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Unit 5: Resourcing the Organisation - Fundraising

1.Developing a Fundraising Strategy

  • One of the key aspects of strategic planning is ensuring the long-term sustainability of the organisation.
  • For voluntary and community organisations this involves developing a realistic fundraising strategy.
  • A fundraising strategy sets out how an organisation intends to fund future projects and services to meet the needs of users / local communities.

A fundraising strategy should include:

  • Current sources of funding for the organisation, with details of the length of each funding stream if applicable
  • Funding needed in the future to deliver key projects and services, with a plan of how where the organisation will attract funding for each area of work
  • Who will be responsible for generating funding? This responsibility maybe shared between different people within the organisation, with some focusing on fundraising events and individual donations, and others looking at funding applications and tenders.

An example of a fundraising strategy template is available on the Voluntary Action Westminster (VAW) website:

2. Sustainable Funding

Income Spectrum:

This attached diagram illustrates the various sources of income available to voluntary organisations.

  • To ensure sustainability, voluntary organisations should aim for a mix of funding sources across the spectrum.
  • Relying too heavily on one source of funding could leave the future of the project or service uncertain - if that funding source ceases to be available.
  • Using a mixture of funding streams helps VCS organisations to sustain their services, by avoiding becoming over reliant on one source of income.

3. Analysing the funding mix of your organisation

Income Spectrum Tool:

Traditionally, charities and voluntary organisations have relied on individual donations and grants for the majority of their income.

Look at the Income Spectrum Tool and identify the funding mix of your own organisation, project or service.

  • Do you feel your organisation is over reliant on one type of funding? Think about the likely impact on the organisation if this funding ceased to be available.
  • An organisation is more likely to be sustainable if they have a mix of funding streams. If one source of income stops, the organisation still has funding coming in from other sources.

4. Funding from individuals

Charities and voluntary organisations receive funding from individuals in a range of different ways including:

  • Individual donations
  • Gift Aid on donations from tax payers
  • Sponsorship events
  • Membership fees
  • Raffles and charity auctions
  • Fundraising events

One of the key benefits of funding from individuals is that this contributes towards the organisation's 'unrestricted funds' - unlike a lot of grant funding which has to be used for a specific purpose, unrestricted funds can be spent on any purpose in line with the organisation's charitable objectives.

A wide range of fundraising ideas can be found at:

5. Making applications for funding

Funding applications can be made to:

  • Charitable trusts and foundations - There are over 9,000 charitable trusts distributing 2 billion per year. Charitable trusts can fund innovation and are a useful source of funding for mall scale projects. They are over-subscribed, and the application process can be slow.
  • Lottery funding - The lottery programmes have clear and transparent criteria and will provide large grants. Lottery programmes will only fund 'new work', and will not fund the core costs of an organisation. There is a significant amount of monitoring and evaluation required.
  • Statutory funding - Grants available at local, regional and nation levels. Some grants are being replaced by competitive tendering processes. Funding can be available through local authorities, PCTs, Government departments, and other public bodies such as Job Centre Plus.
  • European funding - potentially large pots of funding are available, but applications can be complex and time consuming, and may require the organisation to provide match-funding. Monitoring systems involve lots of paperwork.

6. Writing a successful funding application

Guidelines for writing funding applications:

  • Check the project proposal fits the funder's criteria
  • Check the exclusions - often charitable trusts have a long list of projects and organisations that they won't fund
  • Follow the funder's guidelines - do as they ask
  • Phone in advance - it can save a lot of time

What makes a successful funding application?

  • Researching funding sources that 'best fit' the project proposal
  • Bringing the project alive in writing
  • Meeting the criteria for the fund
  • Clear outcomes
  • Plan for sustainability

7. Why funding bids fail
Funding Toolkit:

  • Application does not meet criteria
  • No track record
  • Project proposal not clearly explained
  • No clear outcomes
  • No evidence of future planning for sustainability of the project

8. Improving funding relationships with the Third Sector

National Audit Office Report:

Read the attached document, and consider the ways in which the strategic planning process of your organisation could be helped, if the public sector followed the advice outlined in this press release / report.


9. Links between fundraising and strategic planning

All fundraising should:

    • Be consistent with Objects and any Legal considerations (Governance and legal concerns)
    • Link with Strategic Planning and Business Planning
    • Make clear links between the track record, the evidence for what still needs to be done, and the demand for additional resources
    • Outline sources for funds
    • Evolve from a realistic action plan - People/tasks/allocation
    • Address risks
    • Include a clear statement of outcomes, together with monitoring and evaluation activity (with costings where appropriate)

These principles contrast with the ways projects can develop within voluntary organisations without a clear strategy.

10. What is Full Cost Recovery?

ACEVO (Association of Chief Officers of Voluntary Organisations) describes full cost recovery as

"....recovering or funding the full costs of a project or service. In addition to the costs directly associated with the project, such as staff and equipment, projects will also draw on the rest of the organisation. For example, adequate finance, human resources, management, and IT systems, are also integral components of any project or service. The full cost of any project therefore includes an element of each type of overhead cost, which should be allocated on a comprehensive, robust, and defensible basis."

More information on full cost recovery is available on the ACEVO website, including good practice guidelines, Frequently Asked Questions, case studies and toolkits.

11. Applying full cost recovery principles

NCVO report FCR:

Think about funding projects and services within your organisation that receive external funding:

    • Do funding bids and budgets include over-head costs, or only the direct costs associated with the project?
    • Do the over-head costs included in funding bid reflect the true costs, to the organisation, of delivering this project?
    • Do you have a template or formula within your organisation that can be used to calculate the full cost of any funding bid submitted?
    • Are existing services funded at a full-cost level, or is the organisation subsidising them through other funds?

12. Useful publications on funding

Useful documents on government funding of the voluntary sector