The world is fast, ever-changing, complex, and interconnected. On one hand that is exciting: there are new opportunities to grasp and spaces for creativity, solutions and ideas are thriving. On the other, we are facing a dual obstacle: inadequate tools and the persistence of ideological barriers inherited as the status quo.

Now is the time for change. Only through a shift in the cultural paradigm and mindset around private philanthropy, can we develop new tools, freeing up all the innovative potential of social transformation that the present day offers.

The nonprofit sector plays a key role in imagining and providing solutions to tackle the world’s biggest challenges. And philanthropy is in a distinctive position to make the difference, considering its independence, long-term vision, flexibility, and the quality, not only quantity, of resources it can make available.

But first, we must overcome the main cultural ideological barriers, not least the assumption that, for nonprofits to be efficient, they should keep their operating and organisational costs to the very bone. Another sticking point is the view that all funding must be project-related and allocated to fixed outputs and activities. Furthermore, the imbalanced power dynamic between grant-makers and grantees can be an obstacle to transparent and open conversations on actual needs and learnings from the failures of the past.

These false myths combined have a strangling effect, keeping civil society organisations in a “starvation cycle”. This means there is little investment in their resilience, capacity, structure and development, limiting their impact and their ability to take a long-term view. In other words, this can prevent nonprofits from being the transformative force they are meant to be, (see humentum’s report, Breaking the Starvation Cycle).

Infrastructure organisations like Philea – Philanthropy Europe Association are already working with funders to shift towards more flexible, long-term, organisation-oriented funding practices. In 2020, during the initial peak of the pandemic, Dafne and EFC (today merged into Philea) launched a pledge for more flexible funding and adaptive reporting. It was signed by 186 organisations across the continent, with a similar campaign in the US attracting almost 800 signatories. And back in 2018, Assifero, the Italian association of grantmaking foundations, raised this issue with a call to action for funders across Europe.

Even though the old mindset is still common, awareness is growing about how funding practices can impact the power, voice, resilience, creativity, and change-making impact of grantees. With that, we are seeing a few key principles gaining consensus and becoming more widespread among foundations. These include:

Investing with a long-term approach, not just project funding. Investing in the organisational development of grantees is essential to ensure their capacities and capabilities, strengthen their sustainability, and retain the best talent. It is key to achieving the mission. General operating costs are not the enemy. Instead, they are pivotal to attaining it. Different foundations across Europe are moving towards this approach and are collecting evidence to make a solid case. For instance, in 2020, OAK Foundation, Laudes Foundation, Mava Foundation, Mercator and Peace Nexus published a report sharing insights on how to engage in organisational development, discussing the institutional set-up needed, exploring the process and highlighting ongoing dilemmas.

Moving towards a partnership dialogue-based approach. Grantees are by no means passive beneficiaries, they are foundations’ main partners. Communications with them should be a two-way street. This starts with attentive listening using tools such as the anonymised “Grantee perception report”, offered by the CEP – Centre for Effective Philanthropy. This has already been adopted by over 300 foundations across the globe.

Collaboration among funders to untap collective impact and potential. Collaborative funds with a specific focus and mission are a powerful way for funders, small and big, to come together and enhance their impact. Civitates, for instance, a philanthropic initiative for democracy and solidarity in Europe, is one example of a mission-oriented pooled fund that invests in civil society organisations across Europe. Others are EPIM (European Programme for Integration and Migration), sparked by 25 foundations, and the newly born Alliance for Gender Equality in Europe, which brings together local and pan-European civil society actors with diverse funders to progress gender equality and women’s rights.

Going beyond grants and strategically using all the tools in the box. Foundations have so much more than money to give. They can be a strategic partner for grantees, sharing human, social and relational resources, all of which can be key for the organisation’s development. OAK Foundation, for instance, dedicates a large percentage of its funding to core support programmes, while providing a series of flexible tools to strengthen the organisations, including strategic litigation, support for dedicated initiatives, and facilitating collaborations with other entities. In Italy, Fondazione Compagnia di San Paolo has defined in its 4-years strategic plan a set of 19 tools (beyond financial support) to offer grantees further elements to advance their work, structured around their needs.

