Collaboration for Sustainability
Posted on 07 December, 2020 at 15:36
By Epaphras Chinyakuza
Financial sustainability remains a critical challenge for most
organisations in the Non-Profit Organisations (NPO) sector in Zimbabwe and
around the world. Although a variety of toolkits exist examining specific
sustainability strategies, many organisations continue to struggle to develop
and maintain the resources needed to carry out their operations in the foreseeable
future. This constraint limits organisational autonomy by inhibiting long-term
planning and flexibility in designing and implementing activities. Financial
sustainability is also a key piece of the puzzle to empower local organisations
to take greater ownership of the development process, as a robust resource base
provides the resilience needed for organisations to experiment with new models
that reduce long-term donor dependence.
However, there is a call to develop and test ways that different
actors (including donors, policymakers and intermediary organisations) to work
together to improve the factors that drive local organisations’ financial
sustainability.
Our focus in this article
is on predominant sustainability questions: What factors are particularly conducive to local organisations’
financial sustainability? How can the local organisations take ownership of the
development process? Which other stakeholders are instrumental in improving
financial sustainability and encouraging local ownership of development?
In the NPO sector, there is a tendency for organisations and partners to
form an overreliance or dependence on international donor funding streams, which
puts them in a vulnerable position in the case of donor withdrawal. Despite
knowledge of this risk, a number of factors deter the ability of NPOs to
acquire financial support beyond donor aid. These organisations face a diverse
range of contextual factors in their operating environment which challenge
their capacity to strengthen their financial sustainability. Poor economic
conditions, restrictive government regulations, lack of local culture of
philanthropy, taxation regimes and lack of access to skilled labour all limit the
ability of such organisations to operate independently. In Zimbabwe’s case, our
volatile economy has seen high levels of inflation, a thriving parallel market
which contributed to the introduction of a new currency (RTGS Dollars),
multi-tier pricing in recent months and these factors have made it difficult
for NPOs to operate as their budgets were constrained leading below par impacts
of programmes.
In addition, internal
dynamics such as organisational culture, management capacities, internal
governance structures, and financial planning mechanisms can severely impact an
organisations’ ability to build its financial sustainability. In Zimbabwe, we
have also observed some organisations whose Boards are comprised of founding
members who have been on the boards for over 20 years and are reluctant to
react to the changing dynamics in the sector. It is an uphill task to shift
these members’ focus to other forms of financial sustainability as many are
blinkered by the pursuit of donor funding.
Recognition of these issues
has led to a wide range of studies exploring the various methods NPO sector
organisations can employ to overcome systemic challenges and improve their
sustainability. Amongst these methods, diversification of revenue sources is
considered key to ensuring financial sustainability. The currently substantial body of existing
knowledge around sustainability suggests that, sustainability can be achieved
through acquiring a multitude of external and domestic funding sources, ranging
from donor support to alternative approaches such as social enterprise models,
private businesses and social investments. However, there is also evidence that
utilising multiple distinct funding sources leads to greater costs and
additional administrative burdens, which may be beyond the capacity of smaller
NGOs to manage
There is increasing evidence that internal dynamics and mechanisms of an
organisation may also determine their capacity to be financially sustainable.
For instance, when an organisation has sound administration and robust
financial and strategic planning, they are far more likely to be financially
sustainable than they would be without these characteristics. Transparent
reporting though strong monitoring and evaluation of financial systems can also
be linked to maintaining strong donor relationships, reinforcing the capacity
to acquire additional funding in the future.
A number of manuals, workshops and training
courses have been put across by many authors that attempt to support NPOs to
increase their financial sustainability through these approaches. However,
these resources tend to be generic and only broadly cover budgeting, planning,
and some variation of the multiple approaches to resource diversification.