Topic 3: Finding new forms of income

Attracting new forms of funding can become a strategic imperative for your NGO,  enabling it to diversify revenue streams, mitigate financial risks, and unlock new opportunities for growth and impact. In this section, we’ll explore a range of creative strategies and approaches that nonprofits can employ to attract new forms of funding.

Attracting funding from impact investors and venture philanthropists can provide valuable resources and support for small NGOs’ programs and initiatives. By understanding investors’ motivations and criteria, articulating their impact and value proposition, developing robust business models and financial plans, building relationships and networks, demonstrating financial and operational effectiveness.Want to know more about how to attract Impact Investors and Venture Philanthropists? We will be launching an online course on this soon. Register your interest here.

Commercial contacts

Commercial contracts are services sold to traditional donors and generate income not in form of grants but as unrestricted. The benefit is that you may already have some good donor contacts you can leverage here. 

Just like any other business endeavour, securing contracts from commercial entities or service providers can provide a stable and sustainable source of revenue. Here’s how to approach this:

1. Identify a Relevant Services:

The first step is to identify the services or products you can offer that align with the needs of potential commercial or service contract partners.  Most importantly, the service or product must align with your impact mission. 

Take stock of your organisation’s expertise, resources, and capabilities. Consider areas where your NGO has a competitive advantage or unique value proposition. This could include specialised skills, technical expertise, or innovative solutions that address pressing needs or challenges faced by businesses or service providers.

A good example is a West African Peacebuilding NGO we work with which made and sold jewellery from the collected small arms. Another example is an East Asia NGO that MzN supported to develop an eco-tourism offer and sell premium agricultural products that come from the farmers the NGOs support. 

2. Research Potential Clients:

Once you’ve identified your core services or products, research potential clients or partners who may be in need of these offerings. Look for businesses, government agencies, non-profit organisations, or other entities that operate in sectors or industries relevant to your expertise. Consider factors such as their mission, values, priorities, and pain points that your NGO can address. Tailor your approach to target clients who are likely to benefit from your services and have the capacity to enter into commercial or service contracts.

3. Develop a Compelling Value Proposition:

Craft a compelling value proposition that clearly articulates the benefits and value your NGO can deliver to potential clients. Highlight your organisation’s expertise, track record, and unique approach to solving problems or meeting needs. Clearly communicate the outcomes or results that clients can expect from engaging your services. Emphasise the value proposition in your marketing materials, proposals, and communications to attract the attention and interest of potential clients.

4. Build Relationships and Networks:

Building relationships and networks is key to attracting commercial or service contracts. Attend industry events, conferences, trade shows, and networking opportunities to connect with potential clients and partners. Leverage existing relationships and partnerships to access decision-makers and influencers within target organisations. Cultivate trust, credibility, and rapport with potential clients by demonstrating your organisation’s reliability, professionalism, and commitment to delivering results. Invest time and effort in building long-term relationships that can lead to fruitful collaborations and contracts. There is no short-cut here. 

5. Customise Proposals and Presentations:

Tailor your proposals and presentations to the specific needs and preferences of each potential client. Research the client’s organisation, industry, and challenges to understand their context and requirements. Customise your proposals to address their unique needs, priorities, and objectives. Clearly outline the scope of work, deliverables, timeline, and budget for the proposed project or contract. Use case studies, testimonials, and examples of past successes to demonstrate your organisation’s capabilities and track record. Present your proposal in a professional and persuasive manner that highlights the benefits and value of engaging your services.

6. Demonstrate Quality and Value:

Deliver high-quality work and consistently demonstrate the value of your services to clients. Focus on exceeding expectations and delivering results that contribute to your clients’ success. Provide regular updates, progress reports, and communication to keep clients informed and engaged throughout the project or contract. Seek feedback from clients and incorporate their input to improve and refine your services over time. By consistently delivering quality and value, you’ll build trust and credibility with clients, increasing the likelihood of repeat business and referrals.

7. Negotiate Fair and Competitive Terms:

Negotiate fair and competitive terms for commercial or service contracts that benefit both your NGO and the client. Be transparent about your pricing, rates, and terms upfront to avoid misunderstandings or conflicts later on. Seek win-win outcomes that align with the interests and objectives of both parties. Be flexible and open to negotiation while ensuring that your organisation’s needs and priorities are adequately met. Establish clear expectations, roles, and responsibilities in the contract to minimise risks and ensure a smooth and successful partnership.

Attracting commercial or service contracts requires NGOs to identify relevant services, research potential clients, develop compelling value propositions, build relationships and networks, customise proposals and presentations, demonstrate quality and value, and negotiate fair and competitive terms. By following these steps and approaches, NGOs can position themselves as valuable partners and providers of services to commercial entities and service providers, thereby diversifying their revenue streams and achieving greater financial sustainability. Remember, persistence, professionalism, and a focus on delivering results are key to success in securing commercial or service contracts. Keep honing your skills, refining your approach, and seizing opportunities to grow and thrive as an NGO in today’s competitive landscape. Do good. BETTER!