Purpose: To encourage community groups think about sustainable ways of funding
Audience: Community Groups, Government Bodies, Corporate Sponsors
In my previous role as Head of Migrant Banking with ANZ, I used to frequently receive proposals to fund or sponsor community groups. I also came to know some community groups that never asked for any sponsorships.
It led me to think about the different ways that community group fund themselves and below is the funding matrix that exist New Zealand, and a comparison of the different funding methods.
1. Community groups need to be consider two things when it comes to funding: sustainability and the funding amount.
2. At the very rudimentary level is Donation, where funding is provided by anyone. However, this is not sustainable and funding amount is limited at best, unless it’s for a very common cause, such as cancer.
3. The next common form of funding is Grant, where funding is usually provided by Government bodies (eg Charities Services), philanthropic trusts (eg The Tindal Foundation), or corporate foundation (eg ANZ Staff Foundation). This type of funding requires ongoing efforts of applying for grants with specific output expected. I regard this type of funding as being unsustainable because it relies on the provider’s annual budget allocation for the grant, which can fluctuate depending on factors outside of their control.
4. Another common form of funding that I came across in community groups (and business associations) is Sponsorships, where there is usually a legal binding contract to provide benefits to the sponsor in exchange for the funds. I find this type of funding is very arcade and most of the time the benefits are difficult to measure even when it is well-defined. I’ll provide article on “Turning Sponsorships into Partnerships” later this month.
5. The ultimate funding framework is to be Self-Funded, where funding is achieved in the form of earning, by providing products and services that match with a clearly defined and verified market need. The best migrant community group example is Chinese New Settlers Services Trust, where they provide services such as cultural training, language classes and products such as social housing, all for a nominal fee to fund themselves.
So, can existing community groups change their funding model towards self-funded?
Multicultural New Zealand is currently embarking on this journey to move from Donation and Grant funding model to being Self-Funded. I was invited by Multicultural New Zealand’s Executive Director Tayo Agunlejika to join their workshop over the weekend to explore ways to transform towards a social enterprise model. The workshop was facilitated by Akina Foundation and they have upcoming introductory workshops on social enterprise across various locations in New Zealand. Most workshops are free and some are only $10-$20 to cover the venue cost. I highly recommend them to any community groups who are seeking to transform their funding model to a sustainable model.
Do you have other examples of community groups who are successfully applying self-funded or social enterprise model in New Zealand or other countries? Please share them in my LinkedIn comments. Thank You.
Eric Chuah was the Head of Migrant Banking for ANZ and the founder of Cultural Connections, which is a social enterprise that helps multicultural community groups to flourish in New Zealand. We are currently inviting migrants to join our research panel which takes only 10 minutes. We will donate $2 to multicultural community groups for every migrant who joins our panel.