Around the world, achieving financial sustainability remains a critical challenge for civil society organizations (CSOs), which face significant barriers in developing and maintaining the resources needed to carry out their missions, research from LINC, Peace Direct, and Foundation Center finds.
Based on interviews with more than a hundred and twenty development stakeholders and analyses of nearly eighteen thousand grants benefiting Bosnia and Herzegovina, Colombia, the Democratic Republic of Congo, Mexico, the Philippines, and Uganda, the analysis found that between 2012 and 2017 only 5 percent of grant dollars was awarded in support of CSOs' financial stability.
Drawing on outcomes from the first year of the Facilitating Financial Sustainability initiative, a three-year effort funded by USAID's Local Works program, the research (Synthesis Report, 51 pages, PDF) found that while both funders and CSO staff emphasized that small amounts of unrestricted funding over time are critical for improving organizational resilience, unrestricted grants to local CSOs accounted for just 3 percent of overall grant dollars, and of that funding only 11 percent was awarded in the form of multiyear grants.
According to a second report in the series, Understanding the Drivers of CSO Financial Sustainability (68 pages, PDF), social capital — in the form of support from local community members — is critical to CSOs achieving financial sustainability, especially in difficult environments or when access to donor funding is limited. Local funders and intermediaries also play an important but often overlooked role in mobilizing resources, understanding local sustainability challenges, and advocating for policy changes to improve the enabling environment. And a third report in the series, Funder Approaches to Facilitating CSO Financial Sustainability (58 pages, PDF), found that while funders tend to view CSO financial sustainability as part of a broader framework of organizational or movement sustainability, they readily acknowledge that they lack the expertise and strategies for supporting CSO financial sustainability more intentionally.
The research also found that combining support for projects with support for technical capacity building can help CSOs deliver better results and attract and maintain funding, and that non-financial resources such as land, materials, and volunteers can be as important as funding in supporting long-term sustainability.
"This research is the first time that we have gotten a comprehensive picture of both how funders support local organization financial sustainability and what factors CSOs themselves see as critical to their sustainability," said Rich Fromer, managing director of LINC.
To test and translate the findings about effective strategies into action, the next phase of the FFS project will bring together Action Learning Groups consisting of local development stakeholders in the Democratic Republic of Congo, Uganda, and Colombia.