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winsight 05 Meeting challenges in resource mobilisation

Meeting challenges in resource mobilisation
The load you put on your head by yourself is a load you can carry.
~African Proverb
Judge: ‘Why did you rob the bank?’ Prisoner: ‘That’s where the money was, your honour’.

Individuals and institutions, corporate enterprises and people’s movements share the same need for resources: human, material and financial. The challenges of accessing resources have always been complex for organisations and movements of the poor. They need external resources—human, material and financial—while retaining control over their agenda, institutions and their people.

Though it seems a simple solution—asking for money from people who have it and would willingly give—there are several hurdles to actually doing so, most of them self-reinforcing, and self-made. Cause based organisations often face ideological, value and systems constraints in raising resources. The challenge becomes acute since the poor often have limited resources, skills and outreach. In this note we will explore the challenges of raising financial resources, and how to face them.

1 The context and scope
1.1 The positions
There are different ideological and practical positions regarding individual and institutional fundraising. They vary from organisation to organisation (and movement to movement). Some of them are legal, for instance Indian trade unions and political parties cannot accept ‘foreign funds’. Some are ideological. Some make a virtue out of necessity. Whatever the underpinning reason, the positions broadly fall in the following categories:
• No funding at all. All funds must be raised through membership fees.
• Limited funding is possible, if it is ‘voluntary’.
• No ‘foreign funding’.
• No funding from government, multilateral or corporate sources.
• No funding from the ‘tainted’ industries: arms, chemical, liquor, crime, tobacco, but other corporate institutional funding is accepted.
• Any ‘local’ funding is accepted.
• Any funding is accepted.

1.2 Why do we refuse external funding?
The fear of dilution of the agenda, solidarity and ownership are at the heart of the debate.
• Somebody else will set the agenda.
• Loss of control.
• Become unsustainable.
• People will no longer contribute, they will only expect to receive benefits (dilution of ownership).
• Accountability will be towards the donors, (dilution of internal accountability).
• The struggle will get diluted.
• Resources will need to be diverted for meeting the donor requirements.

1.3 The categories of donors
There are two primary categories of donors: individuals and institutions. They support for various reasons—out of sympathy, the desire to support or for solidarity. Each of these result in different expectations and rewards for the donor and from the recipient.

Donor motivation and accountability need to be factored into any resource mobilisation strategy. Given the diversity in donors, it is strategically important to know what to expect, from whom, for what and when. None will give for causes to raise an income or ensure assets above their own. The best is the solidarity donor who would want the standard to be equal to their own (at most) or at least to human rights standards.

2 Addressing these concerns
When we cannot find supporters within our friends, we must find supporters from amongst our enemies.
Japanese proverb

We must deal with the world as it is to create the world as we want it to be. Solutions need to be consistent with values, and not conflict with other objectives. At the same time, they need to be rooted in the social reality of the day.

2.1 Ideological
In an age of globalisation, international solidarity is a necessity not an optional extra and certainly not a luxury. The quantum of funding can be restricted in both absolute and relative terms (see Quotas and sub-quotas below). It could also be dependent on the need (see A good, strong financial system below) and the absorption capacity of the organisation at different stages of its growth. Funding in excess of absorption capacity can be catastrophic, especially in the organisation’s formative years, but potentially at any time.

2.2 A good, strong financial system
Any enterprise, whether using public money or not, always needs good financial systems. These financial systems need to be of a higher standard than the generally accepted norms. This financial system, with qualified professionals, will give a good projection and a realistic estimate of the financial outlay and cash flow required. The senior management can then identify potential sources of income.

2.3 Decouple fundraising and agenda setting
This used to be done in the newspapers where the editorial staff were distinct from the marketing department that sells advertisement space. This was to prevent advertisers from influencing the news coverage and the editorial department. Both departments used to have strong links with the circulation department.
Similarly, the decision makers need to be insulated from those raising funds. The fundraisers need clear guidelines as to which mode of fundraising is permissible (see 1. The positions above). The chief of the organisation is often the chief fundraiser also. Though the CEO could meet with traditional donors, it would be best to have them vetted beforehand to avoid surprises at a later state.

2.4 Quotas and sub-quotas: Restrict financial power of single donors
Diversified sources of funding are an important hedge against wide variations. There could be caps on single donors (not more than 1% of the total outlay) and even sectors (not more than 30% from any particular sector—private, public, individual or corporate—and within it not more than 5% in a sub-sector: 5% from the telecom sector, 5% from housing, 5% from services etc).

2.5 Separate resource modes for different operational modes
A good rule of thumb is that at most 25% of the organisational expenses go towards ‘awareness’. At least 75% should go towards actual services. Activists support (full-time/part-time, salaries, social security) could be raised separately, as also operational costs. The ‘services’ budget could be given directly to the members by the government, but monitored by the organisation. (for instance housing, quality schools, health facilities etc).

