Ongoing Project Funding

Most corporate and local trust/foundation donors fund projects for just a year at a time. Although there are a few notable exceptions, the majority of international donor trusts and foundations also restrict their giving to a year. It’s frustrating for fundraisers, CEOs and programme and project managers who want the security of sustained funding for projects via which services are delivered to those in need. However, it’s these donor entities’ right to support NPOs’ projects for a 12-month cycle only.

South African corporate social investment (CSI) budgets are reliant on a percentage of their previous year’s net profits after tax. This means that they don’t know in advance how much they will have to give away. And companies’ grant making criteria are regularly changed. Donor trusts and foundations are more consistent in what they fund but often have policies excluding beneficiary organisations from further funding for a year or two. This is to prevent dependency and to encourage them to seek funding elsewhere. These are just some of the realities of fundraising from these sources, albeit that the amounts they give can be substantial.

As fundraisers embark on constant prospective donor research (or should be doing so!), they find potential funders with application forms. A question favoured by donors and disliked by fundraisers, is one along the lines of: ‘How will this project be funded after the life of the grant?’

Interviewing 28 people (five from South African companies, six from local trusts, three from American foundations, five from European foundations and nine from UK donor trusts) for a new book, elicited similar responses:

  • We must encourage board members, senior staff and fundraisers to be innovative. They must resource their organisations in various ways and not slip into the comfortable (sometimes lazy) mode of presuming that we will fund them year after year.
  • We once had a tough situation where trustees and staff at an NPO tried to guilt us on social media and blame our ‘funding for one year, then two years sitting out’ policy for the orphans in their care not having school uniforms. Our website clearly states our policy, and we added it to our grant letter, MOU and letter in response to their mid-year report. Sadly, for the children in their care, we will never fund them again.
  • We even add 10% of the amount given for our grantee organisations to spend on upskilling their fundraising staff as part of our commitment to preventing dependency.
  • The vast majority say in answer to our question about how they will fund the project after our one-year donation, something that boils down to, ‘We will find another donor.’ We accept this as it serves our purpose to highlight that we only fund a project for a year. However, those who respond in an innovative way, such as ringfencing some reserve funding to ensure the project’s continuity, dedicating an event to raise the next year’s money if no new funder is found or allocating profits from an income generating initiative are the ones that stand out and are more likely to be funded by us.

One manager of a UK trust that commits to two years and then insists on a year out, told me that in effect the year out becomes two as they will only accept new applications (they announce calls for applications once a year) with audited financials and few organisations have these ready early …

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