THE ROLE OF THE ACCOUNTANT IN FUNDRAISING

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1 THE ROLE OF THE ACCOUNTANT IN FUNDRAISING Josephine Magoba Makuyi, Friday 1 st of July 2016 Scope of this presentation Introduction and Background Current Funding and Fundraising Environment in the NGO context What Fundraising entails How the Accountant fits into the picture Accountants effectively supporting Fundraising Fundraising as a collaboration tool Conclusion & Takeaway for the day Introduction and Background The changing role of the Accountant..Accounting is a profession so diverse that we as accountants have a role to play in almost all areas of the organization. An accountant has a role to play in the Annual Planning process, Budgeting, Audit, Tax planning, Credit Control, Procurement, project management, Fundraising, etc... Introduction and Background The changing face of Funding and Fundraising Fundraising and Funding for NGOs has also evolved over time due to various reasons: o The Global agenda emphasis on the market as key to Economic Development Funders have changed their priorities as a result of global failure to achieve a real reduction in poverty, which has since led to new and different analyses of causes of poverty and the means of resolving this. For example in the 1990s, the World Bank and IMF primed the engines for development by promoting Global Economic growth through Liberalisation and Privatisation, moving money away from supporting Governments into the Private sector. Markets were seen as the key to promoting Economic development and governments were increasingly relegated to a minor role. Development was understood as Economic Growth and issues such as distribution of wealth were left to the market. o How the role of NGOs emerged and the concept of Privatising Aid Within the broad global agenda, NGOs were seen as critical players; they were both expected to provide services for the poor that governments were failing to provide, and to fill in the gaps left by market failures. NGOs were to experiment and provide successful models of working with the poor to develop new partnerships with local players and later other donors, markets, governments and other civil societies. NGOs were seen as both critical service providers and the crucible for innovative development work. They were recipients of aid money for basic service delivery, by-passing the government in providing the poor with essential services. 1

2 Many Donors felt that NGOs understood the local context and were better placed than donors to reach the very poorest the trend was generally for privatising aid. There was generally a significant rise in funding for NGOs and growth in the number, size and voice of NGOs. o 2000 World Bank poverty report emphasizing the role of government: The focus of the development project changed dramatically following intense lobbying that led to new analyses and understanding of the causes of poverty presented in the 2000 World Bank report, where the key drivers of pro-poor change were identified as enabling government rather than only markets and NGOs. Aid was re-aligned in relation to poverty reduction and governments, NGOs and the private sector were all expected to work together to address poverty reduction. o Emerging of the MDGs - Millennium Development Goals: Clear targets for achieving this were subsequently set out in the Millennium Development Goals Governments are expected to create appropriate frameworks for economic growth, collaboration, decentralisation and responsive policy & planning sensitive to the needs of the poor. Those governments that have good pro-poor policies would be expecting to receive more aid and debt relief to support their work. Current Funding and Fundraising environment in the NGO context: The Funding context for NGOs has evolved over time; now characterised by: Intense competition for funding between INGOs: Given the changing government agendas, fluctuating aid flow and changing aid mechanism with the new terror agenda absorbing aid funding, there s been a shift of money to funding NGOs directly and there s been a rise of number of NGOs in the past 10 years. Increased control and tight accountabilities: NGOs have to apply for funds for projects and programmes that are in line with the latest strategic plans and priorities of funders. These are increasingly tightly defined by funders like DFID where all work must contribute to the Millennium Development Goals and DFID s current agenda in a country and to fit their Country strategic plans. Significant rise in contracting: Larger INGOs apply for significant funds through contracts, which are designed and tightly controlled by the donor to fit the overall agenda and timelines for change. Far less responsive funding available for INGOs own agendas and ideas: For this kind of funding, they now have to rely increasingly on small foundations and the 2 relatively big sources of funding the Big Lottery and Comic Relief, which are also now tightening their terms and conditions and are increasingly focused on results and demonstrable change. 2

3 A focus now on Civil society, not just INGOs and a concern that INGOs must work in partnerships with the wider civil society organisations, the private sector as well as government something that was not in their role traditionally. Need for a wide range of conditions to be met, usually including working participatively, in partnerships, doing work on the ground as well as policy advocacy, participating in networking, ensuring sustainability, addressing gender and women s rights, and ensuring human rights are central to the approach. These conditions are multiple, complex and fast changing. The log frame and its associated tools dominate all funding streams; and to get access everyone must be able to use, manipulate and speak the language of rational management targets, indicators, results, planned change and so on! What are the Consequences? For some INGOs there s increased funding available in this evolving context. For example, those that are able to secure partnership agreements, along with governments & EU contracts. Some of those include - Water Aid which has since more than doubled in just four years from 9m to 20m a year; as well as the largest agencies such as Save the Children Fund, Oxfam and others which have grown year to year with current incomes well over 100m per year. All these have benefited from the rise of Institutional Funding including some for Humanitarian and Emergency work. However, the picture is different for many smaller and medium-size NGOs where competition for funding is intense, the conditions required to be met are numerous and chances of success are less than before. Some are disappearing, talking about merger or struggling on the edge of survival. These changes are also having a limiting effect on the way in which all INGOs can pursue their missions of developing capacities in the world s poorest places and tensions consequently arise within organisations between front-line staff/senior managers (including fundraisers) over delivering projects that appear to be more concerned with delivering the agenda of the funders rather than to beneficiaries; thus creating a negative effect on their activities and relationships. The challenges that arise from this situation include: o Focus on results, but with funding being tied more to ability to meet donor demands. o Donors change their demands on NGOs and re-define their roles. o This has the knock-on effect that speaking the language of donors often undermines NGOs mission, values and aims; as they increasingly adapt their language and projects to suit the current demands of the funding donors. 3

