Funding Environment Slowly Improving

funding npos donors sustainability
Wednesday, 5 March, 2014 - 11:17

A study conducted by the GreaterGood South Africa show that while things are better for NPOs in SA, many are still challenged by among others, funding cuts

Findings from a follow-up to the NPO Funding Cuts and Job Losses survey, conducted by GreaterGood South Africa in October 2013 show that while things are better for nonprofits in South Africa many are still challenged by funding cuts, resource constraints and an uncertain financial position.

Although fewer organisations report funding cuts - and the scale of the cuts has reduced - the overall funding environment does not appear to be significantly better for most nonprofit organisations (NPOs) we surveyed. Over half (54 percent) of the 467 organisations that took the survey reported significant funding cuts in the previous year which is significantly down from 80 percent in the 2012 survey.

“It's a low long slog – there are no magic solutions. You have to build a loyal support base of individuals.”

Things are no better

But organisations also reported an average of R4 million in cuts per organisation. Almost half (46 percent) said that although the funding environment had worsened, they were surviving; 26 percent said the situation had stayed the same; and 13 percent said it was getting better. An equal amount (13 percent) said it is much worse.

Funding cuts were reported from all funding sources, with the National Lotteries Board topping the list again (40 percent), followed by the corporate social investment (CSI) departments (39 percent) and individuals (34 percent). Only 17 percent said cuts had come from international donors.

“Although it might look as if our financial situation became stable, it is because of the retrenchment of three staff members, so it looks more stable because of reduced core costs, but the remaining skeleton staff is battling to keep our commitments.”

Adapting Strategies

Qualitatively, it seems that the cuts reported in the 2012 survey have forced organisations to become more agile and better able to adapt their strategies in response. This has resulted in fewer job and services cuts. 33 percent reported retrenching staff (a total of 2 078 people) which equates to an average of six permanent staff and 17 volunteers per organisation and 38 percent reported having to cut services to beneficiaries as a result, down from 64 percent in 2012.

But the job losses are still significant, especially among volunteers, many of whom rely on stipends to survive. The sector is a major employer and the shedding of jobs remains a concern.

“We are struggling to cope as personnel do not have the time to do fundraising. The subsidy from the government is not enough to pay salaries. The salaries are way less than that of the same posts in government.”

Uncertain Position

Perhaps most concerning is the fact that the immediate financial position of organisations has not improved with 34 percent having enough cash to cover operating costs for six months (36 percent in 2012) and 16 percent reporting no operating cash at all (17 percent in 2012).  While sustainability planning and well-managed finances with provision made for saving are crucial to survival, it seems that few organisations have the breathing space that reserves can provide.

More needs to be done, therefore, to support and encourage organisations and donors to make provision for reserves that can see them through unforeseen funding cuts.

Survival Strategies

Organisations are using a wide variety of tools to address funding shortfalls with the majority still submitting proposals (76 percent), 58 percent using networking and 48 percent fundraising events. Most organisations reported making significant changes to their structure, financial management and staffing to survive in the current funding climate.

Collaborative working and the building of networks and partnerships has gained ground as a strategy to survive the cuts, which highlighted the need to save for an uncertain future:

“The sustainability of today is the result of a deliberate strategy over the past 10 years to make our organisation not dependant on donors or government.”

Click here to download a summary of the key findings.

This article first appeared on the GreaterGood South Africa website.

NGO Services

NGO Services

NGO Events