New innovative funding practice possibilities. With the evolution of financial instruments, different foundations are exploring new type of solutions to invest in grantees, that can be integrated with grantmaking activities. DOEN Foundation, for instance, has set up an impact investment company (DOEN Participaties) within its organisation, which can act as an early-stage investor. One of their success stories is the social enterprise Fairphone, the first fair trade, modular phone. To develop the idea, DOEN supported the initiative with a grant from its creative programme. Then, when the company was established, DOEN Participaties became a shareholder in Fairphone.

Endowment as a strategic asset. There is a rising trend for foundations’ endowments to play an active role in achieving their own mission. In addition, to avoid aggravating the problems that the foundation is trying to solve (e.g. fossil fuels), organisations are shifting towards a less conservative approach in their portfolio management, aligning it with their mission. For instance, Foundation Scotland became the first European foundation to establish a Social Impact Investment Portfolio developed within the framework of the Sustainable Development Goals.

Carola Carazzone, Assifero

Foundations and philanthropic institutions need to realise that if grantees are empowered to achieve their mission, they as funders will better fulfil theirs. Precisely for this very reason, grantees and funders are not counterparts: they are allies in achieving the same horizon of impact. Therefore, it is key to rethink and reshape funding practices, for funders to empower the organisations they support and achieve the systemic change to build a more sustainable, equitable and fair world. This is our chance to embrace the complexity of today’s world with new tools and mindsets.

About Carola Carazzone

International human rights lawyer, Carola Carazzone is secretary general of Assifero – the Italian association of grantmaking foundations and incoming vice president of Philea. She holds a multitude of board roles, having been the first Italian woman to be appointed chair of the Board of Dafne. She also serves as an advisory board member of Ariadne (European Funders for Social Change and Human Rights),  ECFI (European Community Foundation Initiative), Alliance Magazine’s Editorial Board, Ashoka Italia’s Advisory Committee and Philanthropy Coalition for Climate. In 2017, she was appointed senior fellow at the Centre on Philanthropy and Civil Society at the City University of New York.

Main photo by Hannah Busing on Unsplash

Based on a survey of 480 nonprofit representatives across Europe, the 2021 Nonprofit Pulse Report reveals that 2 in 3 respondents expect their total income in 2021 to exceed or match income from last year.

Although half of respondents had to cancel or postpone fundraising activities during the year, nonprofits innovated and diversified, ramping up their use of digital. More than 2 in 5 reported a rise in individual giving over the past year, with 1 in 4 saying donation levels were stable. As demand for services continues to rise and social distancing restricts face-to-face outreach, over half (55%) have developed new ways to deliver their mission and reach beneficiaries.

Concerns about increased workloads and pressure on staff

However, the report exposes concerns about rising workloads and increased pressure on nonprofit staff. A second year of lockdowns, remote working, cancelled fundraising events, barriers to service delivery and a general climate of uncertainty is taking its toll on the sector’s workforce.

When asked to identify the biggest challenges facing their nonprofit now, the ability to manage workload topped the list, cited by more than half of respondents (52%). 4 in 10 report that staff and volunteers are more stressed than they were pre-pandemic.

As nonprofits continue to adapt to new ways of working and often longer task lists, sector capacity is being stretched. 1 in 3 representatives report a drop in volunteers and 1 in 5 a reduction in staff.

Eduard Marček, former President of EFA and Head of the Slovak Fundraising Centre, says:

Eduard Marček, Slovak Fundraising Centre

“Nonprofits have proved themselves to be hugely resilient and agile, but this cannot come at the expense of the sector’s workforce; the people who work so hard to protect good causes and the most vulnerable communities around us.

“Remote working, reduced staff and volunteer capacity, restricted budgets and higher demand for services are all adding to the challenge of managing workload in an ever-changing environment.

“The biggest challenge ahead of us now surely is not only how to survive and thrive through the next phase of the pandemic, but how best to support and nurture our people and ease workloads. It’s no easy feat but protecting our people has never been more important.”

