Your mission or your money staying on course and staying sustainable
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This document discusses sustainable funding for organizations. It defines sustainable funding as having vision, mission, values, a spectrum of income options, organizational improvements, focused actions, delegation of responsibilities, and funding goals. Successful sustainable funding is suitable, stable, and sufficient. It fits the organization's mission and strategy, comes from a range of sources to avoid risk, and meets organizational needs both now and in the future. The document provides tools for conducting self-assessments and analyzing income sources to help organizations develop sustainable funding strategies.
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Your mission or your money staying on course and staying sustainable
- 1. YOUR MISSION OR YOUR MONEY? STAYING ON COURSE AND STAYING SUSTAINABLE LEAH SELINGER Drinks sponsors: Lead sponsor: Co sponsor: Media partner: Digital partner:
- 3. More than ‘just fundraising’ More than ‘just financial management’ All the elements that keep your organisation nourished 3 WHAT IS SUSTAINABLE FUNDING?
- 4. 4 THE SUSTAINABLE FUNDING STRATEGY KITE Vision Mission Values Income Spectrum options Organisational improvements Focused actions Delegation and responsibilities Funding goals
- 7. 7 SUITABLE • Fit with your mission and vision • Align with ethical and legal requirements • Fit with your strategy / strategic vision • Reflect the resource available • Align with the risk appetite of the charity’s board
- 8. 8 STABLE • Range of income sources • Phased to avoid a ‘cliff edge’ • Restricted vs Unrestricted • Multi-year / ongoing income opportunities • Accurate forecasting to manage risk
- 9. 9 SUFFICIENT • Meet organisational needs and strategy • Needs are prioritised and clear • Full cost recovery models are used • Forward thinking – not just in-year income
- 11. SUSTAINABLE FUNDING TOOLS Lead sponsor: Co sponsor: Media partner: Digital partner: Drinks sponsors: SELF ASSESSMENT
- 12. 12 THE SUSTAINABLE FUNDING STRATEGY KITE Vision Mission Values Income Spectrum options Organisational improvements Focused actions Delegation and responsibilities Funding goals
- 13. THE INCOME SPECTRUM Gift Economy Grant Funding Contracts Open Market Donor Funder Purchaser Consumer ASKING EARNING
- 15. NCVO TOOLS – SELF ASSESSMENT 15 https://knowhownonprofit.org/funding/fibasics
- 16. NCVO TOOLS – SELF ASSESSMENT https://knowhownonprofit.org/tools-resources/income- diversification-tool/
- 17. SUSTAINABLE FUNDING TOOLS Lead sponsor: Co sponsor: Media partner: Digital partner: Drinks sponsors: INCOME ANALYSIS
- 18. MISSION VS MONEY On mission Off mission Makes money Requires subsidy
- 19. Existing Market New Market Existing Product New Product Ansoff’s matrix MAXIMISING YOUR POTENTIAL
- 20. 20 WHICH WAY SHOULD YOU LEAP? What skills do you need? How do you identify opportunities? What weaknesses would undermine you? What resources are necessary?
- 21. ANY QUESTIONS?
- 22. THANK YOU Lead sponsor: Co sponsor: Media partner: Digital partner: Drinks sponsors:Leah Selinger @leahselinger leah.selinger@ncvo.org.uk
Editor's Notes
- Introduction This session is about NCVO’s approach to sustainable funding - what we mean by this, and an introduction to some of the concepts, and tools that are used to bring this approach to life. Big group, so not time to introduce yourself to everyone, but quick 2 mins to say hello to the person next to you? - Please can you share who you are, what charity you are representing, and one current income generation challenge you have - 2 mins each – then swap! 4 mins – then ask them to stop. Explain that there are lots of different orgs here represented –big, small, mix of income, reliant on one, mix of resource – one person, big team – however will often share the risk of mission drift… how do you stay true and make sure your income is sustainable in the long term?
- Income generation can be confusing! Some of the decisions you need to make can be hard – especially in tough times. With the loss of some income streams individual charities are having to make hard decisions and look carefully at their operations in order to make ends meet and keep delivering the service they know their beneficiaries or end users need. So how do you make sure that you take the right path, and stay true to who you are rather than following the money? NCVO’s sustainable funding approach is about making sure you build income generation into the organisation and make this possible and plausible. Today’s session is going to be about
- Sustainable funding is an approach used since 2000 – is about diversification, innovation in income, strategic approach, but most importantly is about a mission driven income strategy. And key to that is it is more than just fundraising or financial management – is about a whole organisation approach. If you know where you are going, and your income supports this – it will be sustainable. The random tangents wont de-rail you.
