#14: Diversity in Funding: A Key Component of Sustainable Practices
“The moment we try to separate out things, we find that they are actually interconnected. This is why sustainable practices are necessary for organizations to have the most impact.”
Resource: Download our Quick Guide: Creating Diversity in Funding
In my previous post, a very broad description for sustainability was given. I shared that in the most simplistic form, sustainability is a framework that considers the 4 core columns- environment, society, economics, and culture- through a holistic lens as we seek to meet both current needs, while at the same time keeping the bigger picture (the future desired) in mind.
The Interwoven Tapestry of Sustainability
Two of my favorite quotes are from John Muir.
The first quote is:
And the second quote is:
There is so much wisdom in these simple statements and one that I think we often give little time to reflect on beyond the surface. At first glance, one might say these quotes are saying the same thing- but there is a subtle element of difference. Whether you slightly pull on an element or go further by attempting to fully separate it, it has an impact, whether intended or not. Additionally, nothing can actually be separated and looked at in silos because of the interconnected nature we live in; the moment you attempt to do so, any changes you make in that silo will create a ripple impact.
What a beautiful image regarding the need for sustainability and systems thinking within organizations!
When we think about sustainability and sustainable practices, all four of the core columns work together and impact one another. Therefore, as we seek to create solutions for problems or challenges we face, it’s important that all 4 of these columns - environment, society, economics, and culture- are taken into consideration because when we focus on meeting a need for one column, it immediately ripples and impacts the remaining three.
Sustainability Matters
Previously, I likened sustainable practices to the thread that binds all elements of an organization together: from the conception of vision/ mission, the values, governance, funding, program development, capacity building, relationships with various stakeholders, etc; without that thread, an organization risks becoming seen as segmented.
As I shared in my last blog post, the most common core column that organizations consider and tends to drive the decision making process is economics. What I find interesting, and is often dismissed, is that while funding is pertinent for organizations to move forward and be effective, without effective programming and intentional capacity building, donors are hesitant to invest.
In reality, for many organizations that fill the NPO and Education spaces, it’s 2 sides to the same coin. Intentionally designed programming and investment in capacity building* needs funding; and yet often funding cannot be found without intentionally designed programming and capacity building. As John Muir pointed out, the moment we try to separate out things, we find that they are actually interconnected. This is why sustainable practices are necessary for organizations to have the most impact.
*When I speak about capacity building in this sense, I am speaking in very broad terms- capacity building can have a variety of shapes and forms depending on the needs of an organization. Ultimately though, I’m referring to strengthening skills, resources, processes, and abilities of individuals/ communities etc so they not only improve, but achieve the goals they have, and ultimately thrive in their specific context.
Why Alternative Funding Streams Matter
In my prior blog post, I shared a trend I’ve seen the last several months. Many organizations have shared that the largest challenge they face is funding and finding funds has become their primary focus.
Identifying alternate funding streams is absolutely necessary in today’s climate for a variety of reasons. Organizations that continually build sustainable practices for alternate funding mitigate the risk from various changes and unforeseen circumstances they may encounter.
Those that tend to rely on one or two main sourcing streams often face the following challenges:
#14:
Diversity in Funding: A Key Component of Sustainable Practices
1) In the past year’s climate, an unprecedented amount of funding has been cancelled which has created unforeseen challenges for many organizations. Few had alternative sources of income to draw on and as a result, programs immediately closed or were greatly diminished.
2) When there becomes a reliance on only one funding source, it’s difficult to meet the organization’s mission when funding is taken away. By relying on just one source of income, many organizations have now found that they are starting to move away from their original vision and mission. Instead, they are contorting themselves to become whatever is necessary to receive funding. This often creates additional challenges and it becomes the start to an organization’s identity crisis.
3) The lack of clarity and faltering adherence to an organization’s mission creates confusion about an organization and its purpose. Many shared that while their organization was started around a fundamental vision, the drive to put funding as their number one priority has led to many questions around their purpose.
This creates new challenges and they find they are struggling to maintain trust with donors and the communities they serve. What often happens as an unintended outcome is that the door to skepticism begins to be opened; a lack of engagement with stakeholders starts to take place which often leads to less donors.
4) As many shared, grant writing, and potentially tapping into CSR programs are their main ways they seek diverse funding. However, funding from these avenues is limited and competitive; many organizations feel the need to continually reinvent themselves in an effort to ‘outshine’ and ‘win’ funding.
While these are good and standard ways to begin to diversify, they also bring their own challenges. Many times CSR programs and grants are related to individual donor goals with specific desired outcomes attached. These outcomes may or may not align with an organization’s purpose.
If intentionality is not a key element in the initial process of identifying potential funding opportunities, what often happens is that organizations begin to find themselves offering programs and services that may not initially relate to their stated purpose. Instead, economics has become the driving motivator for an organization taking on this grant/ or CSR collaboration. This then feeds back into point #3.
How to Diversify Funding
There is not a 1 size fits all when it comes to diversifying funding opportunities. However, there are some basic steps that every organization can take as they seek to build sustainable funding practices that ensure organizations can reliably pursue their mission.
Step 1: Conduct a financial needs assessment-
This is a diagnostic tool and should be every starting point; its key focus is to not only assess an organization’s current budget, but it also looks at things such as: operational costs, assesses funding gaps, analyzes revenue streams, and forecasts future needs
Step 2: Brainstorm diversified resource streams -
Diversified income streams will differ according to context; the key though is being open to new ideas- the cultivation of these ideas are often dependent on the type of questions you ask. Check out my blog posts 9, 10, 11, 12 where I talk about the different types of questions that are necessary in this stage and give examples of how they are used!
Step 3: Engage with your stakeholders-
Accountability + transparency= trust! Clear financial reporting and accountability mechanisms for staying true to the purpose of an organization develops trust. In turn that trust helps attract more funding opportunities and increases support for various purpose-driven initiatives.
Step 4: Invest in capacity building-
Capacity building is not just for the individuals that a program is serving, its reach goes further than that. When we move away from a linear perspective of ‘serving the other’ and the focus becomes the larger picture of what we desire to see for the future, it opens up opportunities that encourage the facilitation of pooling and leveraging resources, expertise and networks. As a result, the impact an organization has is not only amplified, but there becomes a broader sense of shared responsibility and mutual growth.
Step 5: Monitoring &Evaluating (M&E)-
To be fiscally sound, adaptable strategies is critical. However, these must align with the long-term sustainable goals that an organization has; therefore, economics alone cannot be the main driver for an organization. Rather, it’s vital that there is continual M&E for the financial health and its relationship to the other core pillars of sustainability (society/culture/ environment).
Final Thoughts…
Actively seeking diverse funding opportunities is crucial for organizations striving for long-term sustainability. By broadening their financial landscape, organizations can safeguard against uncertainties and ensure the continuity of their specific vision and mission. By embracing a variety of funding sources fosters resilience and opens doors to innovative solutions that can enhance impact.
