With the International Monetary Fund (IMF) predicting that Covid-19 will cost the global economy $12 trillion (R209 trillion), resulting in the biggest dip in growth since the Great Depression, the non-profit sector in South Africa is facing a massive challenge. How can it secure the critical resources needed to create social change in an uncertain world? Sarah Scarth, Global Programmes and Partnerships Director at The Resource Alliance, explores how the funding landscape will change due to Covid-19, where the opportunities lie, and how these can be harnessed.
Most South African non-profit organisations (NPOs) were not expecting 2020 to be an easy year. A stagnant economy, rising unemployment, and South Africa’s impending downgrade to junk status by the last of the three
big ratings agencies did not inspire confidence. However, no-one could have predicted how bad things would get with the outbreak of the Covid-19 global pandemic. We do not yet know what the full impact of the extended economic and social lockdown will be for more than 230 000 registered NPOs and their estimated 800 000 employees, but the situation is dire. The sector has been excluded from any government relief packages, despite the vital and critical contribution it makes.
A changing funding landscape
Despite the impressive response by many philanthropic donors, the funding situation is likely to be constrained in the medium to long term. Locally and globally, donors substantially increased their giving in response to Covid-19 and relaxed existing grant conditions to give their grantees more flexibility in how funds were used.
At the height of the crisis, the chairperson of the Independent Philanthropy Association of South Africa (IPASA),
Sarah Rennie, cautioned in a Daily Maverick article that “stock market crashes have led to many foundations losing between 30% and 40% of the value of their endowments, and in order to respond
to the Covid-19 pandemic by providing emergency funding, many foundations have been forced to dip into their reserves, which is a rare step for them to take”.1
This will no doubt affect their grant- making strategies in the future, and we can expect a more cautious approach
as they seek to rebuild their reserves. This sentiment is likely to be replicated at international charitable foundations.
Richard Hebditch, director of external affairs at the Association of Charitable Foundations in the United Kingdom,
said in an interview with Devex that there is likely to be uncertainty in the long term. He believes that while many foundations will do their bit to help in the short term it is difficult to predict how the crisis will affect giving behaviour by foundations in the long term.
In South Africa, corporate giving is also very likely to be negatively affected by the pandemic, given the depressing forecast that the South African economy will shrink by around 7.2%. With cutbacks and business closures on the rise, and the resultant redundancies, corporate South Africa is going to be strained to match the estimated R5.5 billion in CSI spend received by the NPO sector in 2019.
Encouragingly, giving by individual South Africans has increased during the pandemic. Local platform BackaBuddy reported exponential growth during April, which is not surprising given the outpouring of compassion for those most adversely affected by the lockdown. BackaBuddy Chief Operations Officer, Catherine du Plooy, reported that in April 2020, they had 914 campaigns as against 401 in 2019, resulting in a 285% growth in giving.
“In April last year, R3 949 344 was donated through our platform and this year it grew to R15 218 000,” said Catherine. “Encouragingly, we saw donations being made to both individuals looking for help as well as to larger, more established organisations. There was definitely a trend towards campaigns being set up for tangible needs, for example food vouchers, and this made transparency around how donations were used easier to establish, as we were able to purchase the vouchers on behalf of the organisations.”
However, despite the spike in giving during the height of the crisis, as the impact of the pandemic deepens, and takes its expected toll on household incomes, it will be more difficult for organisations that rely on donations from ordinary South Africans to grow income. Given that statistics on individual giving are not easily accessible, we can look to more developed individual giving markets to get a sense of what might lie ahead. Despite the UK government’s £750 million Covid-19 relief package for the charitable sector, predictions are that the sector will still take a hit.
According to Charities Aid Foundation (CAF), which has been conducting research among charities and their supporters for many years and has increased the frequency of these surveys during the Covid-19 crisis, over half (53%) of the 416 UK-based charities surveyed said that they had experienced a decrease in donations since the start of the crisis. Only 18% said they had seen an increase. Individual donors have less disposable income and the ‘cause areas’ they support have shifted during the crisis, for example towards health-related issues.
Loss of funding is a reality for many African non-governmental organisations (NGOs), as reported by Epic-Africa and @AfricanNGOs in their June 2020 report on the impact of Covid-19 on African civil society organisations (CSOs). The report found that of the 1 015 NGOs surveyed, “55.69% had already experienced a loss of funding, while 66.46% expected to lose funding in the next 3 to 6 months. Further, 77.97% believed that COVID-19 would have a devastating impact on the sustainability of many CSOs.”
