Reflections on the South African Non-Profit Funding Landscape: In Pursuit of Sustainability!

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Many might agree that South Africa’s non-profit sector has been a cornerstone of societal progress pre- and post-Apartheid! Today, non-profits invest considerable efforts in tackling the critical issues of poverty, inequality, and unemployment and driving positive change in social and environmental justice. The sector plays a vital role in promoting the common good in our country.

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Forbes suggests that non-profits in 2024 are navigating change with key trends shaping their trajectory. Collaborative partnerships and networks can amplify impact and foster innovation, while community-driven efforts to promote ownership and inclusion reinforce sustainability. Using digital technology will enhance operations and marketing. Showing impact through rigorous measurement and compelling storytelling is more critical to future success than ever.

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Yet, many non-profits face significant challenges in securing sustainable funding amid high competition from other organisations also needing support and limited local resources. Additionally, actors in this space may motivated by a passion for their cause but lack the institutional capacity and technical skills to operate effectively.

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This is why non-profits can significantly benefit from various non-financial support provided by funders and partners. Capacity-building initiatives, such as training staff on specialised skills, strengthening organisational systems and processes, or leadership coaching and development, may allow non-profits to operate more effectively and efficiently. Technical assistance from subject matter experts can also help them design and implement high-quality, impactful programmes grounded in proven methodologies. Access to tools, technology, and other resources like skilled volunteering or pro-bono professional services can also assist non-profits in raising their operational standards.

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When it comes to financial support, one of the main hurdles confronting non-profits is dependence on local and international aid and grants, which are often uncertain and only awarded for a fixed duration. In addition, many donors do not entertain unsolicited engagement, making it challenging to connect as a new partner or even get an opportunity to have a meeting while additionally international donors often favour countries on their priority list.

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In the local market, lacklustre economic growth, global shocks, and decaying infrastructure hinder market opportunities. Naturally, such factors constrain Corporate Social Investment (CSI) budgets, imposing vulnerability as the social return on investment has not always been forthcoming. Too often, this is exacerbated by so-called “droopy NGOs” in the sector – who advocate for essential issues yet fail to deliver. This emphasises the critical importance of non-profits delivering impact effectively to make sure there is a tangible return on social investment and that limited resources are spread out equitably.

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With the fiscus already stretched, there have also been budget cuts to public sector support. The 2021 Civil Society Organisation Sustainability Index report for South Africa highlighted the gap. Foreign funding for CSOs decreased in 2021, making them more reliant on local funding sources like corporate giving, likely made worse by the pandemic – wherein one could say countries were informed by the ethos which goes “charity starts at home”. CSI spending fell by 4% to a total sectoral contribution of ZAR 10.3 billion in 2021. Still, it accounted for 28% of the CSO sector’s total income, showing the importance and commendable commitment of corporate entities in their funding essential projects and causes.

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Moreover, with an overburdened tax base, philanthropic contributions by individuals arguably tend to be limited to emotive causes close to people’s hearts, such as childhood disease or animal welfare – to the detriment of other social upliftment initiatives that are equally important. Indeed, individual contributions declined from 14% to 11% between 2020 and 2021.

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To increase their chances of securing sustainable CSI funding, non-profits should strive to align their missions and programmes with the strategic priorities of corporate funders. This involves understanding each funder’s core business, values, and areas of focus, then aligning proposals to demonstrate direct relevance and impact. Adopting best practices in Board oversight, Auditing, and Risk Management can boost funders’ confidence in an organisation’s ability to deliver results and comply with regulatory requirements. In the South African context, this also entails compliance with the Departments of Social Development and Labour and SARS, among other policies such as POPIA and best practice accounting procedures.

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To bridge the resource and capabilities gaps, South African philanthropy could embrace a paradigm shift – one that prioritises flexibility, empowerment, and strategic partnership among public, private, and non-profit sector stakeholders. Unrestricted funding entails financial support given to non-profit organisations without specific restrictions on how funds are used, allowing non-profits to allocate resources where these are most needed to build organisational capacity and sustainability. In Trialogue’s Business in Society Handbook 2023, CSI research revealed that a mere 10% of companies offered unrestricted funding in 2022, while an overwhelming 86% were unwilling to consider this flexible model. The evidence proves unrestricted funding allows NPOs to build vital organisational capacity and sustainability for lasting impact. This mismatch between funder restrictions and CSO requirements is highlighted because 39% of CSOs surveyed stated their most prominent needs were flexible funding for operations, pro-bono assistance, and training. With 45% of companies not offering this kind of support in 2022, it is critical that funders begin recognising that investing in capacity, alongside other funding, can empower non-profits to amplify their impact.

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However, a perceived lack of accountability seems to be the biggest bogeyman deterring funders from unrestricted giving and comprehensive support offerings. But this fear, although founded, requires a solution that is not punitive to compliant and effective non-profits. The solution could be “more vetting” to ensure that NPOs receiving support are of the calibre and ethos to deliver results. Following thorough due diligence, funders could then offer multi-year unrestricted funding to aligned NPOs, requiring regular communication and reporting on the delivery of their programmes.

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To create more confidence in the sector, non-profits should strengthen their governance and ensure robust financial management, transparent reporting, and informative monitoring and evaluation frameworks. Non-profits should also continually assess and refine their programme design, implementation models, and theories of change to optimise efficacy and impact. By enhancing strategic alignment, governance, and execution capabilities, non-profits can position themselves as attractive, low-risk partners that responsibly steward CSI investments toward achieving mutually beneficial goals.

Mutual mistrust serves no one’s best interests. The trend is shifting, and donors and non-profits are increasingly treating each other as true partners, welcoming bottom-up and co-designed solutions with the hope that flexible funding arrangements that account for the dynamic socioeconomic landscape found in development work can be achieved.

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South African non-profits must also endeavour to be far more innovative to balance social causes with the business imperative to deliver market-activating initiatives that will bank social and economic returns for all of society in the future. We in the sector cannot maintain a deficit mindset akin to refilling a leaky bucket! Building tri-sectoral partnerships, exploring income-generating activities, cultivating local philanthropy, and collaborating within the sector could open the way for a “joiner” attitude among individuals and organisations in society who become more willing to gift time, money, goods, and services.

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Let’s get practical! You might ask, Where can I find funding opportunities? When looking for funding opportunities, desktop research is required. Regularly review tender bulletins, donor websites, and company CSI pages. There are platforms such as Funds for NGOs,Devex, among others, which offer a paid-for service to target your search by country, thematic area, and grant size. Where can I find resources? Many foundations and companies provide clear guidelines alongside their funding opportunities. There are also accessible groups you can find on LinkedIn and by networking within the sector, providing advice, encouragement, and motivation to refine and enhance your approach to fundraising continually.

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In the digital age, adopting new technologies can also greatly benefit the sector. Forbes recently said: “Emerging technologies can drive further innovation in the philanthropic sector, benefiting charities through personalized donor outreach strategies, optimized resource allocation, and streamlined decision-making processes.”

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The Commonwealth Foundation also has a South Africa toolkit with insightful advice on enhancing accountability within the civil society sector, which explores the practical tools and frameworks provided that offer concrete strategies to build trust, credibility, and legitimacy with stakeholders.

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Finally, beyond just identifying funding sources, non-profits can strategically leverage media visibility and compelling storytelling to raise awareness for their work and stand out amid the competition for limited resources. Indeed, crafting a robust media and communications strategy incorporating digital marketing, collaboration, and multimedia storytelling can amplify an organisation’s voice to help reach new donors and stakeholders more effectively.

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