ATMA | 03 January 2022
Written by Sneha Arora
Let’s start by addressing the elephant in the room - Fundraising is a Pandora’s box for most small and mid-sized NGOs in India. One enters the development sector with the assumption that funding will follow strong program delivery and impact. But that’s not always the case. We have seen NGOs delivering strong programs, but falling prey to either organizational or systemic deficiencies impacting fundraising. Successful fundraising requires a triad - strong program results, organizational capabilities, and a conducive environment.
Organizational capabilities refer to the internal aspects of NGO management that a Founder/CEO typically has full control over. When Atma works with NGOs to strengthen their fundraising capacities, we focus on a prioritized set of three critical organizational elements.
An organization should spend time understanding and reflecting on its own strengths and weaknesses across these elements. We often find that Founders/ CEOs tend to look outward for solutions to or causes of their fundraising troubles, without first taking a step back to look inward and understand where their fundraising capabilities might be broken. Whether we like it or not, fundraising is both an art and a science; and if I may add, it’s actually more of a sport. Sports research reveals that there are seven key traits that determine the success of an athlete - Concentration, Commitment to Excellence, Desire and Motivation, Goal Setting, Optimism, Confidence, and High quality of relationships and Support. If you’re a fundraiser, I am sure you can relate to most of these traits and might even have experienced moments of both strength and weakness in them.
Though organizational factors play a large role in the fundraising successes of NGOs, environmental factors can often prove to be a spanner in the works. Environmental factors may have a low traceability of occurrence but can prove to have a high impact on the fortunes of a nonprofit, depending on any number of factors (sector, NGO size, geography etc.). Unlike organizational capabilities, these are often not in control of the Founder/CEO. There are five environmental factors which in my view dominate the fundraising landscape for NGOs in India.
Mandate Mismatch: Much like modern day dating, a mid-sized NGO leader is often trying to find the best donor match. Sector alignment (Education), sub-sector alignment (Life Skills), program alignment (Teacher Training vs. Student Intervention), annual budget size (
Asymmetry of Information: A related second challenge is the asymmetry of information which compounds the mandate mismatch. NGOs often invest in donor research, but there are only a handful of donors that invest in NGO research. Information - both with regards to the giver and the receiver - is fairly broken in the sector. Reliability on databases can prove to be helpful to an extent, but we have often seen that NGOs lack the resources to tap into sources of information that could help them overcome the mandate mismatch. These two challenges alone often trap nonprofit leaders in a loop which becomes difficult to break out of.
Regulatory Challenges: Regulatory challenges have been a recent addition to the list of macroeconomic factors plaguing nonprofit fundraising efforts. Reduced access to foreign funds and license renewal requirements have kept NGO finance teams, often overseen by the CEO, busy in the last 1-2 years. This impedes both the access to funds as well as the bandwidth to invest in fundraising efforts for a small or mid-sized nonprofit.
Domino Effect: The fourth factor that I would like to call out is what I call the Domino Effect. Not all NGOs experience it, but the ones who do, end up being the tail ends of the bell curve. NGOs that have been able to successfully raise large amounts of funding (due to any number of factors) tend to continue to build onto their success and scale up rapidly to be large organizations - oftentimes backed by a strong program performance, no doubt. However, I have also seen the reverse occur, where small NGOs that lose out on funding due to factors beyond their control, see a domino effect of funders pulling out one by one, putting their very existence at risk.
Randomness: My thoughts on environmental challenges would be incomplete without discussing the role of luck or randomness in fundraising. I am sure we’ve all experienced the paradox of cultivating a donor through extensive efforts over the years, only to get a rejection, and the seeming serendipity of someone picking up the phone to call and tell us they would like to make a donation to our cause. As fundraisers, while we might not be able to ‘plan’ around this randomness, we cannot ignore its occurrence and impact on the success or failure of fundraising in our organizations.
Being an eternal optimist, while I started this article on a note involving challenges, I would like to end it with solutions and recommendations that I have seen work for many mid-stage NGOs as part of our work in the Atma Accelerator.
Embrace the Grind: In my view, fundraising is 80% effort and 20% luck. Put another way, organizational factors can play a major role in the success of fundraising efforts. Given these are well within the control of the Founder/CEO, it is imperative for them to internalize and learn that fundraising is an effort-reward game. As Atma, we advocate for metrics to help NGOs track their fundraising efforts, before aspiring for fundraising results. This means setting targets not only for the amount to be raised, but also for the number of meetings conducted, proposals sent and new leads added to the pipeline. A strong research and an execution orientation is a non-negotiable for a fundraiser.
Resource Tip: Streak is a great software to invest in to manage funding pipelines. It allows the fundraising team to be organized and methodical in pursuing leads.
Diversify Your Donor Base: Never put all your eggs in one basket, or if I may add, even one kind of basket. Diversification has two dimensions - one is the number of donors which contribute to your organization’s annual budget, and the other is the nature of these donors. Keep the number of donors large. Even though this presents challenges in donor management, its benefits in terms of risk mitigation far outweigh its costs.
The second is to ensure that your donors are spread across the spectrum; a healthy mix of corporates, foundations, Indian as well as international funding, HNIs, non-HNI individuals, recurring and one-time donors, single year and multi-year donors - helps to ensure stability over a longer period of time.
Resource Tip: Read this article on IDR to understand the different categories of donors and assess what your organization’s donor mix currently is.
Invest in Donor Relationships: I have found that fundraising can be one of the most tactical things a leader can do; but it can also be one of the most strategic. Investing the CEO/Founder’s time in cultivating and nurturing a donor relationship that goes much beyond funding can be a catapulting force for the organization.
When was the last time you had a call or a coffee with a donor who supported your organization 5 years ago? It might not seem like the most pressing need for your organization, but it is an investment in its future. Invest in strong donor relationships. Build a Reserve: This is a more recent lesson that we have learnt and advocate for passionately post pandemic. Saving for a rainy day hardly seems critical until the rainy day is upon us. If there is one thing that 2020 has taught us, it is the sheer uncertainty of our times. If you are driven by the long-term change your organization can create with stakeholders, set aside time, energy and a strategy to build a general reserve fund.
Resource Tip: CAP is a great one stop shop to help an NGO strengthen its compliances, finance and fundraising. Its annual membership is reasonably priced and we would recommend them as advisors for building a reserve.
Build a Support System for Yourself: Yes - for you. Fundraising is a mentally challenging sport to play, since it’s mostly played alone and vs. an ever changing team. We recommend NGO leaders to invest in building a network of supporters - friends, family, Board members, advisors and mentors that can guide them through the ups and downs that come with fundraising. As is the case in a game, you might lose after doing everything right. In those moments, I go back and read the definition of success by John Wooden that I have subscribed to for the last decade of my life - “Success is a peace of mind attained only through self-satisfaction in knowing you made the effort to do the best of which you’re capable.”
Resource Tip: Read an article by Atma’s fundraising associate to get a feel for what a day in the life of a fundraiser looks like here.
Sneha Arora joined Atma in 2018 and served as its Chief Programs Officer for 3 years before transitioning into the CEO role in 2021. An MBA from Indian School of Business in Strategy and Finance, she is passionate about applying her skills to enable education NGOs to accelerate their impact.