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Need for a new funding model for nonprofit organizations

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This presentation examines the need for South African nonprofit organizations to develop new funding models. It was presented in 2009 to help educate South African nonprofits.

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Need for a new funding model for nonprofit organizations

  1. 1. Thinking about the future: The need for a new funding model for nonprofits Presented by Marcus Coetzee July 2009
  2. 2. Part 1: The Problem
  3. 3. 1. Pool of funding oversaturated www.Flickr:com : Mrr182
  4. 4. 2. Increase in numbers of NGOs Size and scope of the nonprofit sector in South Africa, 2002. …and this was only in 1999
  5. 5. 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?
  6. 6. 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
  7. 7. 5. Fraction of impact HDI Index from WorldMapper Are you having more than 10% of the impact you desire?
  8. 8. Part 2: Some Good Ideas
  9. 9. 1. Change your paradigm
  10. 10. 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
  11. 11. 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.)
  12. 12. 4. Hunt for the profit margin! www.Flickr:com : Charles Fred
  13. 13. 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)
  14. 14. 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 incomeProvides rehabilitation Enterprise development and honouring responsibilities
  15. 15. 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