What to do when your funding isn’t enough

Introduction

The sad reality of today’s world for UK charities and non-profit organisations is that funding is in short supply. Government funding is decreasing, grant-makers are under increased pressure, and public fundraising has been hit by a range of setbacks.

So when an organisation doesn’t have the money, it needs to do the work it wants to do. What are the options? I think there are eight ways to respond, including two that look at increased funding. But the sad reality is that there isn’t enough funding to go round for every organisation to have enough. Not everyone can raise all the funds they need. Here is what they can do

Reduce the cost base.

The most obvious way to make ends meet is to reduce costs. This divides into staff and non-staff costs. My advice would always be to cut costs earlier rather than later, and to cut more, not less, to allow for any other unexpected setbacks.

Option 1: Restructure staff team. For most charities, staff make up the bulk of the costs, so cutting staff is essential to cut costs. A restructure of the staff team can provide a new focus and a clearer narrative. In other words, make sure there is logic and clarity to the new structure, and staff and trustees can feel there is some sense in what is a very difficult situation.

Option 2: Reduce non-staff costs. One of the costs that many organisations are cutting is office costs. In a world where people are increasingly working from home, less office space is needed. All other costs should be looked at – travel, expenses, marketing, etc. But if non-staff costs are only 25% of total costs, then it requires a 20% cut in non-staff costs to achieve a 5% cut in total costs. And that may be too small.

Change the way you work.

Option 3: Do fewer activities. One of the ways that organisations cope with reducing staff is by doing less: less services, less communications, less fundraising, and so on. To avoid overload of the staff who remain any restructuring needs to be accompanied by a reduction in either activities or changes to the way of working.

Option 4: Streamline processes. Many charities are quite bureaucratic. There are lots of committees, sign-offs and protocols. One way to cope with a restructure is to streamline. Is that trustee committee really necessary? Is writing all those reports any more than bureaucracy?  Does it really need 3 people to sign off on a social media post? In a world of AI, then finance is almost certainly an area where processes can be streamlined and staff numbers reduced.

Option 5: Move from doing to influencing. Charities love doing. But influencing may have a greater impact. A more fundamental approach to reduction in funding is to become an influencer charity as much as a doing charity. If one member of staff can influence 10 other organisations to change their approach, that may be a greater total impact.

It's never easy to do less; all the choices are hard, but doing nothing is also a choice, and in almost every situation, it may feel like the easiest choice, but it's probably the worst choice for the organisation.

Option 6: Use volunteers more. If costs need to come down, then look at using volunteers more. This might be using trustees to do more or recruit skilled volunteers through an organisation like Reach Volunteering. For many charities with staff, volunteers are often seen as only doing low-level tasks. But it's worth remembering that 90% of charities have no staff, so in those cases, volunteers do everything.

Increase income

Nothing that I have said so far should make people feel that it's pointless to raise money; it isn’t. The challenge is that it can take up a large amount of time and money to do so successfully. In any income-generating strategy its worth looking at the two main areas for fundraising, because the skills and expertise needed are massively varied.

Option 7: Raise more funds from individuals. The days of easy mass fundraising are gone for all but the largest organisations. But my three areas for investing in fundraising from individuals are major donors, lotteries, and events. If you have an event, you can piggyback on one that somebody else organises (e.g., the Royal Parks Half Marathon) rather than organise your own.

Option 8: Raise more funds from organisations. The three broad types of organisations to generate funds from are government (central and local), businesses and grant-makers. The first two only tend to have funds for very specific types of organisations, and grant makers are getting an ever-increasing number of applications. Do you invest time and energy for success, very diligently? Fewer applications, done better, are almost always better than spraying and praying. Alternatively, you can earn income by providing services to organisations such as by consultancy or trading activities.

I don’t want to pretend for a moment that it is easy to do any of these options is easy. But it is the role of senior staff and trustees to make these kinds of decisions, and to not do so will almost certainly have worse consequences for the organisation. Be bold, act early, and be humane, but remember the organisation and its beneficiaries come first.