By Saveetha Matthews, Inyathelo's Advancement Officer
“The donor is an essential part of the organisation and cannot be viewed as someone separate with no ties to its activities.” – Inyathelo Pocket Guide, Understanding the Donor World.
As non-profits, we are being encouraged to think more like advertising and marketing professionals, strategically positioning our “products and services” (projects and programmes) so that they appeal to the “buying power” and needs of “investors”.
Donors see themselves as investing in our ability to meet our stated objectives, make an impact and effect meaningful social change. So, knowing what motivates people to give and how donors make decisions about what and who to fund should inform any fundraising strategy.
Research into South African giving has found that there are three main reasons why donors give. The first and most prominent is still the moral imperative. The second is to enhance the reputation of their organisation and the third relates to BBBEE – our Broad Based Black Economic Empowerment policy.
The codes have recently been revised, turning their focus away from charitable giving by allocating only 5 points to socio-economic development. In terms of points allocated, the code is now pushing skills development (20 points) as well as enterprise and supplier development (40 points). This means that although non-profits can no longer benefit directly (as they are not businesses), they can still act as a conduit by facilitating these development initiatives for a company.
Despite the BBBEE policy shift, Corporate South Africa is still the biggest funder of non-profits in South Africa. We derive 22% of our income from Business and CSI spend. Surprisingly, private individuals are next, contributing 15% of our income. We are also generating 15% of our own income these days by “selling” products and services. Foreign independent donors and our government both provide 11% of our income, with South African Trusts giving 8% and the Lotteries 7%. Foreign state donors are down to 5% and other non-profits also contribute 5% of our income.
So, what are donors looking for when it comes to choosing organisations and projects to fund? Well, one of the things they want to see is bigger impact. This means that as non-profits, we need to think about how we can expand the reach of our programmes and scale up our projects so that they touch more beneficiaries.
Another key trend is predictable funding. And it works both ways. Donors are publishing their eligibility criteria and financing levels upfront, spelling out what they are prepared to spend and over what period of time. Non-profits can benefit from this by either tailoring their own project spend to match these donor criteria or presenting donors with proposals that include predictable funding requirements for a three or five year period.
Donors are also rewarding ambitious vision by having a pool of competitive “incentive” funding available. They are prepared to allocate additional funds to non-profits who are able to prove that their work is making a significant or greater impact that anticipated.
According to Inyathelo’s online prospecting tool FundingFinder, Education still tops of list of sectors that donors are keen to support. 63% of grantmakers on the database support Education. Health is next at 48% and Children come in third at 32%.
And what about the type of activities donors are willing to fund? According to FundingFinder, the top five activities supported by grantmakers in South Africa are capacity development and training; Education; Donations in kind; Bursaries; and partnerships or collaboration with other non-profits. This means we have to look at how we can partner with other organisations to enhance and expand our work. Capacity development and training also give us the opportunity to generate some of our own income if we offer it as a service to other stakeholders.
Despite the drop in international and government funding over the past few years, it is encouraging to remember that South Africans are a nation of givers. Research by The Centre for Civil Society claims we remain highly motivated to give to local causes. Giving is ingrained in all South Africans and is not just the domain of the wealthy. As non-profits, we often ignore private individuals as a key source of income for our work, focussing instead on the big givers like foundations and corporates. Maybe it’s time we looked at how we can mobilise the support and resources of those we know and those who live and work in our communities?