Building a Sustainable Funding Model Moving from Unsustainable to More Sustainable Model Efforts by the Foundation for Civil Society Tanzania

Tanzania - emerging or growing economy? Total area is 947,000 sq km, being the 31 in the world Total land area is 885,800 sq km, out of it 4.23% is arable (about 37,500 sq km), but only about 5% of the arable land is irrigated. Has a coastline of 1,424 km Estimated population as of July 2013 is 45m (31 in the world), with population growth rate estimated to be about 2% 70% of the population live in the rural areas

Tanzania - emerging or growing economy? GDP growth rate between 5 – 7% over the last 10 years GDP per capital is USD 560 GDP USD 25bn 67% of the population live below USD 1.25 per day 46% of the GDP comes from the services sector, 25% from Agriculture Recent finds of natural gas likely to generate substantial revenues in 10 years or so.

Introduction Sustainability is a challenge to every organization in the philanthropy sector It is, however, a bigger challenge to organizations in the South, especially in Africa, because the legal regulatory environment is not very conducive to philanthropy The tax environment, for example, is not conducive for either individual or corporate giving The business environment also does not give many options for business models supporting philanthropy in a sustainable way The cultural environment in Africa, presents different frameworks for philanthropy

About the foundation for civil society The Foundation for Civil Society was established in September 2002 and started its operations in January 2003. It was established by a group of development partners with a mandate to build the capacity of civil society sector in Tanzania. This mandate is fulfilled by our major two activities, grantmaking to civil society sector and capacity building interventions aimed at strengthening institutional and technical capacity of civil society sector in Tanzania. The Foundation for Civil Society was the first and remains the only organisation in Tanzania whose mandate is to support growth of civil society and philanthropy in Tanzania

About the foundation for civil society Vision: ‘A Tanzania where citizens are empowered to realise their rights and engage in change processes that enhance their quality of life.’ Values: Fairness Integrity Professionalism Transparency and Accountability Gender equity Mission: ‘To empower citizens through the provision of grants, facilitating linkages and enabling a culture of ongoing learning in civil society in Tanzania.’ Purpose: strengthened Civil Society Sector that is more effectively engaged in policy processes, governance and political processes

About the foundation for civil society The Foundation is focusing on three Key Result Areas (KRAs): Policy Engagement: Citizens are able to influence and monitor policy processes Governance and Accountability: Citizens are aware of their rights and responsibilities, and able to demand accountability from public resources Civil Society Capacity Strengthening: Having in place a creative, imaginative, effective, sustainable and accountable civil society sector

Our funding situation

Our funding situation

Our funding situation The Foundation for Civil Society is solely dependent on donor funding for its operations, hence the challenge of sustainability is real Most of our donors used to be bilateral donor agencies (Government Aid Agencies, e.g., UK DFID, CIDA, Sida, etc) If all donors stop funding today, we will not be able to sustain our operations even for three months Over the last three to four years, three governments changed their priorities with regard to Tanzania, and that severally affected our funding So, currently discussions on building a sustainable funding model for us are current and real

What are the options taken? We prepared a financial sustainability strategy with options and some key milestones. The options included: Diversifying funding sources Investing idle funds in risk free interest generating accounts Investing in Government Treasury Bills and Bonds Providing advisory services and grants management services Creating an endowment fund Obtaining our own office infrastructure

What are the options taken? The key milestones were: At least 10 percent of our annual budget to come from non-traditional (non-bilateral donor agencies) - Diversifying funding sources All funds to be in “call accounts” - Investing idle funds in risk free interest generating accounts Providing grant management services – ILO, IRC, Creating an endowment fund of USD 5,000,000 by 2013 Staff salary contributions (1% of salaries – opt out option) Board Contribution (opt out option) Interest, consultancy incomes, etc Obtaining our own office infrastructure by 2013 Cost sharing with our beneficiaries for training expenses

What are the options taken?

What does it take? Clarity of what you would like your organization to achieve in terms of sustainability – setting milestones Understanding of the environment; opportunities and challenges Commitment of the leadership and staff of the organisation

Steps to Create a Funding Model Developing an options paper for financial sustainability of the organization Identifying the feasible opportunities and foreseen challenges Developing strategies to tap into the opportunities Effective engagement with the current funders to obtain their commitment on the need to having a sustainable funding model, and getting their buy in for the proposals

What type of decisions and trade offs? Achieving sustainability is a long term mission, but steps have to start to be taken now There is always a trade off between long term sustainability and short term needs There are some decisions that will not impress every one – leaders need to make bold decisions

What more can we do?