By: Niloufer Memon, Julia Standish-White, Nkanyiso Hlongwa, Dominique Wells, Mikal Kooiker, Bradley Seeman
Many African NGOs are well run and deeply rooted in their communities and countries, delivering powerful impact. Yet many operate in an environment of funding scarcity and uncertainty. Our research examines how these NGOs secured the funding needed to grow and sustain themselves. We analysed revenue data for 85 NGOs in Kenya, Nigeria and South Africa with budgets over US$1 million. We interviewed leaders of 33 large NGOs in those countries.
Methodology
This research was carried out between June and December 2023. We focused on NGOs in South Africa, Kenya and Nigeria because they are the largest economies in sub-Saharan Africa and have the largest and most mature social sectors.
Through conversations with sector experts and desk research, we identified 85 NGOs in the three countries with annual revenues of at least US$1 million. The NGOs were headquartered in one of those countries. Since the database excludes international NGOs as well as smaller local NGOs, the research is not intended to be fully representative of the NGO sector on the continent but to provide information about larger NGOs in our countries of focus.
From this database we interviewed at least 10 leaders of larger NGOs in each of the three countries, amounting to 33 organisations. For Kenya and South Africa, ‘big’ was defined as US$5 million; for Nigeria, we set the threshold to US$1 million (see how ‘big’ differs in the different countries in the figure alongside). During interviews we asked leaders for more information on their funding models, including their first sizeable grant, current budget size, primary funding type and target funding mix.
What this research addresses
African NGOs play a vital role on the continent – so it is important to understand where their funding comes from and the strategies they pursue to grow and sustain themselves.
What we found is that African NGOs that have grown significantly rely overwhelmingly on international sources of funding – although, to be sure, only a small share of international funding for the African social sector goes to African NGOs. These sources include both philanthropy from outside Africa (foundations or high-net-worth individuals), and bilateral (foreign government) and multilateral (for example, World Bank) donors. Among the NGOs interviewed, over 90% rely on philanthropic, bilateral or multilateral funding from outside Africa for most of their revenue.
The research is aimed at two audiences – NGO leaders who want to understand the funding strategies of others in the sector and funders who are interested in pursuing funding strategies that support the growth and sustainability of these African NGOs.
Key Findings
The research revealed five key findings:
1. International funding fuels growth
Across the 33 NGOs we interviewed, over 90% rely on funding from outside Africa for most of their revenue (see figure alongside). That funding came from a combination of international philanthropy and official development assistance (ODA) from bilateral or multilateral government sources in roughly equal parts. If you consider that nine times more capital flowed from ODA into the three countries of focus than from international philanthropy in 2022, it becomes clear how important international philanthropic funding is for African NGOs that strive to grow.
Nine out of 10 of the organisations interviewed across the three countries received a ‘first pivotal grant’ from a non-African funder. (This grant, irrespective of size, was described by the NGO interviewee as a significant early milestone in the NGO’s growth trajectory.) About half of these first pivotal grants came from philanthropy, with a wide range of donors. The remainder received their first pivotal grants from bilateral or multilateral donors – 10 different governments or multilateral.
2. NGOs have adopted tactics specific to accessing this international funding
Given the need to focus on international funding sources, the NGOs we interviewed have adopted tactics specific to this category of funding.
These tactics often reflect the burden of conforming to the practices of funders from outside Africa. It is our hope that funders adapt the NGOs’ practices and embrace norms that ease the way for local leaders and NGOs with close ties to communities. Tactics include:
- Building and sustaining relationships by leveraging personal connections and existing funding networks
- Establishing US or UK registration to facilitate fundraising
- Hiring and building a team that reflects the skill sets needed
- Establishing sufficient credibility with funders to move from being a subgrantee to a direct grantee.
“If you’re based in Africa, you need strong global connections to access international funding – whether it’s philanthropy or bilateral funding. We’ve worked to develop our grant writing, storytelling and communications capabilities so that we can compete with the best.”