- This is NCVO’s sustainable funding strategy kite! It can serve as a way to think about a sustainable funding approach – and importantly makes you think about starting at the top, and working your way down.
- Before you EVER start with income generation – you need to get this top part clear! You need to be clear where are you headed – what are you trying to achieve as an organisation? That’s the M. V and Values. Me – consultant experience: I need help with fundraising / what do you need to raise money to do? / not sure / lets start with that then…. Cant convince someone else if you don’t know yourself! Mission led income generation is key – both to making your income sustainable, and convincing others you are worth investing in/ donating to! Then, what do you want to achieve with your income generation? Less reliance on one income source or type? Increasing your income? Being more efficient and increasing your Return on Investment? This has to be your starting point – and not, as I hear so often – “ooh, shouldn’t we look at crowd funding” (facepalm)
- There are three S’s which we think make your income generation sustainable – thinking about all these is the key! If your income generation approach ticks these boxes, then its much more likely that your income is going to follow your mission, and NOT send you off down a bunny run that’s solely income driven. As these are so important, going to quickly run through each, before getting you to have a go at some of the tools we have to make these a reality.
- Suitable income is just that – income that fits your organisation. What is suitable for you NOW may not be suitable for another organisation, or suitable in 10 years time. Knowing where you are, who you are ,and what your market is are key to defining what is suitable. How big are you? If your organisation is 3 full time staff, do you really have capacity to run a low level giving programme and service that – with all it entails? If you have a strong religious value within the charity, how might that impact on your income generation strategy?
- Thinking about the long-term is key. Getting good at analysing risk is essential.
- Do you know how much you actually need? Really? Really really? How do you know? Easy to think about this year when the cashflow looks wobbly or uncertain, but have to force yourself to look into the future. Is a £20k injection now worth more or less than a £10k injection every year for three years?
- This simple graph shows how different types of income can work together, and shows how the three S’s can apply. Example is an animal rescue charity who were over-reliant on legacy income which came in erratically and mostly unpredictably. Cashflow to cover ongoing ops costs was an ongoing challenge. They had one, under performing charity shop, but could see that there was potential to increase income with some investment in the shop (fit out, new POS, gift aid drive etc) having done an analysis and looked at the local market. The aim was to get to a point where sales income would cover ongoing costs, and and legacy income could be used for specific projects such as capital or infrastructure works. So the income they generated was Suitable – it was realistic and achievable and aligned with their operations. They had experience of both Stable – well, it was moving to this! Some flux in shop income, but legacy income could ‘shore’ this up Sufficient – would grow in line with operational cost rises, but legacy income could back fill.
- There are two types of tools we are going to look at now, some I will run over, and the others we are going to work through in your tables. First off are a series of simple tools which you can use yourselves and are available on the NCVO website.
- Back to the kite… There are two tools I want to show you to help you look at your income options, and how your organisation may need to evolve to be able to deliver these.
