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  • Leandro Echt

Working on your funding model: more ideas from our course

Updated: Apr 15, 2021

Are we ready to innovate? There is a lot of interest from most organisations in introducing innovations to their funding models. These can range from income-generating activities (as we mentioned in the last post) to changes in fundraising tasks and responsibilities, to hiring a new fundraising officer or director. However, it is precisely the way they do things currently that makes these changes difficult to achieve. Innovations often take time as well as some kind of expertise that may be missing inside the organisation. A way to deal with these constraints is to start by the most minimal form of change or innovation to see how it works and to build on that. Smaller scale innovations have lower costs and allow for quick learning. For example, finding private donors for a small and ‘cheap’ project can help to determine whether and how these types of donors can work with a think tank.

Everyone who is anyone diversifies. Ideally, all organisations are open to the idea that diversifying their sources of funds is important and necessary. Diversification can refer both to the amount of donors of the same class and to having different types of donors (e.g. international organisations, foreign aid agencies, local government, private companies, individuals).  In this regard, sustainability is not the only concern – and perhaps not even the main one. Although some organisations may be financially comfortable with a relatively concentrated (i.e. not too diversified) funding scheme, it is often the case that they want to diversify to preserve their independence. We have learned a lot about diversification by looking into the experiences of a good number of think tanks. However, it is necessary to make a more detailed analysis of different types of diversification and their implications. For example, what happens if an organisation is able to open a new venue of support within government but finds that the way the latter pays (with significant delays) significantly affects is financial planning?

To change, I need to challenge some assumptions. Repeatedly throughout the course we discussed how important it is to know which are our main assumptions regarding funding. There is a difference between inferences and assumptions. The former are a reasoning by which something is held as true by virtue of something else being true (because x is true, y must be true). They can be illogical or wrong, but they are based on ‘something’. Assumptions are ideas we take for granted as part of our belief system, and in turn we use to interpret the world about us. Here are some popular assumptions:

  1. The level of philanthropy in our country is too low to be a reliable source of funding

  2. State funding is almost impossible if you are not affiliated with the incumbent party, or it always entails loosing independence

  3. The public are not interesting in funding research work

  4. Core grants are necessary to ensure a think tank´s agenda remains focused

  5. Donors are more interested in community oriented activities in fields like education and healthcare

We are obviously not claiming that these statements are not true. They may all be at least partially true. However, to the extent that we assume things to be in a certain way, there is not much that can be done about it. To the contrary, if we want to infer something out of these sentences, we need to scrutinise them further. For example, the level of philanthropy may be ‘low’, but it may still be worth something for an organisation. The public may have little interest in traditional research project, but they may be keener to fund some other policy-related initiative. In sum, challenging assumptions may be a necessary step for any organisation that wants its funding model to become a strategic advantage rather than a constant problem.

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