4 What does Fundraising entail? Broadly speaking, this would entail: 1. Preparing the Fundraising Strategy 2. Effectively driving the fundraising process. 3. Clarifying key roles for each of the actors in the fundraising process. 4. Maintaining key relationships and keeping funders happy. Preparing the Fundraising strategy: Which kind of fundraising is required. Where the funds will come from bearing in mind diversification of the NGO s portfolio What activities will be undertaken. What resources will be required. Effectively driving the fundraising process: Communication to all stakeholders on deliverables, guidelines, timelines, activities, roles and responsibilities. Developing the concept, log frame, activity plan for the proposal Budgeting for the proposal Coordinating all reviews for both log frame and budget at each stage. Risk analysis and assessment against overall portfolio Managing approvals, submission, deadlines and communications thereof An example included herewith below: 4

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6 Clarifying key roles for each of the actors in in the fundraising process: Involves defining the responsibilities of each of the key actors as well as identifying exactly who should take on each of the roles: Maintaining key relationships and keeping funders happy to increase prospects of continuous funding from same donors, repeat funding and new funding prospects Partnership, departmental and other relationships well maintained. Clean Pre-financing audits, donor and other audits, action points in MLs followed up. Timely and accurate reporting both financial & technical reports Demonstration of ability to manage and build capacity for partners Adhering to other Donor compliance specifics Strong internal control environments 6

7 How the Accountant fits into the picture: The Accountant in any NGO is a key link the fundraising process as s/he: Has sight of the big picture. Can provide technical expertise in various areas. Is an authoritative source of information. Is better placed to perform vital analysis ROI, Financial Risk Analysis Would be in position to provide key advice to the other funding team on delivery as per funding requirements. Will be key in ensuring funders are kept happy! Promoting Collective Responsibility, Accountability & Ownership The Accountant effectively supporting the fundraising process: Specifically the Accountant will be responsible for: 1. Effective Budgeting: Total Project costing Ensuring all cost drivers in the activity plan are identified and costed realistically, including the indirect costs like overheads and other shared costs supported with justifiable percentages for staff and office cost allocations. This would also entail developing relevant pricing strategies for donors in order to maximise cost recovery. 2. Ensuring compliance throughout the fundraising process - to all Donor rules & regulations, the NGO s policies and procedures, the country s statutory and other requirements. The accountant will have to proactively obtain guidelines for all these and ensure all actors do understand and will comply accordingly. 3. Providing expert advice on funding decisions: Feeding into the GO-NOGO decisions in the funding processes, and advising on strategies of engagement with donors with regard to budgeting after a thorough Cost-Benefit analysis. 4. Portfolio Analysis - Identifying any financial threats to the NGO s Fundraising function, analysing underlying issues and explaining complex financial matters to non-finance colleagues. The Accountant would also advise on status of portfolio diversification and associated risks as well as contributing to risk analysis arising from funding submissions. 5. Keeping funders happy to increase prospects of continuous funding from same donors, repeat funding and new funding prospects. Continuous or future funding prospects can be consequent from good finance and grant management and the accountant comes in handy to present and highlight the highs and positive points in managing previous grants well. 7

8 The accountant would support this cause by ensuring all Donor rules and regulations are adhered to by providing training to all staff and partners in these. Maintaining a strong internal control environment in order to obtain clean pre-financing audits, donor and other audits by ensuring all action points in management letters and all self-audit exercises are actively followed up and actioned. The accountant would also ensure timely and accurate reporting for both financial & technical reports ensuring value for money is clearly highlighted. The accountant should be able to demonstrate ability to have built capacity for local partners to enable them sustainably perform as per set standards. 6. Advising on Funding movement and resource allocation - S/he should also proactively advise on the impact of new proposals in light of current resources/capacity/ financial need and suggest effective solutions. 7. Promoting Collective Responsibility, Accountability & Ownership - Better Programme- Finance working relationships; where the Accountant and the Budget holders (commonly Programme staff) would start to have a mutual understanding on the projects being undertaken if they have worked closely together in raising the funds. 8. Ensuring delivery of results from the funds raised and advising management accordingly - VFM ratio (Economy, Efficiency, Effectiveness) [Time into the project - Funds spent so far objectives achieved. 9. Ensuring the organisation has an up to date fundraising strategy that is in line with the NGOs Strategic Plan and providing advice where necessary. The fundraising strategy should be aspiring for Programme-led funding and not Donor-led funding. 10. Providing technical advice in specific areas such as during Crowd funding campaigns where advice may be needed on the tax implications of their fundraising campaign as well as the basics of the accounting process. Conclusion & Takeaway for the day.joint effort in fundraising by all departments builds a sense of collective responsibility, accountability and ownership that generates a ripple effect.. As accountants, the organisation relies on us as key actors in the fundraising process so we should endeavour to play our role effectively 8