Is the era of traditional donor funding over?

For decades, NGOs and social enterprises have relied on a stream of grants from institutional donors.

However, recent data indicates a shift in funding dynamics, prompting the question: Is traditional donor funding sufficient to sustain impact-driven organisations in 2025 and beyond?

Being strategic in diversifying funding sources

The truth is NGOs can’t rely solely on traditional grant funding anymore. The effective scrapping of USAID is a wake-up call, but the writing has been on the wall for a few years.  NGOs need to stop over relying on large country-based donors. Instead, NGOs should be sparking connections and building stronger relationships with diverse funders, including foundations, corporations, investors and other individuals. 

Skill up

The structure of humanitarian and development funding is undergoing significant changes. Donors are moving away from traditional grant-making toward more sophisticated types of financial support, such as conditional and catalytic funding, which focus on sustainability and scalability. 

These changes are accompanied by increased collaboration among governments, donors and private funders to address the complexities of development. International financial institutions, donors and larger foundations are actively pushing to reform the financial system to build mechanisms that are more inclusive, accessible to more stakeholders and streamline investments into the Sustainable Development Goals.

In practice, this means programmes now often involve blending public and private funds to promote inclusive development, and maximise synergies, building financial momentum to fund the SDGs. This does flush more funding towards impact programmes. But it also makes them more complicated to manage. Programme implementers need to skill up for that.  For more information, you can read about  funding beyond grants here. 

Understanding donor priorities

While private finance is needed to accelerate progress and close the funding gap, there are areas of work where private capital cannot fully replace the scale and scope of traditional development aid. In some areas and some countries, we will always need grants. But acquiring them has changed, and it now requires a deep understanding of donor priorities, programmes and partnership. This can overwhelm even the best business development team at an NGO.

Donors, whether they are governments, foundations or corporations, have specific goals and objectives to achieve through their funding. And these are constantly evolving. For NGOs looking to win donor funding, aligning your programmes with these priorities is crucial. This involves conducting thorough research into the donor’s strategic focus, identifying areas of convergence and tailoring proposals to demonstrate how your work contributes to the donor’s overarching mission. 

Showcasing added value and value for money

In a competitive funding environment, NGOs must effectively showcase their unique added value to donors. This involves highlighting your organisation’s expertise, experience and ability to deliver impactful results. It’s essential to differentiate your organisation from other implementors by emphasising innovative approaches, niche capabilities and a strong track record of success. Demonstrating a deep understanding of the local context, challenges and opportunities further strengthens an NGO’s appeal to donors. 

Understanding how important it is for NGOs to have  strong organisational storytelling capabilities, MzN International is rolling out training courses this year to provide our valued clients with the learning necessary to develop  this vital skill. 

Which foundations are out there?

Thousands of foundations – ranging from small family trusts to large institutional funders – exist worldwide, each with a unique mission and funding focus. Knowing which ones are most relevant to your specific programme and country is crucial for effective outreach and partnership building. At the same time, failing to identify potential supporters can mean missed opportunities. 

But researching and cataloging every possible foundation can be incredibly time-consuming. That’s where MzN’s donor lists come in. It’s a curated resource that will help you quickly pinpoint the foundations most likely to support your cause.

How MzN International is supporting NGOs

Navigating funding transformation requires knowledge, strategy and the right tools. MzN International equips NGOs with the knowledge to secure sustainable funding through world-class training, advisory services and knowledge resources. For example:

• Our upcoming in-person courses in London (17 to 19 March 2025) focus on writing winning proposals that meet donor expectations and investor criteria. Additionally, we offer opportunities to learn about diversifying income, and impact investments. 
• In terms of new resources,  we’ve just launched the 2025 Proposal Writing Guide for NGOs, a comprehensive eBook designed to help organisations craft compelling, high-impact funding proposals.

Is the era of traditional donor funding over? 

While grants and government-led contributions will always play an important role, the global funding landscape is undeniably shifting. NGOs can no longer rely solely on classic donor channels to sustain their impact. Instead, forward-thinking organisations must diversify their funding mix, sharpen their skills to engage with new finance models and strategically align with evolving donor priorities. 

Those that adapt to these changing dynamics by developing partnerships with foundations, private investors and innovative financing structures —stand the best chance of thriving in 2025 and beyond.