B4SI News

Addressing the Elephant in the room – Funding Models & Non-Restrictive Funding

One of the ways in which corporate foundations help to drive positive social impact is by providing financial support to different causes and non-profit organizations. Supporting these organizations involve various approaches to funding – from restrictive and non-restrictive funding, to more flexible, hybrid models. In selecting the right funding model, the journey is far from smooth for corporate foundations as they are faced with multifaceted challenges that sometimes require a bespoke approach.

The second event in The Elephant in the Room: Corporate Foundation series focused on the intricacies of these funding challenges, as well as solutions and potential strategies on how to overcome them. We were pleased to be joined by Stefan Rissi as a speaker. Stefan is the Global Head of Community investment at JTI, a multinational company based in Geneva, and Director of the JTI Foundation[1].

Picture Caption: Result of word cloud when Corporate Foundation practitioners were asked to comment on their organisations’ top challenges in relation to funding and funding partners.

Throughout the event, participants considered challenges relating to funding and funding partners (some of which are displayed in the word cloud above). Stefan shared some reflections on JTI’s funding approach, as well as some advice for participants.

Based on the insights gathered throughout the event, we have compiled four funding considerations for Corporate Foundations:

  1. Use foundation goals as a basis for funding:

All funding decisions should be based on and linked back to the impact goals of your organization (in JTI’s case, this is to help victims of disasters worldwide). Having clarity on these aims will help guide funding decisions in a way that is useful and impactful for non-profit partners.

  1. Take a hybrid approach:

Funding practices should be flexible. The approach taken should depend on several factors, such as type of partner and grant focus area.

NGO partners can vary greatly, coming in a variety of sizes, structures, cultures, all with different aims, geographic scope etc. This diversity sometimes makes it difficult to agree on a one-size-fits-all approach to funding, as such, the funding approach can be flexed, depending on the partner in question. For example, JTI have long-term partners with whom they make long-term financial commitments, whilst giving the partner the flexibility to use the funds how they wish. In other cases, they take a 50/50 approach, whereby 50% of funds to a project are unrestricted, and 50% are specified. This approach can provide a sense of ‘ownership’ to the foundation, whilst responding to partner need. A combination of these approaches can often simplify the approval process for the foundation.

Similarly, the focus area in question may decipher funding decisions: a model that is relevant for a one-off disaster management scenario would not reflect the approach taken for a commitment with a long-term education partner.

  1. Minimize admin and support overhead costs:

Reducing paperwork is a key challenge: grant applications and due diligence during a grant period can be labour intensive for both donor and receiver.

Many foundations often lack the capacity to administer more grants due to large administrative burden attached during the grant period. In mitigating this, trusted funding intermediary organisations can be an effective way of disseminating grants locally. Not only can intermediaries reduce the paperwork for foundations, but they also have relationships on the ground, knowledge of local needs, and can ensure funding goes to relevant organizations that the foundation may otherwise not have contact with.

Beyond this, supporting with the costs of overheads such as costs associated with project administration, development, implementation, measurement communication, staff costs, and salaries, is a very effective way of helping non-profit partners fulfil their project goals and aims. Stefan shared his pride in having developed a model that specifically supports these often overlooked and “less attractive” aspects of funding which results in a more efficient way of managing admin and overhead costs.

  1. Measure smarter:

Funding models and agreements often include requirements to measure and report on goals. This alone can cause a huge administrative burden on foundations and charities alike. While it may not be worth measuring impact for all donations, having a robust framework in place for the larger partnerships will ensure that the progress of more significant grants is measured. To ease pressure on both sides, Stefan suggested alignment to a common-sense and flexible approach to measuring impact. JTI applies the B4SI Framework, a global standard in measuring and management of corporate community investment. Many organisations in the B4SI Network work with non-profit partners to improve measurement capacity and apply the framework to their programmes.

Ultimately, when it comes to funding and funding models, each organisation’s challenge will be different. But regardless of external factors, corporate foundations should have an approach which is flexible, measurable, and grounded in the organisation’s goals and strategy.

If you are interested in being featured in ‘The Elephant in the Room’ series addressing other challenges faced by Corporate Foundations, please reach out to the Business for Societal Impact (B4SI) or Corporate Citizenship teams.

Our next event in the series focuses on impact measurement and is scheduled on 14th September at 1pm BST. The guest speaker is Kate Sullivan, a Monitoring, Evaluation and Learning Manager with The Human Safety Net, the corporate foundation of Generali Group. In its first five years of operation, The Human Safety Net has expanded its activities to work with a network of 77 NGO partners in 24 countries. Kate oversees the organisation’s impact measurement strategy to guide its work with NGO partners. Register your interest here to attend.

[1] JTI Foundation is a non-profit organization registered under Swiss law, which is financially endowed and managed by JTI. JTI Foundation’s mission is to help victims of natural or man-made disasters improve their quality of life. JTI Foundation focuses on partnerships to support emergency relief programs, and we build long-term disaster risk reduction programs.


Source: CC Social Impact Feed

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