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Ever baffled by funding jargon? Yea, me too. Hopefully this might help.
*This is a work in progress! Add your amends/additions below..
A is for…
Adaptive Management | aka ‘learning-by-doing.’ Or better yet ‘learning and-then-changing-what-needs-changing-to-improve-outcomes by doing.’ Imagine an annoying micro-manger dictating every task you do and then checking every step of your progress on the way to finishing said task. Massive pain in the ass, right? Now imagine, a progressive, forward thinking boss who gives you a task and lets you ‘fail forward’, giving you the space to learn what works and drill down that route yourself. Oh joy! This is Adaptive Management.
Beneficiary Feedback | whether you like the term or not, there’s no getting away from the fact that NGOs’ work aims to benefit certain people or groups. ‘Beneficiaries’ are at the heart of what they do. Or at least, they should be. Beneficiary feedback is the act of listening to your target audience and adapting your project design or delivery based on this information. Some organisations fall at the very first hurdle, designing programmes based on perceived – rather than actual – needs. Beneficiary feedback aims to looks beyond this basic step, focusing not just on initial feedback but on gathering regular feedback from beneficiaries to improve the programme outcomes whilst the work is ongoing. By addressing problems early, time and money can be better spent. And as DFID state in their explainer:
“not only will relationships with the communities improve, but the beneficiaries involved in beneficiary feedback mechanisms report a feeling of empowerment”.
Blended Finance | Public or philanthropic capital leveraged to increase private sector investment in developing countries and sustainable development. As the guys at Convergence state:
“Blended finance aims to increase the amount of capital directed to sustainable development in developing countries”
The Development Impact Bonds outlined below are one example of a blended finance vehicle. Convergence offer funding for those wanting to design catalytic blended finance vehicles.
Commercial Contracts | Many institutional funders seek suppliers (rather than grantees) to fulfil their objectives. Contracts are usually offered by governments and financial institutions, where they invite potential suppliers to bid for large projects. As their names suggest, these are often won by commericial organisations, but as funding through contracts has increased over the last decade (and grants have simultaneously decreased) NGOs have been edging their way into the commerical contract landscape, winning bids not just as down stream partners (sub-primes, they’re called) but as lead suppliers. The International Rescue Committee, for example, has a great track record of winning commercial contracts and more and more NGOs are seeking out employees with contracting experience.
DFID lists their commerical contracts on their Supplier Portal here. They also post them on Twitter. Bond has a very useful guide to the ins and outs (and pitfalls) of becoming a supplier. USAID also offer contracts. This is a useful overview of how to access USAID contracts as a UK NGO.
Development Impact Bonds | Instead of the tried and tested Grant Funding model we are used to, DIBs offer upfront funding from private investors for set of interventions who are then paid back by development funders (these could be host-country governments including a ‘bonus’ return on their investment if the project achieves pre-agreed outcomes. In this way, DIBs resemble Payment by Results contracts explained below.
[fusion_button link=”” title=”” target=”_self” alignment=”center” modal=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” color=”default” button_gradient_top_color=”” button_gradient_bottom_color=”” button_gradient_top_color_hover=”” button_gradient_bottom_color_hover=”” accent_color=”” accent_hover_color=”” type=”” bevel_color=”” border_width=”” size=”” stretch=”default” shape=”” icon=”” icon_position=”left” icon_divider=”no” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]Read the full DIB explainer here[/fusion_button]
Convergence offer funding for those wanting to design catalytic blended finance vehicles, such as DIBs, that aim to attract private capital to global development at scale.
Full Cost Recovery | No NGO funding A – Z would be complete without mentioning the holy grail: Full Cost Recovery.
What does your entire operation cost to run? Not just your stand alone inclusive education project in Kolkata, but what do you spend to hire the person who cleans your desks every Thursday on Old Street? Work it all out right now, from your CEO’s salary to the heaters you put on in winter. Really, everything! Rent, ink cartridges, the milk that magically appears in the fridge for all the tea you all drink. Everything).