Necessity is the mother of invention … and innovation
All this makes for depressing reading. With forecasts this bad, it is hard for NPO leaders and fundraisers to know what to do to survive, never mind thrive. But as former UK Prime Minister Winston Churchill pointed out, one should never let a good crisis go to waste. Local and international organisations have come up with some creative fundraising practices to endure and survive the crisis.
The Cape of Good Hope SPCA head of fundraising, Belinda Abraham, has reported a growth in income during the crisis, achieved through agile, creative thinking and quick adaptation to the new lockdown reality. The well-known animal welfare organisation, whichrelies on donations from individuals for 71% of its annual income, was facing a collapse in large portions of its income that would be generated through event fundraising (such as the Two Oceans Marathon fundraisers, book sales, and its own signature dog walks). As the team was forced to work remotely, Belinda implemented four key actions:
- Rapid engagement with existing supporters to let them know they were still operational and rescuing and caring for animals despite the crisis
- The creation of new virtual fundraising events, like a virtual half-marathon, which raised just under R100 000
- Increased use of digital platforms to communicate, especially social media, using video footage to highlight the organisation’s work, and hosting pet adoption awareness drives on Zoom
- Creating unique animal face masks, the sales of which have generated gross profit of R350 000.
The result has been that the Cape of Good Hope SPCA’s year-to-date income has increased by 91%.
Beyond our borders, the fundraising communication of the UK’s Royal National Lifeboat Institute (RNLI) has been impressive. From the start of the crisis it adapted to ensure its communication was not only relevant and ‘spoke’ to what its supporters were going through but it used the powerfully emotional concept of ‘belonging’ to significantly increase donations.
In its ‘You’re one of the crew’ campaign, volunteer crew members recorded a video message thanking RNLI supporters for their past support, telling them they were thinking about them, and asking them to take care and stay safe. They reminded their supporters that, thanks to their past support, the RNLI was ready to respond, even during a pandemic. In this way, RNLI helped its supporters to feel powerful during a time of unprecedented fear and uncertainty, which elicited a huge response. One of its fundraising appeals, to equip a new boat, achieved a fivefold increase in donations over its previous fundraising appeal.
Making people feel good through giving and belonging
The power of giving and belonging as a force for good has been demonstrated by Community Action Networks (CANs), which originated in Cape Town and have brought “residents from varied backgrounds into collective action to find solutions to Covid-related issues”.
In response to the crisis, thousands of volunteers, mostly women, have self- organised – largely using WhatsApp – to provide support to many thousands of people adversely affected by the pandemic. Through feeding schemes, sewing groups making masks, child- care services and more, these groups of volunteers have raised financial and in-kind gifts worth millions during the crisis. In an article for OpenGlobalRights, Ella Scheepers, Ishtar Lakhani, and Kasey Armstrong shared that creating a sense of belonging has been fundamental to the success of these CANs. “We have tried to take an approach that says: organising to create community must have the goal of creating belonging. Belonging creates the conditions for collective thinking, action, and change.”
The outpouring of support through CANs and similar groups confirms that, despite the economic hardships many are facing, South Africa is a nation of givers. Both during and beyond a crisis, the desire to give and help is deeply ingrained and this has been particularly evident during the current disaster, when donating makes us feel good and helps us cope with the uncertainty we are all facing.
This desire shows the NPO sector that the potential to raise funds from ordinary South Africans, rather than just corporates and foundations, is a real possibility. Going digital will be critical to harness and grow these opportunities.
Digital transformation – are you ready?
The Covid-19 crisis has demonstrated the power of technology to enable us to work, shop, learn, socialise, exercise and play while in lockdown, and it has been predicted that we will not go back to normal once this crisis has passed. Many people will remain working from home – if not entirely, then for a portion of the working week.
Online meetings and gatherings are here to stay, given the time and cost efficiencies they help to deliver. With all of us spending more time staring at screens, integrating digital into fundraising strategies is no longer an option – it is a must.
Fundraising expert Professor Usha Menon shared in a recent blog post that “with the spotlight now on technology-enabled ways of meeting our objectives, charities have to adopt online/digital fundraising strategies to connect with donors and enhance their fundraising outreach”.
