Don’t let funding decide your strategy

What comes first: the plan or the funding? What sets an organisation’s direction — the need or purpose, or the type of funding available? It’s not unusual to see organisations repositioning themselves and dropping plans and projects that don’t neatly fit with the latest jargon and buzzwords coming from funding agencies.

How often, even in quite small organisations, do silos develop where people retreat into their roles and don’t see the bigger picture? All too often, people become disconnected. Key individuals or teams don’t talk to each other. Staff delivering the work have little input into how the organisation funds its activity. It becomes easy for an organisation to be led not by its mission, but by the funding it grabs hold of.

In researching the new edition of Business and Strategic Planning for voluntary organisations, one seasoned charity worker described it to me like this:

“It’s almost as if our organisation operates in tribes. Our client-facing staff are consumed by meeting demanding client needs. Managers at head office use a language borrowed from business that’s all about goals, targets and missions. Our fundraising tribe is expected to magic up funds to plug a growing income gap and fund whatever is the latest new idea.”

As well as outlining a strategic process, the book looks at how strategy and fundraising fit together and support each other. Three issues need tackling:

• The danger of funding — and particularly the sense of panic caused by a lack of it — dominating all thinking, blocking fresh ideas and causing the organisation to be led by funding rather than by purpose.
• The importance of involving fundraisers from the start so they understand the big idea and can help shape the organisation’s direction.
• The need to see fundraising as an integral function, not just a specialist one. Fundraising isn’t only an expert activity; it’s something everyone can play a role in.

The funding landscape has changed and continues to evolve. Public sector bodies have shifted from grant aid to a contract culture. There is much more competition for support. Funding is more focused on projects, with less unrestricted income. There’s a push towards operating as social enterprises and trading. Application and bidding processes are more demanding, with an emphasis on measurement, evidence and impact.

In the past, organisations made powerful appeals and pleaded for support. The process is now far more complex. It’s about persuading people to invest and building relationships, rather than treating funders as distant cheque writers.

These new realities mean organisations must manage continually changing business models made up of traditional funding, project funding, public sector contracts and earned income. The nature of this model shapes the organisation itself. Activities and services become a mixture of established services, fixed-term projects, campaigns and initiatives, all supported by a central core that many funders are reluctant to pay for.

To cope in this ever-changing sector, people need to think beyond their own roles and understand the bigger picture and context in which the organisation operates. Developing strategy is an opportunity to bring people together, help them “join the dots” and see how everything fits.

A key part of the process is getting things in order. First, clarify or renew the overarching purpose and values — the vision, mission and what the organisation stands for. Then develop a strategy based on context, needs and future challenges. Once the strategy is agreed, work out how to fund it and organise around it.

It is important that fundraisers are involved throughout, not just brought in later and told how much income they need to generate. To be successful, they need to understand and articulate the organisation’s vision and intended direction.

Because strategy and funding are inherently linked, it’s important to develop this relationship. Some ideas to help include:

• Keep in touch with the changing environment. Spot trends and consider how they might affect the funding landscape.
• Don’t allow organisational silos to develop. Ensure the people who bring in income understand the organisation’s vision, mission and values, and see how their work supports them. Equally, all staff need a basic understanding of financial realities.
• Consider giving fundraising roles a broader scope. They could extend to business development, supporting innovation, and building and managing relationships with current and potential supporters and partners.
• Continually think and plan about how to create a broader and sustainable business model. Questions about the balance of income types, new income streams and potential partnerships are strategic questions that shape the organisation and should involve everyone.
• Involve the whole team in building collaborative relationships with funders. Take the initiative. See funders as partners or investors who have an interest in your outcomes. Talk to them about progress, trends and future ideas.
• Make better use of data and monitoring. Organisations collect lots of information, but often only provide funders with limited reports about activity. Many organisations have brilliant stories to tell. Evidencing impact should involve everyone.
• Learn from your work. Identify outcomes and share learning to show how everyone has played a part in making things happen.
• Involve fundraising staff from the start when developing ideas for new projects and services. They can help identify trends, spot opportunities and shape potential. In fast-changing times, we need to dedicate resources and time to research and development.

For this to happen, organisational leaders need to pull things together, create strategies and plans that consolidate success, and inspire future progress.

These ideas are explored in more depth, along with practical tools and examples, in the new edition of Business and Strategic Planning – for voluntary organisations. The book offers step-by-step guidance to help trustees and leadership teams develop clear strategies, make better decisions, and turn plans into meaningful action. Find out more and order your copy here.