2009 Forecast: Resilience and Change in Uncertain Times

Thursday, 15 January, 2009 - 08:50

The non-profit sector in South Africa can expect some tough times ahead. A decline in corporate giving, less government tenders, contract work and grants and a drastic cut in foreign funding streams will make 2009 a year in which NGOs need to tighten their belts and find innovative ways to weather difficult times. Whatever happens, you must strive to keep a philanthropic spirit alive in your organisation , remain focused on your vision, and you will survive.

Non Profit Organisations (NPOs) know how to cope in troubled financial times. But we also need to be realistic and ask ourselves, are we are in a recession yet? Is the full force of its might starting to bite or is this the calm before the storm? Will the global downturn hinder development in South Africa? We are in uncertain times.

The majority of NPOs know that they will never be in a secure financial space; we do the work and worry about money later. We are vulnerable at all times. It is how we define ourselves - there are no guarantees, so we adapt to cut-backs very quickly and are familiar with disappointment. Quite simply, our strength and purpose on this planet is to respond to the social needs in society and address injustice, to be humanist and make the world a better place. Often this is achieved with nothing more than the smell of an oil rag and lots of sweat equity. As long as we have basic resources and the help of good hearted volunteers we can survive any downturn. The private sector and government would be wise to watch and learn from NPOs and gain some tips on how to do things with little money.

A builder once said “a storm is a good time to spot leaks.” During these days of recession we need to be practical and introduce measures to work smarter and focus on areas that will influence the future, and plug leaks.  A good place to start would be a PEST analysis (Political, economical, environmental, social, and technological) and of course the good old SWOT.

Leadership in fundraising actions

There are a number of practical solutions that we can put in place. The first is for board members and leaders to take immediate action, prepare for the unexpected, become creative and prevent a sense of panic from setting in. Manage your image and public relations both internally and externally, reduce the risk of rumours, ensure that you provide the ‘truth’ about your situation, strengthen your case for support and what makes you unique.

We must continue to make our beneficiaries the priority and not the payroll. Become stingy if you have to, cut costs, fundsave wherever you can by securing goods in-kind; work harder at staying in contact with your donors, do not dilute your fundraising efforts but rather increase the number of “asks” and go all out to build new donor relationships. Do things with a stronger sense of purpose and use the internet to broaden your profile.  (Some NPOs have already indicated that they intend to cancel ICT upgrades or new IT projects but this would be shortsighted).

There is often a lag between the private sector being hit by a recession and when it starts to bite into the non-profit sector. Brace yourselves for corporate giving to decline by 15 percent during 2009/2010. According to the CSI Handbook (11th edition), collective corporate social investment (CSI) in 2008 was a record breaking R4,1 billion. On average there has been a growth of 10 percent per annum since 1998. However this trend will be shackled for a while but should fare well again in 2011. So those who depend considerably on CSI funds should negotiate with their funders to realign budgets as well as their fundraising strategy.

A more drastic cut will be in foreign funding streams (government agencies, international foundations and trusts) - probably as high as 20 percent, although some grantmakers have mentioned that health; HIV and AIDS and malaria allocations will remain as promised and could increase. Wealthy countries and affluent people are taking huge losses on their investments including moneybags such as Warren Buffet and Bill Gates, and the royals; the Queen of England and the Queen of Talk, Oprah Winfrey.

Government will pull back on their spending and become slower in dishing out the dosh, so expect a dip of between 8-10 percent in tenders, contract work and grants.

Individual philanthropic donors will, as always, remain a constant source although some may have to reduce their annual donations by around five percent and some may even want to stop their debit orders. This is where the biggest challenge remains for fundraisers who must encourage a smaller regular amount. 

All of this will become a huge blow to a number of non-profits between now and August, especially those who rely on grants and donations for survival. However, those who have established self-generating income projects will definitely find this to be a time for opportunities related to the FIFA World Cup and some other ‘big buck’ international events – perhaps in tourism, crafts and food. So be brave and take a leap and benefit during the 2010 period when we can expect some recovery with an estimated R55 billion flowing into the economy. Plan to keep your ‘business’ venture buoyant for at least five years.

