Five common confusions on Fundraising vs. Partnerships.

A lot is happening in the world of international development cooperation and the resources available for the coming years. There are public discussions in many countries regarding the (sustainable) impact of development aid. Many (governmental) donors are cutting back their funds and many foundations have less resources to spend and therefore engage more than ever in fundraising or partnership activities. Philanthropy advisory (fundraising) firms are probably making record breaking revenue by providing training, workshops, fundraising consultancies and recruitment activities for many nonprofits worldwide. Sometimes these firms paint the picture as bright as ever, using data from 2006 or 2008, hereby providing a list of top 50 foundations by expenditure, where at least five of the top ten foundation had lost 20-50 percent of their spending for 2011 onward.

With the scarcity of resources, new opportunities arise, topics such as Venture Philanthropy, Impact Investing and Social Investments. Funds are being developed that serve the BoP, however still demanding a minimum of 10% ROI. So, bottom line – for many nonprofits not a feasible option to pursue for their grassroots operations. Fundraising is more than ever key for many organizations in order to continue their activities and even so to survive. So, based on my experience, I selected five confusions organizations create while developing and implementing their fundraising or partnership strategy on attracting resources from other international players.

1. Two agenda’s principle.

The principle underlines my experience with fundraising strategy development of nonprofits in order to raise additional revenue for their programs. It is simple – develop a fundraising strategy, which to external stakeholders is presented as a partnership. Of course one can argue, whether organization really know the difference between partnership development and fundraising. I believe organizations understand the difference, however use the partnership definition to convince their fundraising target group to “partner-up”.

It all depends on your target group: Fundraising is feasible from corporate foundations or multilateral institutions and government programs regarding development cooperation. Multilateral institutions, (some) corporate foundations, as even the larger (international) foundations have annual tender application rounds where nonprofits (if eligible to the criteria) can submit a Letter of Inquiry. Others are directly invited to submit a concept note (based on the visibility in the media and results achieved in their programs).

2. Benefiting who?

But who benefits? If a strategy is based on fundraising for your own programs and partners, how does a partnership fit in? A partnership is based on openness, sharing knowledge and network in order to create more impact to joint (developed) programs or projects. Leveraging resources is not only financial, but also measured in dissemination of knowledge, visibility, develop new initiatives and attracting other donors to contribute (joint fundraising).

3. Deliverables – understanding what one expects from you and vice versa.

Fundraising is an one-way street, where the relationship has clear and set parameters. A nonprofit develops a letter of inquiry for funding and the grantor approves the proposal. The relationship is based on the outcomes of the funded project. A partnership for that matter is a two-way street – focused on deepening the relationship, creating added value to the collaboration and challenging each other on programmatic topics or strategic issues.

4. Start & End or Evolve the relationship?

Fundraising relationships have a agreed start and end (e.g. project end), new proposals have to follow the same principle of application, there are no exemptions. The role of the grantor is on macro level towards a project and/or program of the grantee. There is little sharing of knowledge or other joint activities. That said, a Partnership is based to evolve and grow the relationship. Hereby  for instance, starting with leveraging resources in each other’s programs – to identify and develop new opportunities – to share expertise and disseminate knowledge to others – as to attract other investors to participate (alliance building).

5. Leave the work to outsiders – wise idea?  

Fundraising can be done by a specialized bureau or agency, which through direct marketing attracts donors. This is very common in community and/or public fundraising. International nonprofits may hire expertise to assist in identifying the landscape of funds, as to develop the project proposals for submission. However, some organizations tend to hire external consultants to develop and execute the partnership strategy (read fundraising) and initial outreach. Hereby the consultant not only being involved for desk research and advice, but also being in the driver’s seat for external communication towards the identified target group.

For fundraising it does work, as the consultant acts and speaks in behalf of the organization. The relationship is “platonic”, based on raising additional revenue. If a grantor requires more in-depth information about the applicant (programs, projects etc.), the grantor will be transferred to a staff member of the nonprofit. Partnerships are based on trust and starts with a group of trustees from both organizations whom believe that collaboration will benefit each other and hereby seek leverage within their organization to develop the partnership and monitor the progress and results achieved.

What’s new?  

If your organization is looking for funds to continue or expand your current programs, please continue the path of fundraising. Mind you that the resources are becoming less available and more competitors are active in your area of programs or topics.

However a partnership is an interesting opportunity to pursue. Hereby keeping in mind that leveraging current programs means that perhaps other topics need to be reduced or transformed (be flexible). Partnership is based on give and take, a two-way street which will enable your organization to continue the work, but it does not mean that sacrifices (cutbacks, new focus or strategy development) do not have to be made. Be careful not to engage in a partnership due to lack of funding for your programs (due to cutbacks donors or weak programs – outcomes). A partnership is based on equal respect and successful outcomes of the joint projects. By starting the partnership on a weak basis, it might turn sour and you lose the partner. Start the partnership with a successful formula, hereby challenging the partnership to other more risk full opportunities in a mature phase of the relationship is a more sustainable approach.

Important is not to confuse Fundraising with Partnership development. You will have a short term gain, but on the long term you might lose the partner due to the fact that expectations were not met.  And gaining a partner is much easier than retrieving a lost partnership!

Making the difference to the BoP

“ How to achieve sustainable impact to the BoP through PSD and Development Aid”

A focus on Latin America & value chain integration

Latin America is a region that is characterized by its socioeconomic growth potential. With leading countries such as Brazil, Chile, Peru and Colombia, the region has enabled improvement in competitiveness, infrastructure, international trade partnerships, strengthening of regional and national financial market systems, state reforms and modernization, hereby making improvements in reaching the small & micro enterprises which are growing in numbers, contributing to job creation, economic activity and the gross domestic products of the countries.

