Topic 2: Assessing the discrepancy between required and available income

This section explores the vital task of evaluating and strategising for financial well-being within NGOs. We’ll focus on the crucial aspect of aligning necessary income with current income streams, recognising its pivotal role in ensuring operational sustainability and successful mission fulfilment.

Below is a roadmap on how you can assess the income you have versus the income you need.

By systematically assessing the income needed versus the income available and proactively implementing strategies for income enhancement, your NGO can fortify its financial well-being, bolster operational resilience, and amplify its impact in serving its beneficiaries and communities.

What SORT of funding do we actually want?

Not all money is the same. The way it comes in is very important and could make the difference between our programme or organisation having an impact or not.

We’ll now learn about the “Look in”, “Look around” and “look ahead” strategy.

Look in

It begins with what we have. Perhaps you only have some initial funding from yourself, friends, or family. Perhaps you work for a large established NGO and have been given a budget to launch a new programme. Perhaps you’ve been operating for a few years and have received some local or foundation funding, but you’d like to move up to larger funding pots. In any case, in your upcoming funding applications and pitches, it is critical that you clearly present what you have and how the next step is a natural, logical progression.It also influences the type of funding you seek, as each type has its own set of conditions. So, take another spreadsheet and write down what funding you currently have, how long it will last, what type of funding it is, and what conditions or limitations from this funding you would like to remove.
You may have funding that covers some direct programme costs but leaves no room for innovation, training, or expansion. Or perhaps you don’t require grant funding at all but have a social business concept that could provide far more benefits than the NGO business model. In either case, make a list next to that spreadsheet of what you need more or new funding for. Don’t forget to ask yourself how much flexibility you require from this funding. Is it a two-, three-, or five-year plan that requires little change? Or do conditions change so quickly that you must be adaptable?
If you have had external funding before, then you will have likely applied for it. And if so, you might have also sent more than just a few proposals.
- Time to review them.
- Check back to see what kinds of funding you’ve previously been successful with. What are your most convincing arguments? What type of donor came through for you, and where did you not even receive a response?
- Put it on that spreadsheet. Any format will do!
What can we actually do for fundraising? Do you have a dedicated donor scoping and proposal production team, or do you have to fit it into your Friday afternoons? Checking and being clear about your business development capacities is critical for developing a realistic plan. It is pointless to focus solely on the largest donors, ignoring the fact that their application process is an overwhelming amount of work that you cannot reasonably handle. One option is to seek external assistance (including from MzN’s funding team, but at a cost). So, be realistic about your fundraising capacity.

Look around

In the step above, we looked at any existing funding you may have. That is definitely part of your donor base. But it could be more than that. To try to identify donors who might be interested in what you do or want to do, you should conduct a donor mapping. To begin a simple mapping, look up online which donors have supported similar programmes in your area. If you already have some donors, it’s a good idea to start with those who fund similar programmes to yours.
Finally, you might want to track donor, philanthropists and impact investors attendance at thematic conferences that match with your programmatic themes. Often you can also attend these online to learn more about what potential donors think. Ideally you are seen as or will become an expert in these areas who can also speak at such gatherings and publish noteworthy papers on your topics, gathering an audience.
Another good idea is to look into other NGOs that work in similar or adjacent thematic areas to yours. For example, the above-mentioned issue of homelessness is multifaceted, addressing issues such as employability, social welfare net deficiencies, and psychosocial support. Perhaps there are NGOs in this area with whom you can collaborate, form a programmatic consortium, and apply for funding together.

Now, let’s look at which funding options are best for you. As previously stated, funding is not free and is subject to conditions. But thankfully, there is a shortcut.

First, think about the characteristics your funding must have. You’ve already considered how much flexibility the funder must have; now let’s look at other characteristics. Examples include how much effort you can put into obtaining the funding, how long you need it for, whether you can repay it later or if you require charitable grants, or simply how much funding you need. Write these and other characteristics on the right side of a spreadsheet. On top, list the various types of funding provided by your donor audience (grants, investments, service contracts, etc.). Simply apply smileys to frowning faces in the grid.

To illustrate, your grid might look something like this:

Look Ahead

With all this done, you can:

List the donors that you identified above and
Shortlist your top three to five donors.

This shortlist should not be finalised, but it should provide you with direction for the next few months in your networking, learning, and funding application efforts.

Financially successful NGOs have a clear strategy for identifying key donors. They invest significantly more in these than others, precisely because they have completed the work described above to align their funding needs and preferences with the donors’ thematic and geographical activities. It’s a wise way to prioritise your limited time, energy, and resources.

In this section, we learned what funding we actually want, allowing us to make a more informed decision and prioritising funding partnerships that are more likely to succeed for us. This work provides a solid foundation for developing a business plan. Keep in mind that this is not yet a complete plan, including a donor map.

As your planning progresses, we recommend that you develop a practical yet comprehensive business development strategy for your new NGO, programme, or team. If you would like to learn more about this, please register for one of your upcoming courses here: