Finding the right funding mix

Synopsis

Ya’axché Conservation Trust (YCT) is a Belizean organisation works to maintain a healthy environment with empowered communities by fostering sustainable livelihoods, protected area management, biodiversity conservation and environmental education within the Maya Golden Landscape.

Through a SWOC analysis, Ya’axché determined that the organisation was not as financially stable as it should be. The reason for this is that majority of our funding was restricted; therefore, it was difficult to cover core costs or make long term strategic plans for the organisation.

About Ya’axché Conservation Trust

Ya’axché’s main work is based on two programmatic areas which ensures that the organisation’s mission is achieved: the Community Outreach and Livelihoods (COL) and Protected Areas Management (PAM). Although these programs are managed separately, the activities are closely interlinked.  We acknowledge that community support and participation is necessary for successful management of protected areas. At the same time, responsible and sustainable use of natural resources (including protected areas) is necessary to ensure the long-term viability of human communities.

We also advocate at the local and national levels for community empowerment, sound legislation for sustainable use of natural resources and protected areas, and governmental support in law enforcement.

Challenges

In order to systematically address the organisation’s financial instability, as identified in the SWOC analysis, we decided to create a finance strategy to guide our efforts.

A integral component of creating the finance strategy was to analyse our current sources of funding, both restricted and unrestricted, and decide where we would like our funding to come from in the future to finance our work effectively and support our strategic plan.

Like many organisations the majority of our funding was restricted and supported our short to medium term projects.  We did not have a set strategy to guide fundraising from national agencies and government. This meant that our finances were not particularly stable and our reserves were below the 60 day recommended survival amount. This made it difficult for us to make long-term plans, both for conservations goals and administrative planning.

Our challenge was to identify and secure funding that would support longer term projects as well as our core finance, building up our unrestricted reserves.

What you did

With facilitation support from FFI we undertook an activity (funding mix) to clarify our sources of funding and how restricted it was.

People participating in this session were comprised from the board and staff of the Ya’axché Conservation Trust (Ya’axché).

In order to consider the different types of funding we are receiving we divided it into four categories to understand the ‘mix’ of our funding:

• Short-term project funding: Short to medium-term (1 to 3 years), relatively restricted
• Long-term project funding: Medium to long-term (3 to 5 years), relatively restricted
• General fundraising: Short to medium-term (1 to 3 years), relatively unrestricted
• Core financing: Medium to long-term (3 to 5+ years), relatively unrestricted

These categories were placed into a matrix:

The aim of the first part of the exercise was to determine what our current funding situation was.

We started by looking at the previous year of our funding income and determined that over 60% was short-term. These funds came mostly from other institutional donor agencies e.g. GIZ Grant and PACT. and this was restricted funding. Of the remaining amount, nearly 30% was long-term funding. These funding were acquired due to the good relationships we developed with the donor institutions.  however, it was still restricted funding. Only a small proportion of our funding was really unrestricted.

We then undertook the same activity for the current year to compare changes. We discovered that our funding income had in fact changed with a greater proportion (60%) of income coming from long-term project funding, which although supported the longevity of conservation work, was still predominantly restricted. There was a slight increase in income from general fundraising, which was starting to contribute towards our core costs.

During the second part of the exercise we considered what funding mix would be best for our organisation. To do this we considered the level of donor dependency, and reserves that would make an impact. We also took into account our stakeholders and organisational opportunities and constraints we had previously identified in our SWOC analysis.

We then focused on changes in the funding mix that would contribute to the financial sustainability of Ya’axché by the end of our strategy’s timeframe.

The funding mix that we developed for our organisation was: 60-65% funding from long-term project funding, 15% from short-term, 20-25% funding coming from general fundraising and the rest from core financing.  We thought this would be realistic to achieve over a period of three years.

By presenting the information in this format it helped us with the next part of the exercise that would help determine how we were going to achieve this. We were able to get a sense of the cost-benefit of focusing on certain sources of funding, which we could then prioritise according to the needs and capacity we had for each over the next three years.

This information also fed into the development of our financial strategic objectives and actions that included building a reserve for the organisation, and securing and increasing our long-term donor contributions.

Results                                                                                                    

Analysing our funding sources in this way allowed us to understand the financial benefits of focusing and  prioritising particular types of funding according to our needs and capacity and guide our fundraising efforts. Completing this exercise will help us to increase funding that we can rely upon that will allow for increased conservation impact in the long run and be flexible enough to support more of our core operations.

Lessons learnt

This exercise was useful for helping to develop Ya’axché’s finance strategy and determine where we see the organisation heading over the next three years. It clarified not only our current situation but helped us to think about the changes we needed to make. It also helped us establish our fundraising priorities to ensure that the organisation could achieve its targets and become more financially robust.

For the staff participating it also helped to amalgamate everyone’s thoughts on the long-term progression of the organisation and how we could achieve our goals together. It also helped everyone gain an idea of where to invest time and resources for fundraising.

These exercises are important for all organisations to undertake even if they just act as an evaluation of current financial priorities. We will be reviewing our strategy and funding mix annually.

Quote

This process has allowed for the organisation to think and act systematically, ensuring effective fundraising, so that the organisation is able to fund its strategic objectives as well as its core/administrative costs. Therefore, the strategic is helping Ya’axché achieve financial sustainability. (Kamille Pennell, Operations Director).

Want to find out more?

Useful resources

Some of the main tools used include the following:

• Types of funding
• Building reserves