Economic growth in the region goes hand in hand with reforms in access to land and means of production, decent wages and international trading opportunities. Healthcare and education facilities, promotion of civil society and attention to vulnerable groups are some of the preconditions for a sustainable development of opportunities in the countries.

The private sector plays a pivotal role, accelerating the pace in identifying new business opportunities in which it can partner with multilateral organization, financial intermediaries, nonprofit organizations, institutions and governments. Hereby creating a multi stakeholder engagement where the return on investment is not only profit, but moreover promoting the socioeconomic development of the region. Integrating for instance the low income communities into the value chain through a sustainable business approach. The private sector is increasingly investing time, knowledge and resources into strengthening local small enterprise networks that show promise to become suppliers or otherwise participate in the supply chains. Besides the traditional sectors as agriculture and natural resources, there is a growing demand for investments and innovation in the fields of renewable energy, clean technology, waste management, innovative production technology, financial services, telecom and media as to logistics.

The opportunities in the rural areas of the region are in need of a different structure and approach on poverty alleviation and productive integration. Focusing on themes like (sustainable) agriculture, renewable energy, climate change and access to basic services. A strategy which is based on four key principles:

(i) Sustainable exploitation of the competitive advantages of a region or territory;
(ii) Enhancement of the ability of local productive systems to participate in value chains;
(iii) Involvement of private enterprises as investors;
(iv) Economic inclusion of the local population, particularly the poorer social sectors.

For low-income communities to be able to compete in the global market, it will be an advantage to collaborate with investors and private enterprises that have the linkages to the markets, expertise and technology to transform and add value to their products. Knowledge sharing by exchanging information and strategies and improving the quality of initiatives through learning from shared experiences will help generate a consistent and sustainable impact in low-income communities, not only at the level of local producers, but within the region and in the wider international business community and its counterparts.

Investment in multi-stakeholder collaboration – which must include local NGOs and link with (local) authorities, local businesses, financial institutions, educational facilities, etc. – must be geared towards enhancing sustainable development and socioeconomic opportunities (in terms of entrepreneurship, business, spin-offs). Environmental sustainability may be enhanced through the introduction of a methodologies and requirements for business partners for organic certification and measurement of greenhouse gas emissions. The international joint ventures and the initiation of a multi-stakeholder process are expected to set an example which will have a positive impact.

The Dutch development agency ICCO is engaged in promoting and supporting the multi stakeholder approach, hereby collaborating with European enterprises, Multilateral Institutions, foundations, local civil society organizations as the local business community in Latin-America. Hereby focusing on niche opportunities in agribusiness, waste recycling, renewable energy and more. Bottom line is to provide an sustainable outcome for the base of the pyramid.

OPIC – Challenge on Sustainable Development

OPIC: Expanding US companies in developing countries through Impact Investing

OPIC has developed excellent tools to challenge the U.S. private sector to invest in developing countries, focusing on niche opportunities in various sectors, combining critical issues and needs into opportunities for the private sector in creating economic growth in emerging countries. Of course, the outcomes have to be sustainable and generate impact to the local communities through jobs, inclusion into the supply chain and transfer of knowledge & technology.

With the development of a new call for proposals focusing on impact investing, OPIC is pushing the boundaries once more, challenging even further the U.S. private sector to contribute in obtaining a higher social return on investment, creating a sustainable model of investing, where low income communities can be integrated in the value chain of a company or industry.

Impact investing involves other stakeholders in the process (proposal), like nonprofit organizations, local governments, multilaterals and civil society organizations. The outcomes goes beyond the creation of jobs or transfer of technology – to create impact on social and environmental level, the private sector needs to collaborate with one or more of these entities mentioned above. Collaboration in knowledge, network and expertise is of important value for the proposal to succeed and guarantee sustainable outcomes for the company (ROI) and impact to the communities in a developing country. Bottom line is that the private sector can’t do it alone; it needs to collaborate with others to achieve impact. I hereby like to point out a few key criteria (in 3 categories) which I recommend to include in the concept or as tools for this call for proposal:

EASY

1) Profile should contribute and/or follow: (i) International standards – OECD Guidelines for international Enterprises on CSR, (ii) ILO declaration on fundamental principles and rights at work, (iii) UN Convention on biodiversity and (iv) Millennium Development Goals.

MEDIUM

2) Supply chain responsibility: The company must be aware (and act) on their role and the role by their stakeholders in the supply chain. For instance: FSC compliance, child labor, quality standard, environmental impact, certification (fair trade) etc.

HARD

3) Multi stakeholder approach: How to include low income communities in the supply chain (?), who is needed for collaboration? If you take an agricultural project where a company invests in setting up a local production facility – how can the company involve small farmers as their main supplier (?), how can the company guarantee production (volume etc) and quality? With whom does the company need to establish a partnership and is there other funding available to assist these low income producers?

4) The role of OPIC in assisting in the multi stakeholder approach: Can OPIC create linkages with institutions (like Inter-American Development Bank, Foundations, NGO’s etc).

5) Joint Venture opportunity with local counterpart: Instead of establishing a local entity of the U.S. company, provide the opportunity to form a joint venture with local counterpart, which has established an excellent track record and is ready to grow into the next phase (the Gazelles). Identification and matching can be done through the U.S. embassies – trade representatives, local federations or chambers of commerce.