Following on from the work stop on US funding and the removal of American aid to South Africa, amongst other sudden changes over the last few months, it has become abundantly clear that an organisation cannot rely on any one particular donor’s funds for the sustainability of the organisation. The funding pool is getting tighter across the globe as the economic impact of COVID-19 reaches down the value chain and more European governments are focusing on national interests and reducing foreign aid.

It feels a little like a landslide. First there are a few pebbles that roll down the hill and everyone looks up but carries on with life. Then more and more stones come loose, and the hillside gains momentum. Before you know it the whole side of the hill is coming down. You could either be buried under the rubble or ride the wave on a board… it really depends on how prepared you are and how closely you are watching the signs.

The signs are there… even committed funding isn’t reliable as government agencies (not just the USA) pause, reduce and cancel funds to the intermediary grant-making agencies we contract with. It is no longer prudent but essential to diversify income sources. There are 9 categories of income:

• Multi-lateral Grant Making Mechanisms
• Foreign Governments
• Foundations (Local and Foreign)
• Corporates
• Local Government Departments
• Individuals
• Events
• Income Generation
• Passive Investment Income

How spread is your income across these categories? Not every category is relevant for every organisation. Your leadership team needs to carefully consider what would work best for your organisation and focus your time and energy on the most productive income streams. Within each category should also be a level of diversification to prevent dependence on a few donors for the largest percentage of your budget.

In these uncertain times, we cannot continue as before; we need a clear strategy that guides the leadership team’s efforts in building funding pipelines in various income categories. Please contact us if you would like assistance in developing a funding strategy to identify the income sources best suited to your organisation and the processes required to engage each category. Hint: each one is different! Understanding the different donor types is key to financially successful relationships. I’ll talk about that more next time!