Funding Dependency In NGOs

Posted on 31 October, 2021 at 22:43

In the past reviews that we have had in  distinctive organisations, we found that most organisation have a small range of funding  streams whilst some rely on one or a few donors. Reliance on a small range of small funding  streams may additionally restrict the growth of the organisation. Generating new sources of funding  is of importance in the NPOs it reduces the degree of dependence which is a very common risk for NPOs.

The mission is to control each the strategic and operational risks, at the same time as ensuring that your funding streams will provide the type and quantity of  funding   needed to undertake a project now and in the foreseeable future. For most NPOs with restrained resources and working in a more and more aggressive and challenging environment there is need to diversify their funding  streams to reduce the dependency syndrome.

However, there are a  range of external elements that should have an effect on an organisation which includes new technological know-how and the economic environment. It is very important to take into consideration the following factors when they want to diversify funding

• Are the organisation’s current funding  sources adequate to fund all the activities?
• What scope is there to grow these sources of funding ?
• How confident is management that these will continue and, if not, when might these end?
• Does the current mix of restricted and unrestricted funding  meet the organisation’s needs?
• Are there any specific risks related to these that management will need to be mindful of?

 
With the increasingly more shrinking funding available from major donors, less sources are devoted for aiding the organisations’ administrative wants and constructing their reserves. It is therefore important for an organisation to have a balanced combine of funding, with greater longer-term funding that supports core fees and fundraising things to do that can aid in building reserves.

Assessing the organisation’s strengths and weaknesses can be difficult, but is essential. Having a large database of donors isn’t a strength, if they are disengaged and it’s hugely out of date. Listed below are some factors that administration may additionally desire to consider;

• How much can you afford to invest in developing additional funding ?
• How much capacity could you commit and what skills does your team have
• How good is your marketing and social media, reach and engagement?
• Do you have products/services/space that could be sold commercially to other organisations?

 
There is need for management to convey all the above-mentioned factors into  SWOT analysis. This will assist to perceive any elements that are necessary and pressing to the organisation. This will allow management to develop doable strategies, such as;

• Using strengths to exploit opportunities.
• Using strengths to tackle weakness.
• To mitigate/avoid threats

 
There are a variety of picks open to the NPO sector for them to be capable to raise funds, such as ordinary giving/friends/membership schemes, legacies, community events, company sponsorship, trading, on-line and crowd funding.
 
It is very important for an organisation to have a resource mobilisation plan in place and make sure all the staff are trained on the resource mobilisation skills to approach existing and new donors for funding.
 
There is need for NPOs to have various sources of funding since this reduces the risky of dependence in the sector and this becomes a challenge when the donor that the NPO was depending on pulls back and now the operation of the NPO will end up not running smoothly because of unavailability of funds to finance projects and operational costs,
 
By Passmore Muringai
KFM Consultants Accountant
www.kfmconsultants.com