5 challenges to INGOs’ funding during and beyond Covid-19

The UK’s INGO sector is experiencing a perfect storm: public fundraising is dropping, uncertainty over Brexit, the UK’s economic downturn, the DFID-FCO merger, and cuts to the UK aid budget due to Covid-19’s impact on the UK’s GNI.

There are more financial challenges than ever for INGOs in this climate. 48% of NGOs may not survive the next two years, according to our latest survey on NGOs’ finances. Organisations are under pressure to work out their relevance in the international development system, while trying to navigate an increasingly complex funding landscape.

At this pivotal moment, here a few things INGOs need to consider.

INGOs need to adapt their model to remain relevant amidst rapid change

The international development funding landscape is being transformed by new players and movements. INGOs’ traditional funding environment is being transformed by donor collectives, such as With and For Girls, a participatory fund by and for adolescent girls, and platforms, such as Global Giving, which connects people directly with the communities they’re donating to. INGOs need to adapt or they risk being left behind.

We’ll be exploring the trends that are challenging the NGO funding landscape as part of our Funding for Development Week. We’ll look at how these trends have been exacerbated by Covid-19 and what these shifts mean for INGOs.

Donors are changing the ways they fund organisations, so INGOs need to consider their existing donor relationships

The Covid-19 crisis has changed the world as we know it, and funding is not immune. Donors had to quickly shift their processes, priorities and mechanisms for funding international development work. Networks, such as London Funders, came together to sign a joint statement to support their grantees and provide flexibility through the crisis, with some even turning restricted funding into unrestricted.

The changes funders made during the pandemic will continue to affect how they fund. INGOs need to find out how funding practices have changed, so that they can be prepared for the future. Donors like Comic Relief and the People’s Postcode Lottery will talk about these changes and share their thoughts on the future of funding in our webinar on what funders learnt from Covid-19.

Despite the drop in GNI, the UK government is still a major donor

The UK government is still spending overseas development assistance (ODA) across government departments, such as the Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Environment, Food and Rural Affairs (DEFRA). This is expected to increase over time. INGOs should look to secure funding with other government departments that spend UK aid beyond the newly-merged Foreign, Commonwealth and Development Office.

INGOs need to diversify their funding portfolios and should consider accessing funding from these departments. Hear about these departments’ funding priorities and how they engage with civil society organisations in our upcoming webinar.

INGOs need to hold donors to account on their commitments to support gender equality

Governments and institutional donors committed to prioritising funding for gender equality to help achieve the Sustainable Development Goals (SDGs). But progress on SDG 5 is lagging across a range of indicators, including targets to eliminate violence against women and girls, ensure universal access to sexual and reproductive health rights, and support women’s economic empowerment.

Gender equality requires a massive and focused international effort. NGOs have a vital role to play to hold donors to account and help achieve the SDGs. In our webinar, we’ll explore how bilateral donors are directing their funding to help achieve gender equality, how far we are to achieving SDG 5 and what INGOs can do to hold donors to account.

Unrestricted income is key to survival

Many INGOs are facing a large reduction in income because of the economic downturn and a drop in restricted grant funding. They are having to make difficult decisions about their programmes and organisational structures.

Unrestricted income provides organisations with the much-needed flexibility to cover core costs. It also enables them to invest in their systems and learning, trial new strategic approaches and build their reserves.

INGOs needs to build up their unrestricted income to withstand crises. Our webinar will help organisations to respond to decreasing unrestricted funding and adopt new fundraising approaches, such as digital crowdfunding.

Join Bond’s Funding for Development Week, 23-27 November, for insights and support to improve your organisation’s financial sustainability.