As crises and obstacles stack up, what next for funding?

I’ve been a fundraiser for 25 years, and I think it’s fair to say that the last five have been some of the most challenging.

I remember with pride the national display of unity behind the 2005 Make Poverty History campaign, and I am saddened that now fewer than one in five people in the UK give to such causes. I celebrate the huge strides that we have made as a sector as part of a global effort to reduce extreme poverty. But Covid-19 has reversed many of those gains, and conflict and climate change threaten to do more damage. The loss of the Department for International Development (DFID) and the cuts to the UK aid budget have had a significant impact on INGOs and the communities that we support.

At Opportunity International UK we have a standing item on our agenda to discuss the health of our funding pipeline, and it is sadly looking thinner than it did a few years ago. In late 2020, a new strategy was developed and there was optimism that the organisation could make a step-change in fundraising, while having a greater impact. Two years on, it is obvious that some of our underlying assumptions were being tested even then.

How do we sustain the impact we exist to deliver?

Opportunity International is a fascinating organisation with an interesting business model. It mixes the traditional not-for-profit approach of a charity with the for-profit model of banks we founded, and now part own. This mix of charity sensibilities with commercial thinking helps us to take a broader view of funding sources to make a strong impact.

What are our options for our funding?

Do we double down on what we know and do best? A high-touch, high-reward focus on high-net-worth individuals? Or do we put all our efforts into working with large international technical foundations to replace Foreign, Commonwealth and Development Office (FCDO) funding?

We will continue to do both – but the reality is that there is less funding for international causes coming from donations from the UK public, and every charity is trying hard to engage with the larger foundations for the same reasons we are. The common experience seems to be that large foundations are not seeking new partners, and instead are focusing on those they are working with currently. Or they are developing a new strategy and aren’t looking to fund anything right now.

If we can’t rely on traditional fundraising, what other funding sources are there?

As an investor in retail banks, Opportunity International has a chance to influence practice and direct services towards vulnerable, marginalised and traditionally un-banked population groups – refugees, rural farmers, young people and people living with a disability. We can reinvest our dividends in programmes in the countries in which the banks operate.

But should we use some of our reserves to invest in more banks in this way? Or would it make more sense to create an impact investment product built around our expertise here and attract investment from beyond our network? If we do that, how do we fund the exploration process?

Bearing those questions in mind, we are testing the water with impact investing, having launched a $100m (£82million) partnership with Oikocredit, a social impact investor, to invest in low-cost private schools and increase access to them through affordable school fee loans. Our aim is for 1.6million more children to access and complete a quality education.

We would like to test a similar impact investment partnership for our global agriculture programme, getting funds to the many rural small-holding farmers who need investment to improve their land, grow suitable crops, increasing yields and build resilience for families and communities to cope with extreme climate events.

One of the key challenges for us internally is that Boards are naturally cautious of their fundraisers, spending time on activities that might not bear fruit in the short term. However, we are in the impact business, and we seek sustainability in our programme design, so why don’t we seek sustainability in our funding too?

What does this mean going forwards?

We’re still having these discussions internally, and it will be interesting to see how we evolve in response to the new funding paradigm we are all adjusting to. It takes courage to step out in a new direction.

It looks like we won’t make poverty history any time soon – and maybe we are paying the price for our own naïve hubris all those years ago – so let’s not pretend that we’re in the business of putting ourselves out of business.

Endowments, patient investment capital and legacy fundraising are all areas that we should be exploring if we are serious about being there for those we serve long into the future. There are many questions still to be answered – and while we might not have all the answers at Opportunity International, together the UK INGO sector can find a new way forward.

This blog is part of Bond’s Responsible Fundraising series which you can read more about here.