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A better funding landscape needs major shift in mindset'

Finance | Tania Mason | 4 Mar 2009

Transforming the voluntary sector funding landscape into one of sustainability and strong balance sheets will require a “significant shift in the mindset not only of funders but of boards and staff of sector organisations”, consultant David Carrington has warned the new Funding Commission.

Carrington (pictured) has today published his think-piece for the NCVO’s new Commission, outlining what he sees as the issues the Commission must address during it’s year-long tenure.

He outlined three key issues: the behaviours of both funders and recipients of funding, both internally and towards each other; the urgent need to strengthen the balance sheets of sector organisations so they are better protected in leaner times, and the continuing need to explore new ways of bringing resources into the sector.

He explained what a ‘successful sector funding market’ would look like, how the various players would treat each other, and concluded that the behaviour of both sides “needs to be transformed”. But such transformation is possible, he argued.

The weakness of the unrestricted reserves of many charities creates a vicious circle that means they cannot escape from a perpetually vulnerable or unsustainable situation. The successful funding market he advocates would also help these groups to build up their unrestricted reserves and strengthen their balance sheets, he said.

Profound challenge to change mindsets

However, he accepts that this is a “profound” challenge, requiring a “significant shift in the mindset not only of funders but of boards and staff of sector organisations”. Most organisations are locked into thinking about funding on a short-term basis, he said.

But numerous opportunities do exist, in technology, in new financial instruments, and in new uses of existing funds, he said. The climate change imperative will also become more urgent, as both funders and recipients demand the other demonstrates action on the problem, and this will force changes to occur in the funding marketplace.

In conclusion, Carrington said, effective reporting of impact of charities’ work will become more crucial, as will collaboration and partnerships.

“The common aim should be to work towards a funding environment within which the boards and staff of a sector organisation can think of their organisation as ‘assets to be nurtured and less as a cost stream which has to be subsidised’ and in which funders always have regard as to how they can not only help to enhance the quality of the services or activities...but also strengthen the longer-term potential of those organisations.”

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Directory: National Council of Voluntary Organisations (NCVO)
Who's Who: Tania Mason