If you have a significant capital campaign in the pipeline (more than R10 million) then allow an extra 2-3 years to reach your goal and extend pledge timelines. Plan to secure higher levels of non-financial gifts, prepare a wish list outlining specific needs, eg a new hospice might need 120 beds, a children’s park in a disadvantaged community might want 500 trees, and attempt to reduce your anticipated monetary values.

A bit of a glow for non-profits but a demon to some is that during lean times, people turn to games of chance, while hoping for a shift in their fortunes. So expect lotto players to increase which in turn will swell the National Lottery Development Trust Fund (NLDTF) coffers.  Also some of the SMS competitions, for the benefit of charities, like Win-iKhaya and St Mary’s Hospital, ‘Swipe Your Card’ campaign, will probably feel some extra buoyancy.

Sharpen governance and accountability

When times are tough it is vital to demonstrate a higher level of diligence and efficiency as potential supporters will measure you on how you respond and honour commitments. Over 18,000 NPOs are in danger of losing their NPO registration status during 2009. Make sure that you are not among this soon to be de-registered group. Check that you have submitted all outstanding reports and financial statements on www.dsd.gov.za  and search the NPO database. If there is a problem, communicate with the NPO Secretariat as soon as possible. Whatever you do, do not lose your credibility.

Impact assessment is not simply about numbers but how you can prove that lives have been changed through your work. You might find it to be time consuming and costly but donors want it, partners expect it and Government demands it. So make it part of your organisational culture, a habit for gathering-up success stories and writing reports that are engaging, meaningful and insightful.

Elections – be heard, be aware

This years’ general election is as important as 1994. In some ways this will be a new era in South African electioneering. There is a big role for civil society to play this time round. All political campaigns begin with kissing babies, visiting old age homes, sincere and concerned faces about the environment and lots of promises that often are never realized. But if you have the opportunity to corner some of these key candidates hold them down and ask hard questions about plans for social upliftment, housing, health standards, job creation, land etc and make them accountable. The elections, to be held sometime between mid- April and early May, will also cause some amusement and amazement as political leaders wake up to the fact that there is a powerful and influential electorate. Now they will try to lure and seduce civil society leaders – be wary of their fancy talk but take advantage, if you can, of what they may be offering.

Barak Obama’s successful presidential campaign has been in parts attributed to new technology. With over 30 million cell phone users and 11 percent of the population accessing the internet in South Africa, we can expect our political parties to intensify electronic campaigning and also fundraising during this period. Their fundraising plans may also dilute NPO efforts for much sought after Rands.

Technology

More access to ICT will become a reality in rural Africa soon. We can also look forward to cheaper connectivity – probably a fraction of what we are paying today. Google announced it would back a satellite project to provide internet access to three billion people in emerging markets in Africa, Asia and the Middle East. The Sumbandila satellite which will be launched in March that will take scientific images of South Africa (whoops big brother is watching, keep your clothes on at all times). Then there’s Seacom, an undersea cable that will connect Southern and East Africa to India and Europe providing low-coast broadband. This will be operated by Neotel and should be half the price of current Telkom ADSL.

In 2002 the Global Scenario Group published The Promise and Lure of the Times Ahead.  The report speculated that the world would experience a financial crisis in 2015. We need to ask ourselves if this is it: did it arrive earlier than expected, or is there another melt-down in the near future? If so, how are we going to prepare ourselves and what do we need to include in our long-term strategies?

Be resilient, concentrate on keeping the passion alive within your organisation, remain true to your mission, expect things to slow down and projects take longer to achieve, think about the future and put plans in place. Whatever happens, you must strive to keep a philanthropic spirit alive in your organization and remain focused on your vision, and you will survive.

In a nutshell:

  • Leadership must show initiative
  • Do things differently, look for new opportunities
  • Revisit budgets and make adjustments
  • Seek goods in-kind rather than money
  • Communicate and negotiate with donors
  • Make your case for support stronger
  • Widen your donor pool and build relationships
  • Protect your credibility and reputation
  • Build your image and profile

And when you do feel a bit down, hum, whistle or sing the great lyrics of Bob Marley’s song, ”Don’t Worry, Be Happy”.

- Ann Bown of Charisma Communication, is a financial sustainability consultant, mentor and coach to non-profit organisations. For more information go to www.charisma.za.org

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