Most NGOs want to increase their core funding as it is flexible and carries fewer restrictions than project funding. Core funding is important for the long term financial sustainability of an NGO and its effective functioning.
Donors may have their own specific definitions and rules covering core funding. Some donors have strict guidelines on how core costs should be reflected in the budget and spent, while others are more flexible. Few will complain if unspent core funding is re-allocated to projects. It is very important to understand each donor’s rules and regulations. When in doubt, ask.
There are many clear advantages to increasing your core funding. What are some of the techniques that can help?
- Identify donors that are more likely to provide core funding. When researching donors, many will state on their website whether or not they will provide core funding (some will not). If unsure, you can ask the donor what their policy is on core funding. The FundsforNGOs Premium Donor Database contains many donors that provide core funding. Click here for more information.
- Ask your current donors for core funding. Donors that have provided funding to you before are likely to be more receptive to requests for core funding.
- Develop funding proposals that focus on organizational development and sustainability. Create an organizational advancement or sustainability project to help you attract flexible funding. Some donors are interested in developing organizational capacity.
- Include sufficient core funding in your project budget. You can include certain core costs as budget lines (e.g. a percentage of the monthly rent or the time of the accountant) as well as add it as an overhead percentage of the total budget (e.g. 15%).
- Understand the amount of core funding you need. One technique is to divide your annual core budget by the annual total NGO budget. This will give you an average percentage of your budget that is core funding. E.g. if you have a $100,000 annual total budget, and your core cost are $25,000, your average core funding percentage is 25,000/100,000=0.25=25%. Knowing this, you should aim to include at least 25% or more core costs in every project budget.