In a world experiencing a polycrisis, charities in particular face competing demands on resources. Add to that a growing number of charities, declines in individual giving, and more funders accepting applications by invitation only. How do for-purpose organisations ensure they are not just surviving, but thriving through so much change?
Let’s start with a positive change we are seeing in the funding sector in Australia and New Zealand. The intergenerational wealth transfer is seeing much of the assets and wealth held by older generations and high-net-worth individuals being put in structured giving vehicles, representing a lot of opportunity for for-purpose organisations now and into the future.
In this context, it becomes increasingly important to ensure that relationships of trust are developed and nurtured. It may be existing funding partners that facilitate introductions to a new generation of funders, particularly if they elect to research their own charity partners and only welcome applications for funding by invitation.
Sound organisational leadership and clear Vision, Mission, and Strategic Plans are major elements within the due diligence process funding partners conduct when making social investment decisions. So, it’s time to ask yourself:
- Does your organisation have a current Strategic Plan with defined KPIs to measure performance, and is it reviewed at regular intervals?
- Is there strong internal collaboration between teams for planning, performance management, and donor engagement?
- Is your CEO willing to talk to major donors and funders?
- Are your processes and policies for grant-seeking and fundraising endorsed and supported by your Executive (or equivalent)?
- Are KPIs for major donor fund-seeking included in the position descriptions of your CEO and other senior leaders?
Organisations often find themselves chasing funding to get money in the door, without careful consideration of how the funding will be used. Will the project that has been presented to a funding partner contribute to achieving the organisation’s mission?
Following on from the essentials of strong governance and a clear strategic plan comes knowing your funding priorities. In too many for-purpose organisations, service delivery teams and fundraising teams work separately and have very little interaction. Fundraisers are chasing project ideas and information to prepare funding proposals, while program delivery people are notified of funding for a program that they do not yet know how they are going to evaluate. When funders’ expectations are not met, funding declines. It’s a cycle that can be fixed through strong leadership.
Another significant change for those working with funding partners, which is welcomed wholeheartedly—albeit well overdue—is the Pay What it Takes Campaign, launched in Australia in 2024 and slowly gaining traction in New Zealand. Research behind the campaign found that 70% of funders are willing to engage in open dialogue about overheads, but only 32% of charities believe they are. The campaign is a call to action for funders, influencers, and for-purpose organisations to recognise and address the full cost of delivering impactful work.
To create change, we need to do things differently, and the worst thing we can do when change is needed, is to do nothing.
And, Of Course, The Hot Topic for All Charities: AI
Data governance and sovereignty are the key elements for charities to be focusing on and already we are seeing the for-purpose marketplace being targeted by AI solutions. As with all infrastructure investment, implementation planning and design, research, due diligence, and testing must be carried out.
AI is here to stay and the increased efficiencies it will create are significant. So where does that leave fundraising copywriters, grant applications, corporate proposals, or donor appeals?
Within the world of funding, the conversation is active, with hotly contested debates around the use of AI by funders to assess funding applications, the (over)use of AI by applicants when preparing funding applications, new AI grant-writing tools that propose all organisational data uploaded is secure and not used to feed the AI tools’ learning.
As AI inevitably infiltrates the grant writing process, how will a major donor or foundation know if the grant they are evaluating accurately represents the work and skill of the applicant’s organisation? Are the evidence and case studies real?
At the end of the day, we need to remember fundraising 101—people give to people (or the cause) they are passionate about helping. Human emotion and connection cannot be underestimated. In major donor and grant fundraising, for example, the charities that do best will always be those with trusted partnerships. They know their donors, their donors know them, they are engaged in the journey to deliver the organisation’s mission. They celebrate successes and challenges. While AI can certainly assist in generating facts and consolidating reports and data, it’s still people that donors rely on in these major partnerships to deliver information and carry out the work they are helping to deliver through funding.
As for the tools that claim to find you the right grant for your organisation’s projects. AI without quality data is not an efficiency creator! In fact, as recent very public cases have taught us, AI hallucinates and not only in our experience, invents new grant rounds and opening and closing dates, but also delivers invented data references that are used in critical reporting. The recommended way forward is to follow these steps:
- Invest in research and knowledge in AI and implement an appropriate AI governance framework for your organisation with the relevant policies in place to safeguard your and your stakeholders’ privacy and security.
- Be wary of tools that ask you to upload your information into their AI tool, which other organisations are also using. Your usage is teaching the vendor’s AI agent responses. Surely a better way is to implement your own AI Agents that sit within your own data sets with your own approved ethical frameworks and safeguards in place?
- In a sector already resource poor, don’t recreate the wheel. Do your research and find quality data sets and AI tools that already exist that you can implement and develop within your own organisation’s resources. This is essential to build your organisation’s capabilities.
Revenue diversification – should we or shouldn’t we?
And finally, exploring diversification of revenue is critical for any business – for purpose or for profit. Of course, diversification is not always going to be the answer to your organisation’s sustainability. In fact, it may be more prudent to invest in growing the capabilities within your current revenue drivers.
If exploring diversification, it has to be based on research, readiness, resourcing and relevance to mission. It always astounds me if new businesses / products have not conducted adequate market research and readiness and don’t have robust business plans and financial forecasts.
Knowing your stakeholders and understanding which methods of fundraising will work best for your organisation to continue mission delivery, are critical. And when large enough, nonprofits should have a sound investment and/or endowment strategy.
Leadership requires building an organisation’s resilience; strengthening organisational systems and staff capabilities—and in an ever-increasing tech world, collaboration is critical. Simon Sinek’s leadership teaching revolves around the idea that effective leadership is about inspiring and nurturing others through a clear sense of purpose, trust, and genuine connection. And in the words of Maya Angelou: “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
A shorter version of this article was originally published in blackbaud’s eBook “The Forward-Thinking Nonprofit: Leading Through Change” where Strategic Grants’ Founder and CEO, Jo Garner, was invited to contribute insights on navigating change in the funding landscape. We’re pleased to share this extended version with you, which includes additional reflections on revenue diversification – an increasingly important consideration for for-purpose organisations.
If you’d like to explore more thought leadership and practical strategies for for-purpose organisations, we encourage you to visit blackbaud’s resource hub and download the full eBook: www.blackbaud.com.au/industry-insights/resources/the-forward-thinking-nonprofit.