Fast Forward >> #1: Money talks

26 May 2015
Author: Rose Longhurst

'Follow the money’, goes the journalists’ refrain. How often could it also be the motto of the charity fundraiser, or even their whole organisation? The never-ending search for funding puts those who offer it in a powerful position. Both directly and indirectly, donor interests and requirements shape the sector. Directly, their funding requirements can influence the way that organisations operate. Indirectly, their interests may be reflected by mission creep in organisations that focus on income targets over values. Like it or not, donors set the agenda.

Donor influence

This can be a good thing. Donor scrutiny can require organisations to up their game, for example by driving professionalism in monitoring and evaluation. By prioritising particular approaches in their funding calls, some donors have mainstreamed human rights, participatory design and environmental sustainability. I know organisations that had never considered gender equity in their projects until forced to do so for a funding proposal.

The influence that donors exercise is not limited to their grantees. Donor influence is not only over their grantees. Collectively, donor trends can change the mindset of all organisations that seek grant funding. If a fundraiser repeatedly sees the term ‘innovation’ on donor websites, it’s not long before the organisation gets together to articulate its innovative value. Those who are unwilling or unable to engage with new trends get left behind.

There is however an inherent information asymmetry in the donor-grantee relationship. Donors need grantees in order to reach communities they almost never have direct access to and to understand the people they seek to serve. Yet too often the relationship is less of a partnership for shared learning than one of upward accountability, where the NGO feels responsible to the cheque-writers rather than the communities affected by the work.

Putting people first

Grant-seekers and grant-makers both have a role to play in ensuring that people are at the heart of programming. Leaders who set growth-at-all-costs income targets independent of evidence of need should take a look in the mirror and consider whether they should be working for Tesco. Managers that give income-generation targets to individual fundraisers incentivise them to pursue short-term goals rather than strategic objectives.

Fundamentally however the power lies with those with the money. If donors decide that they are unconcerned about an issue, then activists working in this area have to make decisions about whether they can fight their cause un-resourced. And it’s not just on thematic issues that donors have a responsibility to acknowledge their influence. Funding modalities and donor requirements demands can limit the potential for people to effect real and lasting change.

Ticking the boxes

Increasingly it seems that donors are demanding more but offering less. Grant management that demands scrupulous monitoring and a clear articulation of value for money may be called for. But donors need to acknowledge that these requirements necessitate investment in enhanced structures, staffing and knowledge-management systems.

Yet these support costs, which have the potential to enhance programme quality, as well as accountability to donors, are often the hardest to fundraise for. And initiatives that encourage true learning, innovation and adaptive programming – all of which require a level of trust and flexibility – are often not funded at all.

What can be done?

Bond’s latest publication, ‘Fast Forward >> The Changing Role of UK-based INGOs’,  makes seven recommendations for ways in which donors can encourage positive change in the UK international development sector. These proposals acknowledge that donors, especially those funded by the general public, operate under their own constraints and that limited capacity reduces their ability to directly engage with communities.

NGOs need to effectively communicate the complexity of the issues they seek to address, and donors need to listen. We must have the courage to publically acknowledge that development is more complicated than the simple ‘cost-per-beneficiary’ analyses take into account and not use minimal admin costs as a proxy for effectiveness.

As the holders of power simply by virtue of holding the purse-strings, donors have a responsibility to respond to the needs of those with the least power. Compliance-based approaches to funding only serve to enhance the status quo, whereby those with the privilege of wealth make decisions about the lives of people without it. At every level, we must prioritise the rights of those we intend to serve. Money talks. Let’s make sure it speaks wisely.

Want to find out more? Visit the Bond Development Futures pages and download the Fast Forward report.

About the author

Rose Longhurst
Bond

Funding Policy Manager at Bond