Making predictions for the next 12 months in the third sector, the Cinderella sector, is like bungee jumping from the Orlando Cooling towers, you don’t know if you’re going to like it but you just have to do it!
2011 will be a year of rejuvenation for a number of South African non-profit organisations (NPOs) but you will need to be wide awake and cautious in your dealings. Sadly there have been causalities during the two-year financial downturn along with the demise of good community projects. The challenge from here on is in how we rebuild the fallen structures and strengthen capacity of those who have been surviving on a shoe-string budget!
As so many NPOs have limited human resources and monetary capacity they have been operating in crisis mode which has led to a situation of non-compliance with founding documents such as defaulting on the number of determined meetings or not holding annual general meetings or not having sufficient office bearers or not producing annual reports. Take note that your accounting officer needs to state in your annual financial statements that you have complied with the NPO Act and your own constitution during the period under review.
Panic has led some NPOs to the brink of a financial nightmare after making bad calls and not seeking alternative solutions. In one instance a well -known organisation went into overdraft to cover running costs which exceeded millions of Rands. They were recently cautioned by their bankers that the collateral to secure the overdraft had devalued below the amount owing! They have risked damaging their reputation and opportunities for new fundraising.
Donors never fund reckless debt or weak governance so make sure you have your reporting commitments in order and that your bank manager isn’t foreclosing on your assets.
Local is Lekker
The South African economy is improving and this means that it’s better to work on local resource acquisition rather than dream of American dollars and British pounds, these donations will not reach our shores for many years. Local business donors are also looking at ways and means to assist non-profits by offering technical and capacity building such as volunteer programmes, in-kind goods and services – so rather than seeking money see how you can reduce your budget by asking for non-financial resources.
Corporate Social Investment (CSI) will once again have to cautiously award grants as companies in sectors such as construction, mining and financial still haven’t yielded sufficient profits. However, one of the big international players in the construction sector, Murray and Roberts reported a 27 percent increase in their turnover in 2009 and distributed R22.2 million last year to maths, science, numeracy, literacy and environmental programmes. The 2010 turnover will not be as buoyant as the previous year and this could mean a drop in the 2011 allocation to CSI. This is why NPOs need to be vigilant and monitor business trends, get to grips in how CSI budgets are determined and if they are aligned to the norms of BEE Codes of Good Practice and Industry Charters.
The CSI Handbook for 2010 reported that R5.4 billion was spent on CSI initiatives, which means no growth, yet it was better than we predicted. Some NPOs were able to state a new source of funding or an increase from the corporate sector, yet others reported huge reductions in grants or withdrawal from projects. Those that were successful attributed this improvement to more concentrated efforts on brandraising (image building, public relations, marketing and fundraising) they also highlighted networking as important and being involved in burning issues. For instance the Endangered Wildlife Trust was quick to promote their Rhino Security Programme during the intensified media frenzy over the senseless and ongoing slaughter of rhinos. This situation made people angry and anger is one of the motivators for giving. With an increase in donations from business and individuals EWT is now able to be advocates and protectors of these majestic animals.
Individuals are the key to sustainability
Individual donors will continue to support their chosen causes but may reduce the amounts, however, we do believe that from 2012 donations from this market will be more generous. So keep working on those relationships and nurture donor loyalty.
Be wary of a new (to South Africa) concept in fundraising known as a Face2 Face also called Chugging (charity mugging). This is street or door to door fundraising and requires teams of sales people to recruit individuals to sign up monthly debit orders. Initially it seems like a great idea for acquiring new individual donors and so it can be if soliciting is done by your own members and not an external company. It’s certainly more sophisticated than Tin Shaking and has been successful for organisations like Greenpeace and Medecins Sans Frontieres in South Africa. If you decide to go this route be aware that there’s no current regulation for this practice and no guidelines to how the sales team gets paid. It is heavily regulated in the UK and Australia and just being tested in the USA - it can be the quickest way to lose friends and has even stirred-up heated debates on the BBC with regards to level of sincerity – it’s risky so be careful.
Government – friend or foe?
Jobs, jobs, jobs must be created for those living in poverty and the NPO sector could be the partner that government is seeking to help generate opportunities. We have the ability to churn out work, build social enterprises and organise communities. This sector employs an estimated one million ‘big hearted’ people, more than mining and probably on a par with tourism yet the politicians still haven’t mentioned us in dispatches. Is the New Growth Plan another fairytale from government, will Minister Ebrahim Patel turn from a frog into a handsome Prince? He is a lovely human being though!
One of the strengths of our community based organisations is their ability to do great work by reaching the poorest of the poor on small budgets. A good example is the thousands of Home-Based Care givers, many of whom work in some of the remotest parts of the country and walk kilometers across difficult terrain to nourish and attend to the needs of the sick. During the election period local councilors would be wise to talk partnerships and find ways of working together (now where have we heard that strap-line before?). Just a word of caution to CBOs; when entering a contract with government you must ensure that it is financially viable, do your own budget and don’t do more work than stipulated in the agreement. Three years ago a large health NGO was forced to train more people than the contract stipulated with only a promise of recompense and ended up R1 million down the tubes.
Project Literacy, a national literacy organisation, anticipated a further roll-out of a three-year ABET programme during 2010 but this was put on hold after the Education Department was split into two and the contract, originally signed by the Department of Labour, was relegated to the new Department of Higher Education. Twelve months later the contract isn’t signed, the Director General has resigned and everything remains in limbo. Sadly 45 well-trained people have been made redundant, branch offices closed and 8 000 adult learners will remain illiterate! Working with government can be a blessing but you have to be prepared for political upheavals.
Just before the end of 2010 the Ministry for Women, Children and People with Disabilities advertised a number of high level vacancies – does this mean that things are starting to move? Will we now be able to communicate and walk together with the DWCPD or will requests for meetings from relevant civil society organisations still go unheeded and be ignored by the new Minister like the first appointee? It’s doubtful that any funding will be forthcoming but visit their website and read the five-year plan to find out how civil society fits in with the new thinking.
Perhaps it is time civil society started a pressure group for the establishment of a Ministry for Non Profit Organisations, it could be a melting pot for dialogue and entering into partnerships with government departments to support service delivery. Could the DWCPD be the beginning of this body or could the NonProfit Organisations Directorate become a Ministry?
Lotto Lolly Logic
We now have a set precedent in applying to the National Lottery Development Trust Fund for conference money after R40 million was awarded from the miscellaneous fund to the newly established National Youth Development Agency for an International Youth Festival that is oddly referred to as a socialist camp for anti-imperialist youth. The usual funding criteria and application process didn’t apply whilst the mandatory two years of financial statements was waived by the distributing agency as they presumably took into account previous financial reports from the merged entities of the National Youth Commission and Umsobomvu Youth Fund. So how did this request get through the system and how does it fit into the purpose of the NLDTF (National Lottery Development Trust Fund) as stated in its Roadshow presentation “The NLB (National Lottery Board) is committed to HELP more non-profit organisations to access NLDTF grants, especially those working in poorer communities.” Trustees please explain your logic?
In a nutshell:
- Love your donors and keep them close
- Be wide awake and don’t fall for quick fixes
- Brandraise and Hellraise – be heard!
- Stay true to your purpose of being and remain focused on accountability
- Be vigilant and make it your business to know what’s going in government and in business
“You’ll have more fun and success when you stop trying to get what you want, and start helping other people get what they want.” Dale Carnegie
- By Ann Bown of Charisma Consulting, a Management and Advisory Service to the Non Profit Sector specialising in financial sustainability. www.charisma.za.org