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Financial capability a beacon of light for non-profits

Sage Foundation Community Engagement Director Graeme Houghton discusses financial capabilities in the non-profit sector.


"For non-profits to continue serving communities, the sector needs to be upskilled, transformed and digitised."

16 MAR 2021

It’s clear that demand for services provided by non-profits has only increased throughout the pandemic – from food banks to digital devices needed for children learning at home. The past year has only demonstrated how important non-profits are to society.

UK non-profits saw a 25% increase in demand for services in 2020, yet according to recent research from Sage Foundation, 72% recognised that they would be less able to deliver projects or undertake work in 2021 because of restrictions related to COVID-19.

Funding has always been a significant input to non-profit organisation success. And while the sector needs support – it extends beyond providing cash. Non-profit organisations need the capability to transform their financial operations, which in turn helps them to deliver their missions more successfully. Our research shows that 67% say better skills at pitching for funding, including better organisational financial literacy could improve their funding chances in 2021.

For non-profits to continue serving communities, the sector needs to be upskilled, transformed and digitised. Working closely with thousands of non-profits, our experience has informed our approach on how we can better support the sector.

Firstly, we need to upskill non-profit organisations so they are knowledgeable about finance management. Non-profit employees often lack specific skills, such as financial management, owing to resource constraints. Financial capability is critical for any organisation, but even more so for non-profits who often have funding from multiple avenues.

Secondly, the sector needs to become tech-savvy. Non-profits should be better equipped to deliver their projects, serve their communities and drive impact, and technology can help with this by minimising costs and optimising efficiency.

Finally, virtual communities and networking online can enhance non-profits financial capability and open doors to new donors. The pandemic has forced non-profits to find creative and innovative ways to engage with prospective funders. Funding across traditional channels — including government and public fundraising — dramatically dropped in 2020, with 11% receiving the majority of their funding from public fundraising in compared to 20% before the pandemic. In addition to providing practical support, networking through social media for example can be a source of engagement to find new ways of funding.

At Sage, we view supporting non-profits in these three ways as part of our responsibility to society. Most recently we launched a new programme to help empower and transform non-profits by providing the technology, community and support they need. More importantly this will help non-profits be more effective at gaining and managing financial support so they can better support their communities.

For non-profit organisations to succeed in a post-pandemic world, it’s not just money that they need. If anything, the pandemic has only made this clearer – improved financial capability offers a way out for these organisations to upskill, transform and go digital.

Check out our new NPO Success programme.

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