need for a new funding model for nonprofit organizations

Thinking about the future:

The need for a new funding model for

nonprofits

Presented by Marcus Coetzee

July 2009

Part 1:

The Problem

1. Pool of funding oversaturated

www.Flickr:com : Mrr182

2. Increase in numbers of NGOs

Size and scope of the nonprofit sector in South Africa, 2002.

…and this was only in 1999

3. Project funding is dangerous

• What happens in the gaps between funding?

• Who pays for the infrastructure needed to support projects?

• How big is the profit margin?

• Who pays when funding is late?

4. Financial management complicated

• Multiple donors, each

with their own reporting

requirements

• Overheads no one

wants to pay for

• Gaps between funding

but still bills to pay

• No profit margins

• Separate audits and

bank accounts

• Restrictions on use of

funding

www.Flickr:com : Walwyn

5. Fraction of impact

HDI Index from WorldMapper

Are you having more than 10%

of the impact you desire?

Part 2:

Some Good Ideas

1. Change your paradigm

2. Market, don’t fundraise

• Sell success, not problems

• Embrace web 2.0

• Demonstrate impact

• Package products

• Clearly define purpose and

outcomes

• Differentiate from competitors

• Grab PR opportunities

• Provide ROI to donors/investors

• Develop enticing brand

Abalimii

3. Earn income, don’t beg for donations

For example…

Social enterprises are well-established

in the United Kingdom:

• 55,000 social enterprises

• Turnover of £27 billion/year

• Employs 5% of workforce

• Government has a social enterprise

strategy and department of social

enterprise

• Legal form for social enterprises

(community interest company)

• Social enterprise funds (e.g. DOH

has £100 million in investment fund

for social enterprises.)

4. Hunt for the profit margin!

www.Flickr:com : Charles Fred

5. Explore new funding models

• Sell services/products to beneficiaries (e.g. All Grameen

Projects and A-Z Textiles and SoHCo Housing)

• Sell services to government (e.g. TADSA and NICRO)

• Increase paying membership (e.g. Fine Music Radio)

• Setup/buy and use businesses (e.g. Acumen Fund)

• Certify (e.g. Forestry Stewardship Council & Heart

Foundation)

• Increase individual donors (e.g. Doctors without Borders &

Greenpeace)

• Raise money from successful beneficiaries (e.g UCT

Alumni)

• Recycle resources (e.g. FeedBack and various community

recycling co-ops)

• Siphon money from businesses (e.g. Charity Wines or

other cause-related marketing projects)

6. Integrate into business systems

Tetra Pak

Timber Plastics recycles waste and employs

former prisoners

NICRO manages

rehabilitation

SASOL ChemCity

Green and low cost building materials

Fibre to Paper Mills

Earns income Provides

rehabilitation

Enterprise development and honouring responsibilities

Thank you

Good fortune, and hope we have

given you something to think about

Marcus Coetzee

www.MarcusCoetzee.co.za

Marcus.Coetee@gmail.com

0828799131