Donors: Challenges, Funding and Relations
In this article
- Institutional Donors Challenges
- USAID Funding and best-practices
- Applying for Funding Opportunities
- Donors Relations and Engagement
A grants database, a donor search option, sample proposals, guidebooks on how to raise funds, a grants map, a deadline calendar, training from fundraising experts and an funding alert system are some of the methods/tools every day manager would know (or at least being familiar with.)
In this article we will be addressing real-time challenges managers face and best practices obtained from several NGOs working with USAID, UNICEF, European Commission, Innovate DFID.
Institutional Donors Challenges
1- Financial Risks
NGOs are strongly encouraged to deliver humanitarian assistance in high risk areas.
At the same time, they are expected to take on most of the financial risk with no risk premium or compensation for taking on operational and financial risk.
This ultimately results to less funding reaching the beneficiaries.
Mainly because organisation must comply with the "zero liability" to both the UN and the Government where the work is done ultimately reaching the national geographic area where the public (beneficiaries) are in need of the help.
Because of this, NGOs often incentivize to minimise risk directing action towards "safe" areas to minimising risk exposure such as;
- Lower "admin" cost
- Less challenging to implement
mitigation measures - Solely rely on local staff
- More time to conduct assessment
- Lower compliance risk because beneficiaries are less afraid to accept aid (e.g. put their signature on a list)
Note: donors are being asked to recognise and accept the cost of risk management for the implementing agency as an essential project investment rather than admin and support.
2- No Harmonisation
Different donor formats for project documentation causes the organisation to spend considerable amounts of time and resources on activities that create no added value.
Typically, projects documentation consist of generic and donor specific information.
Dividing documentation into generic section and donor specific annex could improve efficiency.
Donors require financial and narrative reports provided via specific format which is an issue especially if your organisation doesn't have a sample for the reports and/or don't have a DMS. (Donor Management System)
An average size organisation can save up to 2300 hours yearly if all donors agreed to use only generic format (no donor specific annex required).
3- Lack of Internal Coordination
Inadequate internal coordination leads to delays of projects.
Whether its a delay in proposal process or donors lack of responsiveness, NGOs' field staff frequently experience negative effects of donor de centralization which ultimately leads to communication issues.
Focusing on the process of proposals alone, it's important to note that the average proposal process takes 122 DAYS.
Moreover, responses and feedback on proposals are usually very slow, although deadlines for submitting are short.
Normally, You'd want to ensure a timely process which gives you a proper time to review and revise documents going through the stages of sending your proposal:
- First submission and contract
- First submission and declined
- First submission and feedback
- Average days between
Feedback and re submitting - Second submission and contract
USAID Funding And Best-Practices
How and where to look
USAID’s funding priorities primarily come from the CDCS document.
Therefore, this can be certainly helpful for organisations in predicting the U.S. government funding in upcoming funding cycles.
The Country Development Cooperation Strategy (CDCS) is a 3-5-year plan document that each USAID country mission develops with the U.S. Department of State, and it contains the outlined objectives of the US Government and the strategic framework within the national development plan of that particular country.
It's also helpful to keep a regular watch on USAID Business Forecast to understand which opportunities are upcoming in thematic areas, countries, regions or locations.
You must also network with the key stakeholders and existing partners in your country or region to gather information around USAID’s goals and strategy for the country in a particular thematic area.
While preparing for a USAID Proposal
It's important to go through the eligibility criteria in detail based on the terms of the USAID solicitation.
Make sure you understand the program description, expected goals, cost implications, budgetary requirements and application formats.
While applying for a USAID funding
1- Go Through The Solicitation In-depth
Read the solicitation in-depth and make notes of the important points.
Some points to be understood well in detail would be the scope of work, evaluation criteria, and eligibility criteria.
Every USAID solicitation would need you to complete a budget in predefined formats, which will include a ‘Standard Form’ format, an additional budget with more detail, and if needed, additional formats for sub-contracting or sub-awarding.
Prepare a checklist and keep striking them off as you complete the steps.
2- Understand The Evaluation Criteria of USAID:
Review the evaluation criteria and their order of importance as listed in the solicitation.
Some of the criteria may include technical expertise, staffing, experience and capabilities, and past projects and successes.
3- Ask Questions:
Normally, solicitations will include a point/s of contact at USAID and timelines for submitting your enquiries, if any.
If any aspect is not clear, ask your questions well in time, in writing, and in a concise and clear manner.
4- Stand Out:
Your application must stand out from those of the competitors.
For this, demonstrating your strengths as an organisation that is expert in the domain and geography not to mention being well equipped in terms of programmatic, financial and overall transparency, accountability and responsibility is important.
5- Divide Your Efforts:
Proposals and grants requests often come with a tight deadline.
Be aware of deadlines and timelines and make sure you keep track of time and submit your proposals/ applications well in time, if possible, ahead of the deadlines.
Applying for Funding Opportunities
Fundraising takes time and skill. When seeking financial support for your programs, you need to dedicate resources to researching and applying for funding and exploring other methods of fundraising.
Choosing the best methods for your organisation to raise funds takes thought and planning.
Most organisations have limited resources, so deciding how much staff time and energy to divert from implementation to fundraising may be a challenge.
However, fundraising is not just a matter of spending time; it is also about using the time and skill you have as effectively as possible.