2.6 CUTE fundraising
In all fundraising, the following four principles need to be followed.
• Communicate your work. Communication is always the first step towards fundraising, and always precedes it. Once you get the money, communicate your gratitude and what you used it for. In most of the avenues mentioned below, your cause and organisation visibility and credibility is vital.
• Uniqueness of the organisation must be highlighted. Emphasise the USP (Unique Selling Proposition). Explain why the work you are doing needs to be supported.
• Transparency in work and use of funds.
• Easy to donate to. Once a person is interested in donating to your cause, they should be able to do it quickly (before they change their mind!), conveniently and easily—if possible from the comfort of their home or office. Oftentimes, giving in kind is easier. Remember to ask only for a small amount. Small, regular contributions are better than larger, irregular ones.
Use technology—for instance the internet—to make giving fulfil these requirements and make it as easy and simple for those who want to contribute to do so.

3 Avenues for fundraising
If you can dream it, you can do it.
~Walt Disney
There are several avenues for fundraising. Here are a bakers dozen of the best. They all need to be used in combination for the best results. A prerequisite is that the cause and the organisation must have already built up credibility and brand recognition. If not, a good communication strategy needs to be developed and the communication and financial systems need to be in place first.

3.1 Institutional grants
Institutional grants can be from government, bi-lateral, multi-lateral, international or private sources. They have their set criteria in terms of geographical and sectoral areas of support, recipient standards and governance structures. The national and state governments, government agencies, UN bodies, foreign governments and institutions, national and international funding individuals and institutions fall in this category.

3.2 Fees: ‘membership’ and ‘service’
The membership fee (or the user fee) should not be token. This is specially difficult in organisations that seek to serve the poor. The poor cannot pay ‘market rates’. However, there could be differential membership fees. The membership fee could be annual or lifetime. Either way, it should not been so nominal as to be inconsequential.
The other source of ‘in house funding’ would be a ‘service fee’. This fee would be charged at a flat rate for every service that the organisation obtains for its members. So a member would pay Rs 10 as annual membership fee (to be paid yearly, whether or not any services or benefits are obtained in the particular year), and Rs 100 for getting a ration card and Rs 75 for electricity connection as and when these services are availed of through the organisation.
The total fees (membership and service) should work out to about 10-15% of the total annual budget, and preferably cover all the running costs (salaries, maintenance). The service fees, apart from keeping the organisation in good financial health, also keeps the organisation disciplined in agenda setting. Clear goals and deliverables to the community alone will ensure that the services offered are of relevance to the membership, and that there is sufficient attention being paid to their material needs.

3.3 Sale of services
Organisations can sell their services and expertise and use the proceeds to further their mission. Most of the time organisations give away their expertise for free (for instance in government committees) instead of charging for them (as academic and corporate institutions do in the same committees) in the vain hope that it would further their cause. It does not. In formal relationships, what is not priced is not valued. And, all too often, the higher the price the more the perceived value.

3.4 Dual use assets
Organisations often build only sufficient assets to reduce avoidable recurring costs, such as rent. They choose to be in the periphery of the cities for this reason. However, they could have a big hall that could be rented out for weddings and other community functions. This hall could double as a training centre or crèche when not in commercial use. Another option is to have the frontage as commercial with dual use infrastructure at the back.

For instance, most NGOs would be the first to use the internet, or know about government schemes. Having a paid membership to access these services not only brings revenue, but enables close touch with the local community. This would be regardless of pay-per-use (as internet/copying kiosks) or as periodic memberships (monthly, annual, life) for the reference library. A good collection of text books either for borrowing or as a book bank, easily sourced from outgoing students, would add to the pull factor.

Since the urban growth would ensure the appreciation of value as the area becomes more ‘central’ this is a virtual win-win situation, keeping well above inflation. Getting maximum land, even if kept vacant, would add to the income of the organisation since parking space is at a premium in urban areas.
Contrariwise, rented accommodation is bound to push the organisation perpetually to the periphery.

3.5 Events
Events can be general events that contribute a share, or all, of the profits to a cause or specific ‘fundraisers’. The charity sales, the special dinners, the balls, special screenings, plays… are all specific fundraising events. The ticket collection, less the actual expenses, can go to promote the cause. If the expenses can be sponsored, then the entire collection can be ‘profit’. The public has ‘fun’ while contributing to the cause.

Co-branding events, such as awards, summits and conclaves can be done with sponsorships and partners. Negotiating with the professional network could result in the a part of the income from their annual industry meet being given for the cause.

3.6 Outsourcing: Professional fundraisers and co-branding
The use of professional fundraisers is not particularly liked within the non-profit sector. The use of dedicated professionals is countered with the idea that ‘fundraising should be also awareness creation and mobilisation’. Even granted that it be true (though we would encourage organisations that hold to this position to reflect on the questions: if so why didn’t it happen?), it does not negate the use of professional fundraisers, despite the ‘outsourcing’ label.