Dr Éliane Ubalijoro, CEO of the Center for International Forestry Research and World Agroforestry
3.Domestic funding helps NGOs in South Africa much more than in Kenya and Nigeria
Our first two findings – the overwhelming dominance of international funding as a revenue source for African NGOs and the NGOs’ efforts to develop specific tactics to access this funding – apply across all three countries we studied. The role of domestic funding, however, is quite different for NGOs in South Africa than for those in Kenya and Nigeria. Domestic funding is the largest revenue source for only two of the 33 NGOs we interviewed across the three countries – and both are South African. Although most South African NGOs we interviewed rely on international funding for much of their revenue, corporate or government funding and domestic philanthropy can play a key role in their growth and sustainability. Indeed, all but one of the 13 South African NGOs we interviewed had received a notable amount of domestic funding. For some, domestic funding helps support work or builds organisational capacity for which international funders will not pay.
4. Flexible funding is relatively scarce but can be catalytic
Most of the funding received by the NGOs we talked to is restricted by the funder – tied to a specific set of activities or goals. Only seven of the respondent organisations get most of their revenue as flexible funding, either unrestricted or lightly restricted. Yet we heard repeatedly how flexible funding – even if it made up only a small portion of the organisation’s total revenue – has allowed African NGOs to develop their capacity and strengthen their resilience in ways that are hard to do with restricted funding.
One example of this type of funding is the Ford Foundation’s Building Institutions and Networks (BUILD) initiative, which provides multi-year general operating funding combined with targeted organisational strengthening support. LEAP Africa, a Nigeria-based NGO we interviewed which focuses on developing ethical youth leaders across Africa, used BUILD funding for strategic planning, back-office operations for expansion plans, talent acquisition and leadership development. LEAP credits these investments with helping strengthen its capacity and attracting additional international funding.
5. African NGOs often seek to broaden their revenue mix to sustain their growth
Given the overall scarcity of funding for African NGOs as well as the risk of shifting funder priorities, most of the NGOs we spoke to do not want to become too dependent on a single category of funding. Some have devoted a lot of effort to broadening or shifting their revenue mix – sometimes by choice, sometimes by necessity.
One example of a shift caused by necessity is the experience of the Wildlands Conservation Trust, a South African conservation-focused nonprofit created in 2004 through the merger of two other organisations. Previously, it relied heavily on funding from the South African government and local corporations for large-scale restoration projects. However, in 2020, the Covid-19 pandemic resulted in the government withdrawing funding and redirecting it towards the pandemic response, leaving the Trust with a big funding gap. The organisation refocused its efforts on international funders – bilateral and multilateral funders, and philanthropy. Today, half of the organisation’s funding comes from these sources.
Other NGOs we spoke to have chosen to shift their revenue mix to unlock more funding, pursue greater flexibility or reduce risk.
“Bilateral and multilateral funders are the biggest source of funding in Africa. So, we’re dipping our toes into it.”
Katherine Potaski, Chief Advancement Officer of Shining Hope for Communities, which receives most of its revenue through international philanthropy.
Conclusion
Not all African NGOs seek to grow. Indeed, many are working to sustain and deepen their impact within their current budgetary footprint. And almost all of them are operating in environments where the revenue they depend on is scarce and sometimes insecure, and comes from outside Africa.
The strength of the 33 NGOs we spoke to in Kenya, Nigeria and South Africa underscores an enormous opportunity for funders who want to make a difference in Africa.
We are publishing this article at a time when the conversation around localisation is growing among international philanthropists and ODA funders. Some are aggressively pursuing the opportunity to direct a larger share of their funding – and less restricted funding – to African NGOs. In practical terms, this might mean a funder making a grant to an African NGO without the track record of an international NGO, could revisit the way it looks at budget size as an indicator of organisational strength, substituting some degree of trust for rigid programme metrics or turning a one-year grant into a three- or five-year grant. And while African philanthropists may continue to pursue impact by funding the public sector or their own operating foundations, they can also support the high-impact work of African NGOs – for example, by providing pivotal early grants or potentially catalytic flexible grants.
Find out more
- Link to report: https://www.bridgespan.org/insights/how-african-ngos-grow
- Contact information: contact@bridgespan.org