Here's Five Tips for seeking funding effectively and efficiently:
1- Apply For a Reasonable and Appropriate Amount
When applying for funding, check the solicitation for the budget range and develop a program scope (for example, geographic coverage and proposed targets) to fit within that range.
2- Provide Specifics In Proposals
Technical reviewers who evaluate proposals constantly ask, “How?” Do not just state what you will do; explain how you will do it.
Describe how your approach is different and/or how it has been successful in the past.
Explain how much it will cost and how you will monitor the outcomes.
Before you submit a proposal, re-read the entire document and constantly ask five “how” questions:
- How much does it cost?
- How will you measure it?
- How will that work?
- How will you get that result?
- How are you different from competition?
3- Build A Network of Partners
Successful partnerships come in all shapes and sizes, from large organisations to small.
They can involve organisations that provide different services or organisations that are similar to one another.
The key to success is the organisations’ willingness to work together on a common cause leveraging the different strengths of each.
The wider your network of relationships, the more potential partnership opportunities you will have.
4- Be Precise In Responding To Solicitations
Common mistakes made in responding to solicitations include failing to address key points or criteria, missing a deadline by just a few hours, or failing to abide by the
submission requirements.
Weeks of work can be lost if you do not include a budget or do not use the proper template.
When you decide to respond to a solicitation, your first step should be to examine it for exact submission requirements—what documents are required, page limits, due dates and times, submission instructions, etc.
Make a checklist and be sure to check off each requirement before submitting your final proposal.
If possible, submit your proposal early to avoid last-minute problems.
5- Start Pilot Projects (If Possible)
If your organisation has private funds, consider starting a pilot project.
Pilot projects developed on a small scale using all of the same technical design, project management, M&E, and budgeting principles as full-scale projects can give your organisation valuable experience you can use later in applying for funding.
A proposal to expand an existing program—even a pilot program—is built on more evidence than a new program.
This gives the donor more assurance that the proposed project has a strong chance of succeeding.
Donor Relations and Engagement
Most often NGOs hire fundraising officers or grant managers to take care of resources and proposals, but neglect the area of donor retention or relation building.
Before asking the million dollar question—Do you have a DRM at your organisation? Let’s discuss its nature and it’s importance.
Donor relationship management (DRM) is the process in which an organisation strengthens the relationship with donors to enhance donor engagement and donor retention.
The key part is that you really don’t have to hire any expert to manage your relations with donors.
All you need is a clearly defined plan and possess effective communication tools.
With the advances in technology, there are several options to manage and enhance your relations with donors.
Through improved communication channels, you can build a good rapport with the donors.
Here's Five Tips to enhance your relations with donors
1- Know Your Donor Retention Rate
Make sure your NGO has an effective way to keep a steady eye on this metric.
It should be in more than just your regular reports.
Increasing donor retention rate should become a habit, so frequent access to this metric is key.
Your NGO software (DRM or any other) should have that covered for you. Another option is to set up a weekly regular report featuring donor retention rate (and other important metrics if you so choose) to be sent to your email.
2- Know The Factors of Engagement
Not all donors are created equal. While they are all important to your organisation, some have shown to be more valuable than others even if they donate the same amount.
Higher engagement rates reveal which donors are more in touch with the core mission of your nonprofit.
Many NGOs focus only on the donation amounts from their donors. This is a mistake. Be sure your nonprofit organisation also looks at the other factors of engagement in order to build relationships.
Look at engagement factors such as event attendance, volunteerism, email click-through rates, tweets to your organisation, website visits, and recency of giving.
From this information, you may see signals of donors becoming disenchanted with your organisation (a sign to reach out) or have a better idea of who to turn to for opportunities like major giving.
3- Communicate Using Various Platforms
While it’s not a bad idea to consider the types of communication that have resonated well with the recipient in the past to choose a messaging platform, taking a multi-channel approach has its benefits.
Typically, you'd use email for communication which is the norm.
However, email doesn’t have to be the only channel you use for those who have only given online. It's time to consult your communication and/or coordinator for what can be done.
Click here to read Communication with Stakeholders in 2020.
4- Use Social Media To Show Appreciation
NGOs everywhere are leveraging social media as a gift acquisition channel, but few use it to its best potential: as a gift acknowledgement channel.
Social media is a great, informal way to show appreciation to your supporters, including donors, volunteers, employees, and sponsors.
Most people’s news feeds are cluttered with bad news and commercials.
As a nonprofit organisation, you can be a lone bright spot by shining a light on those who support you.
Plus, when you tag your donors in your posts and photos, it shows up to all of their connections (depending on their security settings).
It’s a great way to get your brand in front of new people, while saying thank you!
5- Use Effective Language In Communications
Writing and sending messages to donors is a nuanced process.
Your language in letters, emails, and social media updates should be clear and direct, but most importantly donor-centric.
Picture yourself in the donor’s shoes reading the message before you hit “send.”
Send messages that will register directly with your donor by using donor-centric language.
Research has shown that the word “you” is key to fundraising efforts.
By using this word, you’re putting the spotlight on them instead of the organisation, thus validating their own needs and interests.
Sam Alsroré worked with notable organisations such as UNICEF and LinkedIn. His work in Yemen led him to be the recipient of “Humanitarian of the Year Excellence Award”.
Sam led projects in India, UK, Tanzania and Yemen. He’s also the recipient of the “United Nations Africa Recognition Award” in 2018 for his work in the development sector.