Developing stronger supporter relationships

Digital has become critical for fundraising and service delivery in a socially-distanced world, but the shift in channels comes alongside a renewed focus on relationship building and supporter care, which are taking a front seat in fundraising strategies. Half of respondents say they are increasing their focus on supporter retention, and 1 in 3 say that supporter relationships have strengthened during the pandemic.

Bijan Bedroud, Senior Vice President and General Manager International at Salesforce.org, adds:

“We know that supporters and volunteers are the lifeblood of the nonprofit community and it’s amazing to see how the shift to digital has enabled organisations to strengthen this bond. The sector has shown its commitment and endurance during the pandemic, and even if we all look forward to more in-person events, the nonprofit community continues to embrace new channels and the opportunities they bring.”

Reactions from the sector

Responding to the findings, Ceri Edwards, Director of People & Engagement at the Chartered Institute of Fundraising and Vice President of EFA, says:

“These findings are a fascinating snapshot of the impact on fundraising across Europe during 2021. It’s clear that the pandemic continues to place challenges on fundraisers all over the continent and is transforming fundraising strategies for the longer-term, especially with the increased focus on digital and opportunities of online events and new channels. While it is encouraging that income for charities is increasing and that fundraising is recovering compared to 2020, significant challenges remain.

“From the UK perspective, it’s concerning that respondents are most likely to say that they have bigger workloads and that staff are more stressed. We need a fundraising workforce that is energised and healthy to be able to raise the funds that our causes need, and the Chartered Institute of Fundraising will be working with its members to develop the right tools, support and training to achieve that.”

Martin Georgi, Chair of the German Fundraising Association (DFRV) highlights nonprofits’ resilience, saying:

“Organisations in Germany were remarkably resilient in the crisis and many even managed to increase their income significantly through active fundraising. Digital channels have become ever more important, but mail and telephone also worked well in the pandemic since donors could be more easily reached at home: the overall outlook for fundraising is optimistic.

“Challenges were faced by organisations that depend on income from live events and for all organisations providing services, not all of which could be easily transferred easily to digital formats. A particular note of concern for the coming months is the continuing high workload – after almost two years of extra efforts and reconciling sometimes conflicting private and professional pressures, and with the pandemic not yet over, many staff and volunteers are struggling or even suffering and need some relief.”

Commenting on the Irish market, Scott Kelley, Chief Operating Officer of Charities Institute Ireland, adds:

“The pandemic has caused a lot of change in our society and this survey demonstrates that the Irish public has responded to the pressures on charities. The lockdowns and the curtailment of our normal social lives have given donors a fresh perspective on charities and the work we do. Many charities have responded to a collapse in traditional fundraising (events, face-to-face) by seeking donations online through digital platforms. This is encouraging because it is impossible to envisage a future without a significant level of fundraising being carried out online or remotely.”

View the report here.

Main photo by Frauke Riether on Pixabay

Published in partnership with the Indiana University Lilly Family School of Philanthropy at IUPUI and The Resource Alliance, the report summarises the findings from a poll of 805 charitable organisations in over 150 nations (306 in Europe). It explores the skillsets they rely on to sustain their operations through challenging times and those that must be developed to survive the pandemic and emerge stronger.

Key findings include:

-Capabilities in organisational management are needed to build resilience, including advancing DEI, strategic planning, and digital fundraising strategy.
-Three in four (76%) respondents indicated interest in learning new ways of using digital technology for fundraising and 61% indicated a need for better digital tools to connect with stakeholders.
-Although a large majority (72%) have a communications plan in place, nearly as many (71%) indicate they want to learn how to communicate more effectively for fundraising and 63% need guidance in impactful storytelling to achieve their objectives.
-Seven in ten (70%) feel they are equipped to remain financially sustainable amid the uncertainty created by the pandemic and its impact on the economy.
-Although future implications of the pandemic are unknown, 91% of charities say they are confident they have effective leadership and governance in place to help them successfully navigate the crisis.

“Charities need to be focused on future-proofing themselves for the post-pandemic world,” said Ted Hart, CAF America president and CEO. “The resilience of charities relies on the key competencies of nonprofits in organisational management. Our goal is to ensure that long-term resilience and bolster the ability of nonprofits to face the unforeseen challenges ahead and advance their mission in the face of future adversity.”

View the full report and full survey series here.