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Learning about Financial Sustainability
Many NGO workers recognise how important it is to learn from experience when things don’t go to plan, and also that we’re not always good at honestly sharing this learning. Senior leaders at DFID have admitted it's hard to fail and the Independent Commission on Aid Impact's report on how DFID learns highlighted: “The emphasis on results can lead to a bias to the positive.”
Learning from failure and success
Sometimes failure is due to poor project design, external factors outside our control or even poor financial management. Many NGOs find it hard to be honest about failures in financial management as it can be so threatening to their reputation with donors and partners. So we generally only hear a few big stories about failures in financial sustainability when NGOs go bust or have to merge to avoid going bust.
However, I think we also hear too few success stories about NGOs who do achieve financial sustainability, including building up financial reserves and a diversified income base. I wonder, is this because NGOs are also afraid of losing donors if they have strong reserves and appear financially self-sufficient?
It would be great if NGOs who have succeeded in building a financial sustainable future could share their stories (and learning) with Mango and other NGOs. Please contact us if you will share your story or know of an NGO that you think is truly sustainable. It is hard to be financially sustainable in a donor environment that is short-term and focused on results rather than developing the long-term capacity and effectiveness of NGOs to work with their communities. So we would also really like your help to build up an evidence base of why donors should recognise and value financial sustainability. Please complete our quick, 3-question survey to help us get a snap-shot of levels of reserves compared to income around the world.
The road to financial sustainability
Financial sustainability is one of the hardest things for NGOs to achieve. In Mango’s experience, the best starting point is to get the basics right, to create a firm foundation for your programmes.
Recent Mango training bursary recipient, SACCA, explained they needed to secure “more income for planned activities with the aim of finishing the year without deficits.” One key change that SACCA implemented after Mango’s training was to “budget and plan for next year's activities based on available income, not on expectations” and then to keep checking and revising plans and budgets through the year.
The next challenge is not so much about getting ‘more income’ but the right kinds and mix of income, including some with longer term security and continuity. We’d be very interested to hear from NGOs who have managed to secure a balance of income from different sources, such as from income generation and local financing sources, apart from grants and donations.
Not only is financial sustainability hard to achieve, it is also a task that can never be finished because the external environment is continually changing and the future is uncertain. So I hope we can share our successes and failures more - as the single most powerful factor in becoming sustainable is our ability to learn and adapt.
"Success is not final, failure is not fatal: it is the courage to continue that counts." Winston Churchill
Tim Boyes-Watson, Director, Mango