Thousands of not for profit organisations are struggling to keep the doors open following the tightening of funding, including the Federal Government’s decision to cut $271 million from the Department of Social Services (DSS) Discretionary Grants Program over the next four years.


Without core Government funding, Australia’s capacity to support the charitable services sector will be severely impacted while the need for these services remains unchanged, if not increasing.


Family, health, emergency relief, sport and housing services, as well as policy and advocacy are just some of the areas where not for profit organisations try to meet the community need.


With the State Governments unable to make up the funding shortfall; not for profits seeking funding from other avenues must stand out from the crowd. To achieve this requires a shift in mind-set.


NFPs need to think and behave more like a commercial business to compete for public support and funding. Commercial businesses know that they need to strike a balance between short term results and long-term sustainability.


Working with community based not for profits, we have seen the benefits of adopting a commercially focused approach within an NFP.


An important lesson from the commercial world is the need to become more nimble and customer orientated.


The Government grant application process is traditionally very academic. NFPs prepare a substantial treatise with multiple references to legislative and economic impacts. What a grant application often lacks however is a clear value proposition for the end user.


In today’s environment, NFPs need the ability to package up their value proposition very quickly and succinctly as often they are looking for funding from multiple small donors. Most NFPs do not have the corporate marketing skill set to deal with this.


Five key principles from the commercial sector that NFPs should consider in their business model:
1. Demonstrate value to community funders
Commercial organisations that rely on continued shareholder support tend to have very astute corporate affairs teams. NFPs need to communicate their value through all channels, including annual reports. Step away from a focus on costs and minimum disclosures and demonstrate the value the organisation brings to the wider community. Real life examples and data supporting where funding is spent can help achieve this.


2. De-risk income streams
Look for ways to reduce dependence on one or two key income sources. For example, a women’s refuge may secure a corporate sponsorship to fund their everyday back office function, allowing 100% of funds raised from the public to go directly to helping vulnerable Australians.


3. Take advantage of partnerships
Corporate mergers can offer a number of benefits including economies of scale, greater market reach and security of funding. While a merger may be off the table for an NFP – the benefits are not. NFPs can reap these benefits by partnering with a complementary organisation.


4. Plan for the long term
Corporations plan for the long term. All too often, NFPs focus on the next grant funding cycle or annual membership drive. NFPs need to start thinking about what sort of organisation they need to be to respond to competitive and social pressures over the next 5-10 years.


5. Make use of new technologies
NFPs generally make good use of new tools, such as social media to communicate with stakeholders. However, they often lag behind their corporate counterparts when it comes to embracing technologies that enhance efficiencies. These could include cloud accounting software, client relationship management (CRM) systems or supply chain management.

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