Two articles caught my eye recently:
The results of a survey run by nfpSynergy, which asked charity staff (mainly fundraisers) how they would like grantmakers to change their practices – in short, they want more unrestricted funding.
A blog post by Vu Le arguing that funders who avoid paying overheads are perpetuating inequality and making it harder for charities to be effective.
The issues at the heart of both of these articles
There are severe challenges facing charities – particularly small charities, and particularly those serving under-represented groups:
- Charities struggle with securing unrestricted income (which is crucial for funding internal functions); the smaller the charity, the more difficult this is.
- Charities may lack the skillset for trust fundraising, and waste resources by taking a “scattergun” approach to applications, rather than targeting funders appropriately.
- The demands of some major funders put pressure on small charities, which many feel to be excessive and may lead to structural inequality.
I acknowledge these to be real concerns. I must also acknowledge that I’m writing from a place of privilege, having only ever worked for charities with income over £5 million, all of which had well-established donor portfolios. However, I think all charities, big and small, would benefit from exploring some of the above attitudes.
Which rules do we want to play by, and be judged by?
Dan Pallotta’s seminal TED talk explains that charities are not permitted to participate in society in the same way as corporations, which hinders their ability to do good. Corporations can take risks with their money; the same behaviour in charities is often perceived as wasteful. And as far as I’m aware, corporations don’t have to deal with restricted funding in the same way that charities do.
However, if we want to play by the same rules as corporations, we need to accept the need to be judged by these rules, too.
It all comes down to fundraising
What’s the first thing a budding entrepreneur has to do, once they’ve got their groundbreaking idea? Raise funds, whether from investors or customers. We’re all familiar with Dragon’s Den. The day-to-day reality is probably not as dramatic for most entrepreneurs, but to be successful, they do have to grind away, searching for and pitching to the funders who are most likely to be interested in their product.
And the pressure doesn’t disappear after the first tranche of funding; far from it. The role of a startup CEO is all about securing funds, and customers.
It’s no different for charities. They can’t exist without funding. But is the hunt for cash as deeply embedded within all charities – from tiny, volunteer-led outfits to established multi-million pound organisations? Probably not, otherwise respected commentators such as Veritus Group wouldn’t be so emphatic about the need for change. Fundraising, in many quarters, is still viewed with distaste.
We’re all competing for funds
There are thousands of charities seeking funding. They exist because there’s an important need to be met, whether that’s mentoring disadvantaged people, protecting the environment or researching cures for a rare medical condition.
Just because the mission is important, however, doesn’t mean they’ll get the funding they need. They may feel they have the right to exist but sadly, the real world doesn’t always agree. That’s why having skilled fundraisers and a culture of philanthropy is absolutely vital.
It might not be fair, but it’s the reality. The CEO of a startup company faces the same challenge. He or she might have created the best, most exciting product in the world – but without excellent sales and customer care functions, it’s unlikely to succeed.
Wishful thinking won’t get us there. We need to adapt.
nfpSynergy’s survey found that most fundraisers would prefer “shorter periods between applications, easier reporting, and to be able to submit multiple applications.”
No sh*t, Sherlock.
It also identified that many fundraisers, particularly those from smaller charities, would happily trade a large restricted grant for a smaller, unrestricted gift. This worried me for a number of reasons:
- The question made no sense to me. It was not clear whether the restricted gift would be for budgeted or additional work – this is a crucial difference.
- It also made no sense to ask fundraisers. Of course we all want an easier life, and unrestricted grants are generally simpler to manage, but this type of decision should not be made solely by fundraisers. It’s one for the management team.
- It worried me that small charities would – in theory – give up the prospect of significant funding because they lack the internal processes or expertise to manage it.
Is there a trust issue?
In his latest article for Civil Society, nfpSynergy founder Joe Saxton suggests that “many restricted grants simply demonstrate a lack of trust in the recipient charity.”
There would be value in exploring the reasons for this perceived lack of trust. Luckily we don’t need to look far to find a clue: one of the comments on the nfpSynergy article is from a grantmaker who explains that many of their grantees fail to send them a grant report.
Securing funding comes with responsibility. We cannot expect grantmakers to make our lives easier if we don’t also meet their basic requirements.
Grantmakers are not “the other side”; they’re part of the charity sector too
Vu’s blog highlights the plight of tiny charities that struggle with the conditions imposed by grant funders. He argues for relaxed funding restrictions to give these charities a break.
We should carry this argument through to its logical conclusion. As most trust funders are also small organisations with their own charitable objectives, we need to be sympathetic to the challenges they face, and treat them with respect. This means not submitting speculative applications which we know, deep down, won’t interest them and will suck up more of their time. The commenter on the nfpSynergy article emphasises the fact that most grantmakers have very few resources and are mostly volunteer-led. Restricted funding represents a simple way of ensuring their grantees have some accountability.
I don’t deny that there are challenges and injustices within our sector. And some of the large grantmakers – which can afford paid staff – have excellent, inclusive processes and listen to their grantees. We should continue discussions where they are welcome and advocate for the charities which struggle. But we also need to accept and adapt to the reality.
What should charities do?
- Get really, really good at impact measurement and reporting. This isn’t easy. But if we can show donors that their money makes a real difference, wherever it goes within the charity, it may relax the emphasis on restrictions.
- Have excellent internal processes for budgeting and priority-setting. This will enable quick and wise decisions when opportunities for restricted funding arise.
- Seek to fulfil your charity’s mission while also recognising the need to adapt to what funders want. Yes, the mission is important, but if you can’t sell the cause, you don’t have a charity.
- Take a strategic approach to trust fundraising. Don’t fire off applications at any vaguely likely opportunity. Target your approaches carefully. Seek to upskill your fundraisers.
I’ve hear the complaint more than once, from donors and charities alike, that the charities with the best fundraisers are the ones that get the money. Well, maybe the better question to ask is why aren’t the other charities prioritising investment in fundraising?
Simply complaining about injustice isn’t going to secure funding – nor will it give us any credibility as a sector. We need the right skills and mindset to adapt to the reality we find ourselves in. And we need more excellent fundraisers.