A crisis, which crisis?

2012 was a year of revelations! A funding crisis based on public perceptions and image, not a lack of money. The media exposed a few high profile nonprofit organisations (NPOs) in dire straits; racking-up debt, alleged fraud, mismanagement, unfair dismissals, verbal punch ups, costly suspensions, ruined reputations that besmirched the sector. Donors are reluctant to support organisations that have dysfunctional, dishonest leaders, so be smart and protect your brand and reputation this year.

A recent online questionnaire; “Non Profit Job Losses and Service Cuts Report’, conducted in collaboration with several financial sustainability specialists, revealed that of 695 respondents 80 percent experienced a significant cut in funds and were now exploring new approaches including social enterprise ideas to address funding gaps and strengthen their organisations’ sustainability. Although this is a positive step it depicts an inherent lack of diversification in fundraising practice.

Philanthropic spirit in decline

What has happened to Ubuntu? The World Giving Index, compiled by the Charities Aid Foundation (CAF) using data gathered by Gallup, a market research firm, rated South Africa as the 70th‘most’ charitable country out of 160 countries.  This index measures giving money, volunteering time and helping a stranger. In 2012, South Africa was rated 108th, the previously year we were placed 76th. Surely we can do better? The most charitable African country was Liberia rated 11th with Angola 30th and Zimbabwe in 63rd position.

For NPOs dependent on raising philanthropic funds from the private sector, they should concentrate on individual giving, it will continue to be the best bet, the size of donations will not necessarily increase and there could be a drop in the number of good causes individuals choose to support.  As the economy recovers, individuals will start to have more disposable income and be able to increase their giving but not to a greater number of beneficiaries, so make a point of keeping your donors close and informed. If you snooze you lose, do not blame the funding crisis.

Balanced approach to fundraising

Organisations that have diversified their approaches have reported higher levels of optimism for increasing individual contributions and attracting support from business.

Online giving has shown a slight increase and this trend should continue. Existing and new supporters want to check out your work 24/7, so a newsy website with user friendly donation options is a winner. Integration of mobile technology is also expected to double relationship efforts over the next 12 months so make sure your website is set-up for mobile browsing.

Other methods that still work include; special events for recruiting first-time donors. On average 60 percent of attendees should make at least a once-off donation and then graduate to regular donor status (if you are not achieving this through your events then you are not doing it right), social media is showing promise for increasing new relationships while major donors still prefer in-person meetings. Peer-to-peer solicitations continue to show best results.

Face-to-face, a public space engagement technique to sign-up new donors will be launched early this year by international consultants. For it to be successful it must be done properly, in the right location with the right people saying the right things.  It is similar to tin shaking but with a clip board and slick conversation. If you go this route then make sure you have the facts, understand the rules and the capability to evolve new relationships.

For small to large NPOs, direct mail remains an effective method for new acquisitions and for retaining donor support. In general, nonprofits that communicate at least five times a year, sharing stories and explaining how impact is achieved will secure a higher level of donor loyalty.

Social enterprise development is breaking new ground, success stories abound from turning trash into cash, African cuisine caterers, and non-governmental organisations’ event planners to discovering photographic talent in underprivileged townships. Forward thinking social investors like UnLtd South Africa, SAB Foundation, and Kiva are making dreams come true. The African Social Entrepreneurs Network is a good place to start if you need advice.

Leaders must lead

This year Board members and key staff must get behind their resource development teams or plan for closure by mid-2014. We need to elevate the importance of fund development as a leadership issue, invest in a stronger talent pool, and strengthen the ability of NPOs to develop the systems that enable fundraising success. Without resource development staff a national director or chief executive officer (CEO) needs to spend 70 percent of his or her time networking and generating income ensuring stability.

Too many NPOs struggle year in and year out to raise funds; many display the revolving door syndrome and keep hiring and firing staff. Organisations often pin their hopes and dreams for fundraising on one person – the fund development manager or director – this is when things go pear-shaped. NPOs and their leaders need to build the capacity, the systems, and the culture to support fundraising success. It can take 12-18 months for a new fundraiser to reap results from new friends; although it should not take longer than a few months to bump up support from existing donors.

Power of profit

Corporate social investment (CSI) continues to surprise us; the Trialogue survey shows that CSI spend was the highest ever recorded of R6.9 billion during 2011/12 period. NPOs receive more than 55 percent of the total CSI budgets, the balance is distributed to government institutions comprising of hospitals, schools and universities including direct payments to bursary students.

The 15th edition of The CSI Handbook revealed that NPOs relied on business for around 25 percent of their funding compared to 20 percent from government. Foreign donors provided around one-fifth of funding. The lion’s share of CSI funding goes to education (40 percent) while health has dropped from 19 to 12 percent.

South Africa remains one of the few countries boasting a continuous growth in CSI budgets, sadly, 2013 could be the year that CSI starts to retract as labour unrest continues around the country; this will affect productivity and profits especially in the agricultural and mining sectors.  Take note!

A very wise woman once said: There’s no socialism without capitalism. Dr Mildred Sandi, DP Foundation for Women in Zimbabwe.

