Funding: the role of the board
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CloseThinking strategically about funding and creating a diverse funding base.
Virtually everyone in the organisation can get involved in generating money and there are lots of ways you can do it! You can read about fund-raising techniques for individuals, companies and trusts and using events, collections, lotteries and so on, in KnowHow's Fundraising section.
This section however highlights the need for the board to think strategically about funding. It’s important for stability to create a diverse funding base. One way you can do that is by getting income from a mix of sources. Asking for money is not the only option. An increasing number of organisations earn money and for some not-for-profit organisations this is the preferred or only way they generate funds.
Key funding questions for the board to consider
Understanding our funding base
- How secure is our income? Are we too heavily dependent on one source of income or do we need a better mix?
- How much of our income is restricted, meaning we can only spend it on certain things? Do we have enough for our essential costs?
Different sources of funding
- Fund raising from the public: do we understand the regulations associated with fundraising (for example, data protection, gaming legislation, permits for public collections)?
- Applying for grants: is there a danger we are chasing the money and forgetting our purpose?
- Contracts do we have the capability to do this? Will the contract cover all the costs?
- Should we consider loans, have we the power?
- Can we trade? What are the legal and tax implications?
- Is equity capital a possibility for us?
Efficiency and effectiveness in funding activities
- What are the costs of fundraising? How can we guard against spending more than we raise?
- Are we making use of tax effective giving?
- What are the risks of earned income?
Have your say
How involved is the board in the funding of your organisation? Are they thinking strategically about funding sources?
Share your thoughts on the Governance forum.
