Non-government organisations (NGOs) are experiencing a shift in the global landscape. Following the COVID-19 outbreak and the subsequent economic downturn, NGOs are facing a number of challenges to their financial future.
Changing approaches to NGO funding
The way donors manage their NGO funding has changed, with many shifting their processes to align with a digital-first world. What’s more, new fundraising campaigns crop up all the time, leading donors to regularly reexamine where to direct their funding. NGOs have had to reassess their donor relationships, especially if many of their donors are international. They’ve also had to invest time and resources into becoming more accessible, diverse, and environmentally conscious to attract more funding options.
Competitive markets
NGOs worldwide are mostly dependent on the same markets for funding, which are becoming increasingly saturated. Combined with the cost of acquiring new individual donors, competing with other organisations for funding has left many NGOs stretched thin on resources.
Lack of planning and financial organisation
Many NGOs struggle with a lack of strategic planning, which can result in inefficient use of resources and failure to raise and manage funds. A cohesive strategic plan allows NGOs to streamline their efforts for raising funds, define their brand to potential donors, and diversify their options to raise money.
Limited resources to seek donors
It can be a difficult cycle when an NGO’s lack of resources limit them from seeking and acquiring donors. The old business adage of having to spend money to make money is unfortunately also true for non-profit organisations.
Not having the resources to effectively market and promote your cause can result in a lack of attention from donor organisations. What’s more, a lack of finances can limit an NGO to only reaching out to local donors. Waiting for international donors to approach can be a long and often fruitless process.
Increased dependency on institutional donors
Institutional funding now accounts for more than half of many large NGO’s incomes. This has created growth for these NGOs, but has also resulted in restrictions on their operations, and reduced flexibility. With these restrictions, many NGOs' large strategic decisions are often tied to cultural events or foreign governments outside of their control.
What can NGOs do to address these challenges?
Fundraising for NGOs has been impacted by COVID-19 and the cost of living crises. 2021 research by Bond saw almost three-quarters of British NGOs taking financial hits as a result of these crises, with small and medium organisations the worst affected. Most of the usual methods of fundraising for NGOs have been impacted by the pandemic. 81% of organisations that use public funding, including sponsored events and charity shops, have been seriously affected, compared to only 39% of those who receive government grants.
NGOs should take this time to reflect on how they can pivot their business plan to better align with the changing world. Income diversification, an updated strategic plan, and creating an investment policy are all ways to boost your NGO’s performance. To increase brand recognition, try some new strategies like social media campaigns, online fundraising events, awareness days, and peer-to-peer fundraising. Key considerations include:
- Regular communication (emails) from NGO leaders (e.g. CEO) to donors and stakeholders, keep them up to date with the challenges, steps being taken and so on.
- Use social media. Even in emails, use photographs/ videos and other interesting media instead of emails full of text and boring data.
- Pick up your phone and call donors – if you have an advanced donor data management system and you know your donors. Prepare a script, train your staff (online/ phone) and get going.
- Supporting mental health of communities, distributing protective/preventive gear and so on.
- Organise webinars, social media catch-up events, live social media events and invite the donors and stakeholders to join them.
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