- The income spectrum sets out the main income generation methods, and runs along an ‘asking to earning’ spectrum. Regardless of where the money comes from - having a good relationship with the donor, funder, purchaser or customer is crucial. Working with gifts or grants, you usually define the aim of your work and ask for support to make it happen. With contracts and the open market, the purchaser or customer usually defines what they want to pay for and you earn income by meeting their requirements. ASK THE ROOM: Does any one have any thoughts about if any of these income streams may have more or less impact on mission drift? Answer is – they can all pull you if you don’t stick to your strategy! Gifts, come with hidden agendas/servicing the donor… funder, squeezing to fit the offer… contract, derailed by excessive paperwork.. Open market… follow the money/overextend Within the range of options there is enormous variety and possibility. Sustainable funding isn’t the same for every organisation. It may involve all these income streams, or just some of them– so diversification across the spectrum, or if that is not possible or appropriate, within a particular stream or streams. Income from sponsorship, membership and fundraising events can be gifts or can be in the open market. It depends on whether the person or organisation is understood to be getting a product or service in exchange for their money. If they are, they are a customer, if not, they are a donor. This affects tax and Gift Aid. There are other kinds of income which fit more akwardly on this spectrum, but do fit in here! These include; Social investment - meaning the different types of financing used to create social impact. This includes loans, bonds, capital, equity and many other types of investment in voluntary organisations. Investment income - which includes rent from property, dividends, and interest on deposits. Investments by voluntary organisations generate a small but significant share of the sector’s overall income. Wise investment is part of sound financial management, as
- The sustainable sun tool is about recognising the different areas your organisation needs to be competent in in order to generate income. As we discussed before – its not just about fundraising or income generation being a ‘stand alone’ item – it has to be embedded in your organisation for it to be truly financially sustainable. Getting to grips with your organisations wider readiness is key to keep you on track. The sun tool looks at six areas to develop to support this approach and asks you to rate them from 1 – 10 based on a set of detailed criteria A strategic approach: ensuring how you raise funds and what you raise funds for supports your mission. B Income diversity: an appropriate mix of funding sources; donated and earned. C Financial management: understanding and managing costs, income and risk. D Communicating success: being able to show you are making a difference. E External positioning: knowing where you fit, how you are different and how to tell people. F Relationships: the relationships and partnerships with funders and others that you need to achieve your mission. CLICK SLIDE Once scored, can map onto the sun chart to see where you need to develop
- Where to find the tools!
- Additional tool for NCVO members on Knowhow NP – interactive planner
- Ok, so going to make you guys do some work now!
- So, given the title of this session, this is probably the most useful tool we use at NCVO! Two axis – one for mission and one for money! You can plot your income generation activities or projects on this chart see which quadrant it falls in. For example… - a grant funded project where the funds pretty much cover the costs and the activity is core to your organisation you would probably plot somewhere around here (CLICK ONE) (CLICK TWO) A successful charity shop might sit somewhere around here. (CLICK ONE) (CLICK TWO) it makes some money, and isn’t completely on mission, but serves to publicise your cause locally and recruit volunteers Where you don’t want to go is here – where we may plot something like delivering a contract for a local authority which isn’t really what you are doing, and doesn’t make you any money/or break even. You can use this matrix to help to make decisions. If you have several ideas, then prioritise the on-mission/makes money if you can. ACTIVITY On your table are some blank Mission/Money matrices, working with your neighbour/s have a go at filling one in for your organisation, where do most of your activities sit? 5 mins Feedback – get some input from room - useful tool? How can you use this in your orgs? - prompt if needed on ROI Fundraising activities themselves can be plotted here as they are (usually) intrinsically ‘off mission’ – so a fundraising ball will cost a lot of time and money, are you SURE it will make money? If most of your income is being generated ‘off mission’, where do the different things fall on the ‘makes money’ scale – which are likely to result in the best ROI? (MAY NEED TO DISCUSS WHAT AN ‘HONEST’ ROI MEASUREMENT IS)
- So the mission / money matrix is good if you want to review your current activities, but what about if you are looking at new ones? Another tool here… Ansoff’s Matrix A useful way to think about product diversification and risk. Green, amber and red risk. Top left is what you already do, but are you making the most from your existing services? Could you sell more of your existing products to your existing customers? Top right, is taking your current products to a new market. This might be in a different area of the country or a different “type” of person, e.g. working with young people or older people. Bottom left, stick with the people you sell to already, but offer them new services. This builds on your knowledge of your existing customers. Bottom right, try new something new with new customers. This is the highest risk strategy because you are not familiar with the product or the market. Use the tool with your colleagues to see where you should be concentrating your efforts with the resources you have already. Bright Kids example (DRAW IT OUT) Start product: Walking buses New product, existing market: reflective vests for kids (bottom left) Existing product, new market: more schools in the area and neighbouring areas (top right) New – but now developed and tested – product, new market: online sales of vests. (bottom right)
- Another useful tool if you are thinking about a completely new income stream is the Lillypad. This provides four questions for you to consider about this income stream to help you assess whether you are ready for it, and what you need to do to prepare for it. Can be a really useful way to assess whether you are ready – and identify the risks or challenges you need to overcome to make it a reality. ACTIVITY – handout both grids to each table, working with your neighbours again, discuss how you might use one, or both of these at your org. Will ask a couple of people to feed back.