5 considerations for diversifying your funding

There is a perfect storm brewing for UK INGOs. There’s increasing competition to access traditional funding and less funding from institutional donors available.

NGOs still risk losing EU funding and an uncertain economic climate is causing a decline in individual giving.

INGOs are in a precarious position. Many organisations are reporting a loss of income and are downsizing their operations.

Our recent survey found that 88% of CEOs feel that gaining access to funding will be harder in the next 10 years. 99% believe that NGOs have to redefine their focus and adapt to remain relevant over the next decade.

These are huge challenges for INGOs, but they’re also an opportunity to review and reinvigorate their approach to financing. Here are five things to help you diversify income to build a stronger, more resilient organisation:

1. Align your income generating activities with your mission: Stay true to your mission and don’t get side-tracked by “growth for growth’s sake”. Many organisations have found ways of generating income that directly feed into their objectives. For example, Childhope UK set up the South2South consultancy, which harnesses local expertise in safeguarding to deliver consultancy training.
2. Think long term: Real change happens when you take the time to reflect, plan, prioritise and create a strategy. Your organisation must recognize that change won’t happen overnight. The NGO funding landscape is changing, so you should think far into the future to identify and realise the fundamental changes needed. Start by reviewing your current strategy and funding mix. Then decide where the organisation wants to be in the next 10 years. Then build a strategy and funding model to support it.
3. Get leadership buy-in: Senior leaders are responsible for setting the agenda and culture within an organisation. Your approach is more likely to succeed if leaders support long-term strategic thinking, assign resource to developing a diversification strategy and invest in staff capacity to achieve income goals.
4. Don’t get put off by new language: It may feel uncomfortable for an INGO to start using words such as “profit” and “business planning”. But international development organisations tend to use different language to mean the same thing, like “surplus” or “unrestricted funding”. Delivering contracts for government funders has required INGOs to change their language and the way that they operate, to compete with the private sector. Use the language interchangeably to suit the conversation that you’re having to increase your opportunities to partner.
5. Try and try again: Building a strong resilient organisation involves embracing failure, understanding why something didn’t work and then trying again with a new idea. Senior leaders and board members will understandably be worried about spending money which they may not get back, but they must take risks to stay afloat.

What can you do now?

The Bond Funding Group is focusing their work on income diversification this year. They will be hosting their first group meeting on the 17 February to discuss how organisations can develop an income diversification strategy. If you are a Bond member, you can attend for free.

The Bond Impact Investing Group explores impact investing and other forms of innovative finance. They hold quarterly meetings and, if you are a Bond member, you can join the group. We’re also going to publishing an introductory guide to impact investing, so sign up to our newsletter to her about it.

The Bond Annual Conference boasts five sessions on funding, including funding trends, donors’ shifting priorities and changes to government funding. Join us 23-24 March 2020 .