She noted: “With more people working from home and sharing information related to Covid-19 online, organisations can use social media to engage with their donors and recruit new ones. This method increases the donor rate and expands and builds the donor base through social media and online fundraising platforms. These platforms allow the charity to have multiple campaign appeals simultaneously, allowing organisations to reach out to various segments of the population.”2
Despite the growth in digital fundraising globally (total online revenue grew by 10% in 2019, according to M+R’s
2020 Benchmarks Study), the challenges to starting and keeping a digital fundraising programme going and growing cannot be underestimated.
Some of the biggest hurdles to digital fundraising success include a lack of organisational buy-in (including from the board); lack of knowledge and capacity in software and data collection and storage – including, complying with the Protection of Personal Information (POPI) Act; and a lack of digital expertise and experience, especially creating valuable content so that communications and appeals stand out. To diversify into digital (which is largely unrestricted income), you need to:
- Have a clear, long-term digital communications and fundraising strategy which sets your goal and defines how you are going to achieve it
- Get senior buy-in
- Upskill your team (this is not something you can just expect the youngest member of your team to know how to do, simply because you think they may be more social media- or digital-savvy than you)
- Be ready to work across multiple digital channels (websites, video, email, podcasts, social media)
- Generate value for your supporters through your content
- Test as you go
Engagement is key during a crisis and beyond
Regular, strong, and honest communication is at the heart of good fundraising with all donor audiences – companies, foundations, and individuals – but is sadly often neglected as too many NPOs consider that an annual report ticks this box. During the Covid-19 crisis, those organisations that have invested time in keeping their board members, funders, and other stakeholders engaged in how they are coping, adapting, and responding to the crisis are more likely to have reaped the benefits than those who have failed to do this.
Michelle Henley, co-founder and CEO of Elephants Alive – a conservation NPO based in Hoedspruit in Limpopo – attended a Resource Alliance webinar at the start of the crisis and provided this feedback: “The advice was to take
the energy you would have used to get new donors on board and invest it in the retention of your current donors. Retention is more important than acquisition during Covid-19! I have sent weekly WhatsApp messages and emails to donors since the lockdown. We have just been sharing stories about what we as Elephants Alive are busy with during lockdown. Everybody loves the puppet shows and vegetable garden I have started with Ronny and Joel’s kids, who are with me during the lockdown.”
Michelle reported that following the advice allowed the NPO to raise close to R3 million in new funding from existing donors for their elephant conservation work – an outstanding achievement.
Post-Covid-19 strategic planning
There is no doubt that it will be a long time before we recover from the deep economic crisis we are facing because of Covid-19. Returning to the previous status quo is not an option and if you are to survive and thrive you will need to carefully consider your strategy for the future and critically assess what changes or adjustments are needed in order to secure support from donors, both large and small.
As we start to move beyond Covid-19, challenge yourself and your organisation to consider the following:
- Significant CSI cutbacks are expected and many corporates are likely to place a greater emphasis on the impact achieved by their donation/support in the future. Question: “What are we doing to help our corporate partners achieve even greater ‘bang for their buck’ through the collaborations we create or are part of?”
- Covid-19 has resulted in some funders creating new or non-traditional finance models, such as loan schemes to support their beneficiaries and there is an appetite to do more. Question: “Are we actively looking for and learning about different finance models and having conversations with our funding partners about new potential ways to secure support?”
- The crisis has highlighted the importance for all sectors of society
to work together more effectively. Question: “Are we actively looking
for ways to work with others (that is, government, business, civil society and private donors) to tackle the problems we seek to address and are we ensuring that those we aim to help are represented in our discussions/ governance structures?”
The current uncertainty we face requires us to carefully consider the strategies we will adopt to meet our missions. Change is not easy for anyone; however, if we remain focused on the purpose of our existence, and those that we serve through it, we will find the strength and resilience to endure this crisis and be stronger for it.
Sources
1 Schneider, M. (10 May 2020). NPOs in crisis as financial crisis hits funders and government excludes them from Covid-19 financial relief.
2 Menon, U. (Undated). 15 tips to adapt your online fundraising while co-existing with Covid-19.
This article was originally published in Trialogue Business in Society Handbook 2020.