Northern funders have left the building

International funding agencies have been withdrawing their support since the late 1990s; recent drops in aid are not necessarily attributed to the global financial crisis but South Africa becoming classified as a middle- income country, which means we are rich enough and capable of addressing poverty. Funding is redirected towards greater needs in other Southern African countries such as Malawi and Zimbabwe. Submitting pray and spray proposals to America, Canada, Ireland, United Kingdom even Australia is from the last century. Stop it! Save your energy and paper!

Partnerships have to be equal

Government grants to NPOs remains unsatisfactory. Heidi Swart, an investigative journalist for the Mail and Guardian, wrote in her article Welfare groups fight for survival  (17 May 2012) that, “The National Coalition for Social Services, which represents 3 000 welfare organisations, delivers at least 70 percent of the welfare services for which the Department of Social Development was legally responsible. The state allocated less than 10 percent of the welfare budget to them for this work and then it fell short of actual cost”. Promises of a new funding model have been made but how and when this will kick-in is a mystery.”

Although this year will be as flat and confusing as 2012, there is no place for complacency so believe in your mission and keep delivering on promises. This country needs a nonprofit sector that is vibrant and robust to fight poverty and social injustice.

Compliance and legal stuff

Get your house in order; check your status with the NPO Directorate, 36 513 have been de-registered, 35 217 are on a warning (non-compliant) while only 29 019 are in good standing (registered) out of the 85 000 registered on the database in March 2012. The system is now automated for registration and you can submit financial reports and narrative reports online.

If your NPO Certificate has been revoked it will affect grant applications to the National Development Agency (NDA), the National Lottery Distribution Trust Fund (NLDTF) plus all government departments, in fact all funding will be in jeopardy. It is illegal to continue to quote the number and the original certificate has to be returned to the Department of Social Development (DSD). You may also have problems with FICA verification at the bank without this number. Not to mention the cost of stationery reprints.

Social Development Minister, Bathabile Dlamini, has appointed a Ministerial Task Team (MTT) consisting of 60 representatives from civil society groups, the corporate sector, the NDA, the NLB and staff from the DSD to follow up on resolutions and recommendations proposed during the NPO Summit held last August. A new legal framework has been proposed, inclusive of new resource mobilisation and fundraising models; in its present state this document remains ambiguous, and as they say ‘the devil is in the details’.

Make it your business to read the Declaration and Resolutions on the NPO Summit and a watchdog of the MTT. Collective plans for action will be presented to the Minister on 30 January 2013. Once the Minister gives the go-ahead,the DSD will configure a budget based on MTT proposals to Parliament. In an ideal world the NPO Directorate would be independent of a Ministry, as proposed by civil society in 1995.

New lady boss at lotto

Good news proliferates at the Lottery now that Charlotte Mapane has been appointed as the new CEO.  The chairperson, Professor Alfred Nevhutanda, played a dual role of ‘referee and player’ for nearly two years which raised a number of eye-brows on compromised governance and conflicts of interest. Mapane was formerly chief financial officer (CFO) at the South Africa Broadcasting Corporation Radio, so if she could survive shenanigans at Dithering Heights for 17 years then this job will be a walk in Hatfield Gardens (the park). Congrats madame CEO.

Recognition and awards

In October the Southern Africa Institute of Fundraising (SAIF) will be hosting its 11th Biennial Convention in Cape Town: ‘25 Years of Excellence in Fundraising’.  With a total of 25 speakers,11 international, it might be worth checking out. SAIF has also joined hands with the Resource Alliance and will be launching the first-ever Southern Africa Fundraising Awards next month, celebrating success and rewarding excellence in the SADC region, so get creative and enter the contest.

Get ahead of the game!

Lessons learnt from United States President, Barack Obama. Be aware that political parties have commenced fundraising campaigns for the 2014 general elections and will bombard social media and utilise all the latest hi-tech devices.

While preparing your long-term plans do not forget to align your key objectives with those of the United Nations Millennium Development Goals (MDGs) as these will remain a metric for development beyond 2015.

Also to get to grips with the spirit of the National Development Plan and align your future works with these objectives and enabling milestones for 2030.

“The National Development Plan is a plan for the country to eliminate poverty and reduce inequality by 2030 through uniting South Africans, unleashing the energies of its citizens, growing an inclusive economy, building capabilities, enhancing the capability of the state and leaders working together to solve complex problems.”

Finally, Hildy Simmons, a philanthropic advisor and former managing director of JPMorgan’s corporate philanthropy programme provides a darkish view, in verse, of what complacency among us will produce:

Still seeking money from all the same places

And hoping that new donors somewhere appear,

Still trying to define impact and dance to funder tunes –

Benchmarks, deliverables, scale are the items needed to be held most dear.

Aging (and tired) executive directors (and organisations) with boards not fully engaged,

Young (know it all?) programme officers wanting to find and fund the next ‘new’ thing…

Expectations of results in a hurry, with little sense of how long real change takes,

A field always playing “catch up”, does any of this have a familiar ring?

In a nutshell:

• Be alert, don’t be complacent;
• Keep your nose clean and honour reporting procedures;
• Lead from the front in raising funds, build competencies from within;
• Strategise for tough times and plan accordingly;
• Grow philanthropic giving and ubuntu in your community;
• Build relationships now, the money will follow; and
• Keep an eye on the MTT.

– Ann Bown is financial sustainability adviser and trainer at Charisma Consulting.