The prevailing thought around charitable and non-profit work in Barbados is that “charities aren’t supposed to make money”, and this is a statement we often hear in our work and when we speak with others about what we do. However, this thinking is inherently flawed because organisations need money and resources (human, financial and technological) in order to effectively do their work and achieve long-term sustained impact. This is a complex issue which touches on various topics including legislation, power dynamics, overhead costs and overall myths about nonprofit work, however in this post, we will keep our focus on models of nonprofit funding.
The traditional thought around funding charitable work locally has been limited largely to donations, grants, restricted giving and programmatic funding while neglecting operational and human resource support. This thinking about funding have led to unsustainable organisations, a heavy dependence on voluntary resources, a vulnerable workforce. The funding landscape across the region has changed drastically over the last ten years, with greater emphasis being placed on the need to build capacity and more sustainable organisations, however, we have generally not updated the way in which we think of non-profit funding.
2020 has amplified the importance of role of the non-profit organisations and civic engagement in meeting social and economic challenges and meeting needs. The need for building resilient, high performing organisations which can weather crises has further been proven over the last six months.
Building Resilience
If we were unaware before, we know now that survival requires resilience and the ability be agile in the face of challenges. We can no longer think about our organisations in the same way in which we did prior to Covid. This is a wake-up call for us who live in island states who are vulnerable to the impacts of climate change however, it also presents a unique opportunity for us to build resilient, high-performing organisations who are strategic in their focus and understand their environment and plan for potential negative shocks.
Good governance is Key
Strategic planning and strong leadership are key to this discussion about funding, as they are fundamental to the operations of the non-profit sector and these are functions of good governance and leadership. Non-profit boards and leadership have the responsibility for setting the strategic direction of the organisation, this includes determining the organisation’s business and funding model and ensuring the overall success of the organisation.
High-performing non-profits have strong governance structures, understand their desired long-term impact, have determined funding structures necessary to ensure that the can sustain their organisations. Most of the opportunities which are mentioned below will require strong organisational structures and good governance in order to access some of these opportunities.
Diverse Funding Models
The organisations who will survive the greatest shocks must employ diverse funding models to ensure that they are not dependent on any one single revenue stream and spread their risk. New opportunities for funding include but are not limited to the following: Impact Investment, venture philanthropy,
Impact Investment
Impact investing refers to investments made with the aim to generate positive measurable social benefits while gaining financial return on those investments. It has increased in traction over the last 10 years as investors seek ethical investment opportunities which create value for society while gaining financial returns. The international Finance Corporation estimates that there is $26 trillion available for impact investment globally. The Global Impact Investment Network reported that impact investors grew their impact assets from USD 25.4 billion to 35.5 billion from 2013 to 2015.
Venture Philanthropy
This model of philanthropy is a type of impact investment which seeks to invests in non-profit organisations with the core aim to increase their social impact potential. It is similar to venture capital funding with the expressed goal of achieving philanthropic goals.
Blog Article Week 1
Fabianna Alexander
Social Enterprise
Social entrepreneurship is the intersection where commercial businesses and non-profit meet. There are various models including develop businesses which aim to solve societal issues, developing business ventures to power the mission of a social organisation or developing a business to create social value.
Earned Income
Non-profit organisations and leaders have a wealth of knowledge and skills which are often under-utilised or undervalued which can be opportunities for earned income. Earned income is revenue generated from the sale of related or unrelated goods, services such as , work done.
https://thegiin.org/impact-investing/need-to-know/
CREATING IMPACT; The Promise of Impact Investing; International Finance Corporation
