Funding and Financial Sustainability for NGO Coordination Mechanisms

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The decision to have independent NGO coordination includes cost implications.
Not all coordination mechanisms will be formally structured and require dedicated resources. However, over time, informal coordination mechanisms become more formalised and may require funding.
 
Sustainability is difficult even for well-known coordination bodies. Factors that influence sustainability include:
 
  • The operating context (e.g., a recent emergency, or on-going vulnerability and international attention);
  • The level of involvement by members and the support they are willing to provide;
  • Hosting arrangements;
  • Donor engagement and the very existence or presence of members in a country or region;
  • Reliance on donor funding;
  • The classic project-based model of funding.
Useful points to remember when considering financial sustainability include:
 
  • Start-up costs are usually minimal for NGO coordination efforts, since they are voluntary and informal;
  • Once formalised, coordination will incur more substantial and regular costs. If a formal entity (such as a Secretariat or Security Office) is created, costs will rapidly increase in terms of staffing, office space, and other resources;
  • Most systems to finance NGO coordation bodies also carry administrative costs - in proposal writing, managing membership subscriptions, or reporting to donors. Such costs must be taken into account during discussions;
  • Financial arrangements have a direct impact on sustainability and accountability to both internal and external stakeholders;
  • It is essential that participants in NGO coordination take the question of the financial sustainability of their efforts seriously from the outset – not to delay critical decisions, and to garner membership support for those decisions;
  • Donors are increasingly receptive to funding NGO coordination, but only where they perceive that it adds value to, and does not undermine, existing coordination mechanisms
  • Making NGO coordination structures financially self-sustaining is difficult but not impossible; a combination of the approaches described in the table below will likely be necessary.

 

Possible Funding Strategies

 

The four funding strategies listed below and analyzed in the attached table have all been used by existing or previous coordination mechanisms to sustain their operations, (often a combination of several strategies). No strategies alone guarantee sustainability; they must be combined with good management, and will vary according to the context. The strategies below can be used as a starting point for discussions within the membership to develop the most appropriate solution or combination of solutions.  
 
Core Donor: 
Relying on one or two key donors to cover core costs is the most common way in which coordination bodies initially establish a funding base. Funding goes directly to the coordination body if it is registered or to the lead agency for the consortia. It can be a component of an existing or new programme with a donor, or a separate grant
 
Consortium:
A small group of larger NGOs agrees to support the Secretariat on behalf of the entire NGO community.
 
Subscription:
NGOs pay a regular (usually annual) subscription that guarantees their membership, in return for which they receive the right to benefit from services provided by the body.
 
Service charges:
Generate income either through physical products (such as maps) or for services. Possible services include: security management, publications (e.g., Guides to NGO registration or government structures), analytical reports, trainings, or M&E support.
 
To access the table, including a detailed summary of benefits and challenges of each strategy- click here.  
 

A useful resource is Mayerhofer, J. (2013) Fundraising Guide for Refugee Serving Agencies in the Asia PacificAsia Pacific Refugee Rights Network.

 

    Durability Over the Years: The Example of ACBAR

The relatively long history of ACBAR is both its strength and its weakness. On the one hand, it has managed to weather several periods of crisis successfully, managing to remain relevant despite the changing context. On the other, the institutional form of ACBAR was created in a very specific set of circumstances, and changes in those circumstances inevitably lead to transitional periods in which questions of its role and relevance are resolved. ACBAR has more or less successfully negotiated these transitional periods, partly due to the perceived necessity of an NGO coordination body both by the NGOs and external actors.
This durability has a negative as well as a positive lesson for NGO coordination. The history of ACBAR raises the difficult question: when should a coordination body cease its operations? Some respondents felt that the ACBAR Steering Committee should have had the courage to close the organisation at times when it was clear that it was unable to play the representational role that was critical for its members. ACBAR has become so much a part of the institutional landscape in Afghanistan that it is hard for many to imagine it gone; while all respondents felt that ACBAR still has a role to play, this also prevents serious consideration of an exit strategy.
While funding was more limited in the 1980s, NGOs undertook a wide range of activities supported by bilateral coordination within their own community; however this took place in the absence of a functioning State and a large degree of freedom for NGOs. Increased funding made a wider range of activities possible, but also increased the reliance of the mechanism on that funding. In addition a number of the NGO coordination bodies were initiated or encouraged by donor governments; while this could be seen as donors facilitating coordination, it has also increased the complexity of NGO coordination. Donors must take more responsibility, both in encouraging their grantees to participate in coordination activities and ensuring that their own policies do not complicate the situation.