Funding a Network

29/01/2011 at 10:02 am 2 comments

 

By Hans Zomer

In this blog post, part of a series looking at lessons and recommendations for managing NGO networks (see also this document), I look at funding base of NGO networks.

(Also read the first and second article in this series)

 

Dóchas itself has developed a strategy on sustainability. This strategy looks at the issues and options in terms of enhancing self-sustainability, and is mindful that self-sustainability is as much about the necessity for Dóchas to remain effective in servicing its existing members as it is about being financially secure: Sustainability is about Resources, Relevance and Relationships (see our Sustainability Policy)

Networks such as Dóchas rely heavily on the time and effort that its member organisations pour into the meetings and working groups, and into the shaping of strategies and outputs. None of this can be easily costed into the financial statements of the network, although in our Annual Report, we capture the in-kind contribution of our members in financial terms (essentially: number of participants in our meetings x number of hours spent in meetings x €30 hourly cost).

Dóchas has in place another necessary building block in its self-sustainability strategy, namely the definition of a reserves policy that befits this strategy. This reserves policy defines the reserves cushion that would carry it through any short-term unexpected downturn in income, and enable it to finance any emergency expenditure.

The key challenge for Dóchas as a network is to maintain its freedom to act independently on behalf of its members, while remaining part-dependent on Irish Aid for financial support.

Other networks clearly face a similar challenge, and we have looked at a good few networks, to benchmark our level of income from Government and membership fees respectively. This is what we found:

  • The Irish Charities Tax Reform Group (ICTRG), which lobbies on behalf of its 159 members to create a climate where philanthropy will thrive, obtains about 30% of its total income from membership fees. The remainder comes from philanthropic grants.
  • The Wheel, an Irish support and representational body connecting 880 community and voluntary organisations, and charities, across Ireland. Membership fees constitute about 25% of total income, with the same percentage of income coming from fundraising partnerships, and State Grants making up the other 50%.
  • The Irish Medical Organisation (IMO) is the national representative body linking all branches of the medical profession in Ireland, for which membership income represents 96% of total income.

Outside Ireland, the picture is equally mixed:

  • In the UK, the National Council for Voluntary Organisations (NCVO), an umbrella body for the voluntary sector with 8,000 member organisations, obtains its funding from state grants and sponsorships from other funders. Only 9% of NCVO’s income comes from membership fees.
  • Charity Finance Directors’ Group (CFDG) has 1338 members and an annual budget in the region of £1.25 million. It gets no Government grants, and the organisation earns 40% of its income from the corporate sector, through use of a corporate subscriber scheme, sponsorship of activities, support for training programmers and sale of exhibition facilities. Membership fees constitute 48% of total income.
  • BOND, Dóchas’ counterpart in the United Kingdom, has 370 members and a total income of approximately £1.4 million. Membership subscriptions constitute 23% of the total, but BOND receives 20% of its income from Learning and Training Fees, with advocacy and representational income, and additional membership and communications income representing a further 23% of income. Government grants amount to only 34%.
  • In Sweden, Dóchas’ equivalent Forum Syd,  comprising 205 member organisations involved in international development and global advocacy activities, is largely funded by SIDA (Swedish International Development Cooperation), with membership fee income being less than 2% of total income.
  • VENRO in Germany, is an umbrella organisation of 117 organisations. Membership fees account for 44% of its income, with Government contributing 39% and sponsorship another 10%. 
  • Coordination Sud in France is made up of six groupings of NGOs and 130 individual NGOs. The budget for the organisation is approximately €800,000. Membership fee income is 15% of budget. Government grants are 50% of budget, while international aid makes up the balance of 35%.
  • Partos is a national platform for Dutch civil society organisations in the international development cooperation sector.  It has 101 members, who are the constitutional owners of the organisation. Partos has a modest budget of just under €400,000, all of which is funded from membership fees, with no Government grants.
  • ACODEV is a Belgian Federation of French and German- speaking NGOs. There are 86 members, and the organisation’s total income is approximately €630,000. Only 8.5% of this is derived from membership fee income. Government grants represent 83% of total income.
  • KEPA is the network in Finland, with 270 ordinary members. Minimum annual associate membership fees are €50 for private individuals, €90 for organisations, and €260 for companies.
  • CONCORD Danmark is a network of 17 Danish NGOs involved in international development and solidarity. The organisation has a modest annual budget of €280,000. Less than 10% of this income derives from membership fees. The balance of 90% of the budget comes from Government grants.

 

What this little comparison shows, is that it is hard to compare NGO networks across borders. Each has its own focus, functions, circumstances and limitations. And each has found its own answers to the question of how it can be most relevant and sustainable.

It is also clear, however, that many networks charge significant membership fees. In particular, the idea that there should be a substantial minimum fee, and a sliding scale so that bigger members pay proportionally less – in view of the fact, presumably, that in most networks the bigger members undertake most of the actual work.

It is also interesting to note that, while several of the network organisations have insisted on keeping membership income as a substantial proportion of overall income, several of the organisations have left the membership income at levels lower than 20% of total income. There is no evidence that any of the networks feel particularly vulnerable as a result of state or institutional funding. Typically, across most of the comparable network agencies reviewed, state funding represents in the region of 50% of total income.

Finally, I note that quite a few of the networks have several types of membership, catering for organisations or persons that are ineligible for full membership, but who play a role in the sector and are therefore welcomed as secondary  members. The general pattern seems to be that secondary members are paying 50% of the full membership fee.

In summary: what an organisation considers to be a sustainable model depends strongly on its context and set-up. There is no “one size fits all” approach. And that makes sense, in light of what I was saying in the other articles in this series: A network needs to know its environment and its stakeholder, and it needs to be clear about how it ensures its relevance. It can learn from others, but has to make up its own mind about what is best.

—–

Many more resources on this topic are listed here.

 

In this series:

Managing Change in NGO networks

Managing NGO networks

Funding NGO networks

 

 

Entry filed under: Development Effectiveness, NGOs. Tags: , , , , , , , .

Elections 2011: What to say to Dáil candidates If NGOs were animals, would they be… (pls add at will)

2 Comments Add your own

  • 1. Inka Pibilova  |  23/02/2011 at 6:37 pm

    THank you, Hans, this is exactly, what I was looking for!🙂 Fundraising is a key issue even in Czech. Our membership fees equal to 4% of our income, which causes strong dependence of government funds. It is good to have some role models in some brave EU countries like Ireland!🙂

    Reply
  • 2. Managing NGO Networks « Dochasnetwork's Blog  |  14/03/2011 at 3:02 pm

    […] (See also Dóchas’ own Theory Of Change) […]

    Reply

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