 4 5 6 7LegalAccounting XHR XMarketingSector specificHealth XAdvocacy Social work XFacilitation x

The board skills audit


Treasure audit (Resource mobilization)

Treasure (Low, Medium, High) 1 2 3

Will make a contribution

Will contribute services

Will help raise money

Has access to individuals

Has access to corporations/foundationsHas personal wealth


Time and Trust Audit

Time and Trust (Low-Medium-High) 1 2 3

1. Stature in the community

2. Leadership potential

3. Will help raise money

4. Influence in the community

5. Communication skills

6. Interest in the program

Documents

FUNDRAISING AND SUSTAINABILITY FOR NON- PROFITS IN SOUTH AFRICA !