Professional fundraisers can be employed either on a flat fee basis, or on a percentage of the amount raised. The first is more ‘cost effective’, but the second might lead to more funds being raised due to the incentive.

3.7 A rupee a day and payroll giving
Giving must be as regular and as painless as possible. Payroll deduction and automatic transfer from the banks is the best option. This can be from the members or from others who would like to contribute. Having ‘mandate forms’ from different banks handy to get the approval for the automatic transfer helps to immediately convert the interested person into a regular contributor. Though automatic ‘fund and forget’ painless giving does work, constant interaction enables better returns in terms of money and support. Ideally, friend making should precede fundraising. Remember, small, regular contributions are better in all ways than erratic bigger ones. The first helps institution development, while the latter is destabilising.

3.8 Legacies
These are contributions made after the life of the donor. Most would be bequeaths in a will for a sum to be paid to a specific organisation. It could also be single premium life insurance payments of long duration—for instance when a member’s child gets a job with the organisation as the nominee/beneficiary. It is not so common in India, but has considerable success elsewhere.

3.9 The internet
Most of those with disposable income would have access to the internet and the credit card. Have a website (or register with a charity website) so that those who would like to donate to the cause will be able to do so with one click.

3.10 Credit cards, wealth management and financial services
Co-branding credit cards where a portion of each transaction is given to the cause is a ‘painless’ method of creating a steady income stream. You could also ensure that donation to your organisation/cause is listed as a way to redeem ‘reward points’.

Appeal letters could be written directly to the rich (High Networth Individuals, HNIs). The credit card companies would give you a list of their high spenders (platinum card holders). The organisation brochure with an appeal for support could be mailed along with the credit card bills. Banks and financial services institutions charge a fee for some of these services. Ask for the lowest rates, since the appeal is for a cause rather than commercial marketing.
Banks could be tapped to donate Rs 100 per account opened or fixed deposit during March to those working on women’s empowerment, May for labour, September for education or teachers, October for farmers and November for children.

3.11 Loose change
Tourists, compulsive shoppers have loose purse strings. So have collection boxes for their loose change at airports, restaurants, shopping malls and tourist destinations. Unfortunately, pilgrim centres normally collect everything for god—though people tend to give more during festivals, no matter where they are.
There could be appeals on specific anniversaries so that people give to your organisation on the occasion of their birthdays, anniversaries and other significant dates. This works well for orphanages (feeding during anniversaries) but some others have tried it with varying success.

3.12 Volunteers
Reducing costs is an important part of fundraising since every rupee saved is a rupee that does not have to be raised. Deploying volunteers helps reduce the costs of most functions, and access quality skills. This cost savings can be substantial. it is possible to have a good quality website designed and online totally by volunteers. It is best not to use volunteers for core functions though.

3.13 Family and friends
Family and friends are our strength. We turn to them first and last. We assume that you have already got the maximum contribution from your friends and relatives. Ask them for small, regular amounts rather than bulk amounts.

4 The legal workarounds
‘For private circulation only’… ‘Suggested contribution….’
A good financial governance and accountability system should be in place before any public money is accessed from any source whatsoever. That does not mean that it has to be cumbersome, or that the organisation should become rigid. The systems should support the organisation fulfil its mission in the best possible way. The accountability and reporting systems must be transparent, rigorous but light-touch.
Given the virtual criminalisation of foreign monetary support for social change in India, there is a need to be innovative. There have been numerous ways in which the letter of the law can be followed, while adhering to the promise of social justice enshrined in our constitution. The above disclaimer on books and other publications by NGOs is a classic example. Some of them enhance organisational capacity and deepen leadership.

4.1 Creating multiple entities
Trade unions can form charitable trusts to provide services to their members and union. Being separate legal entities, these charitable trusts can receive external support and, if registered with the Ministry of Home Affairs, even from foreign sources.

The additional benefit is that these services are delivered professionally, with a very specific target, addressing a very specific need. This is the most ‘efficient’ service delivery possible. Delivery of services enhances the managerial and professional skills of the core community, and they do not have to ‘wait till the revolution’ for the results.
The relationship of equals, such as a network of organisations registered with the Ministry of Home Affairs eligible to receive foreign funds, helps in democratising the relationships, flattening hierarchies of capacity, responsibility and risk.

4.2 Scholarships, fellowships and activist support
Some institutional supporters give ‘scholarships’ or ‘fellowships’ for the activists. This too has very little legal restriction, but for the upper limit. Individuals could be asked to support activists either individually or collectively. It becomes easier if the organisation is registered with the charity commissioner and the income tax office so that tax breaks can be offered as an incentive to donors.

4.3 Accessing awards
The law permits individuals and institutions to accept awards (both national and international) even without registration. Applying for them should be seen as fundraising, since these awards are meant for solidarity and support for fraternal work.

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