If it’s imperative that your NGO exists, its imperative you stay in business and all legitimate costs should be budgeted for and recovered through all your fundraising streams. Otherwise you won’t exist for long. Just like some of these cautionary tales. This means you should unashamedly request a proportion of these overhead costs in your funding proposals to Trusts and Foundations (unless they state they won’t fund these, and then you should really consider why you want money from such a restrictive source in the first place).
Grant Funding | One (just one!) way to fund your NGO’s work. Grant funding can come from Trusts, Foundations or Governments. You generally write a proposal saying what you want the money for, if you’re lucky they say ‘yes’. You can generally then only spend that money on what you said it was for and have to report back to the donor how you spent their money quite regularly.
Grants have been the bread and butter for NGOs for many, many years, but in a nutshell, Grant Funding is a dwindling pool of limited resources. So, please! Don’t put all your eggs in one basket. If you haven’t already, it’s high time to consider diversifying your income so Grant Funding represents a smaller proportion of your overall of your funding pie. See how you can sure up your finances here.
See some of the latest grant funding opportunities here.
Grant agreement | Once you’ve written a winning grant application to a funder, they’ll likely make you sign one of these. Make sure you read it and iron out anything you’re uncomfortable with before you commit. There are lots of things to consider before signing. Read our full Explainer to be one step ahead of the game:
Impact Investing | investments made into companies, organisations and funds with the intention to generate social and environmental impact alongside a financial return. The aforementioned Development Impact Bonds are an example of this. See these guys for all the juice on Impact Investing.
Monitoring & Evaluation (M&E) | AKA Monitoring, Evaluation & Learning (MEL) or Monitoring, Evaluation, Research & Learning (MERL). In a nutshell and under all its various guises, M&E is a tool to ensure your project or programme is doing what it set out to do. It’s a way of ensuring the money you’ve raised it being spent the way you agreed to spend it and whoever you are supporting (person, community, country, government) is benefiting in the way you agreed to support them. Without it you’re bowling in the dark, and that’s no fun, so make sure you have a framework in place for your NGO’s M&E. Here are some great tools to help you get started from our friends at Bond.
Non-traditional financing tools | In a nutshell: anything that is NOT a grant! They are ALL THE WAYS we NGOs need to embrace to make sure we have enough funds to stay in business. See ways to diversify your charity’s income here.
Not-for-profit | those organisations that do not distribute surplus funds to owners or shareholders, but instead use them to help pursue the organisational goals.
Payment-by-results | AKA Payment-for-success; Results Based Aid, Results Based Funding, Results Based Financing, Cash on Delivery, and Pay for Performance. This is a way of funding your work where the donor (usually a big multilateral bank) funds your work only when you achieve certain outputs or outcomes. This compares to traditional grant giving where the donor gives you money to pay for your inputs (training health workers, building schools etc). It’s about what you achieve with the funds, not what needs paying for upfront. It’s been seen to improve results almost by half. There are some big (and probably obvious) downsides though. Read more here.
Theory of Change | A description of how we believe change happens in the outside world in relation to our NGO’s organisational / project goal. This description usually comes wrapped up in a cololurful, arrows-and-all flow chart format; a visual succint representation how your organisation makes change happen. Many organisations share their online. Like this one (scroll to the bottom). Or this one. It has many internal and external uses, and is often needed for funding applications to the likes of DFID.
Third Sector | Best understood by what it is not: it’s not a government body or a profit making company. In a nutshell: its us, the NGOs! (It’s also any non-governmental or non-profit-making organisations or associations like a voluntary or community group or cooperative).
Trust | Intangible gold dust that makes the world a better place. Some wonderful funders will give you unrestricted funding because they trust you to spend the money as you see fit. You’re the experts in your field after all, and they’re experts in funding experts, so they let you get on with it. Where there is trust, magic happens. Check out this thread for a neat explanation of why unrestricted funding is so bloody marvelous:
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