The Review of Related Literature on the NGO Fundraising Strategy

Introduction

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This chapter provides critical review of related literature on the NGO fundraising strategy. In the recent past, there has been a lot of concern about fundraising practices, plans, and activities in nonprofit organizations. It has been partially portrayed in many studies undertaken by scholars on the subject. Therefore, this research reviews literature resulting from such studies carried out in Rwanda and elsewhere. This literature is outlined under the subdivisions of: introduction and definition of key concepts, donation and avenues for fundraising, literature of nonprofit fundraising strategy, Barriers and challenges encountered in developing Appropriate Fundraising Strategy and summary and conclusions

Paul & Ormrod (2013:51) suggests that the more researchers know about investigations and perspectives related to the topic they are investigating, the more effectively they can address their own research problem. This serves as the main purpose of this chapter. The chapter not only did it intend to explore what is known about non profit fundraising strategy, it also shaded light on what is not; all of which enabled the study not to be conducted in vacuum. This also allowed identification of outstanding gaps in the research that need to be explored further. Findings observed in this chapter guided succeeding chapters of the study.

Definition of Key Concepts

The key concepts of this study include: Non-governmental Organization (NGO), fundraising and Strategy.

Non-Governmental Organization

Teegan et al. (2004:466) define NGO as any non-profit, citizens' group that operates on a voluntary basis that is organized on a local, national or international level and is task-orientated and propelled by people with a common goal and interest. Non-governmental organizations (NGOs) today form an essential part of the world societies offering a range of services and products that may not otherwise be available.

Tuckman and Chang (1998:211) explain the definition of a nonprofit entities in the United States this way: We define a nonprofit as engaged in fundraising if it reports fundraising expenditures on its [IRS] Form 990... (p. 212). Little (2004:12) defined the term nonprofit this way: the word nonprofit does not imply a preference of deficit over surplus; it means that there are no owners, no dividends, and no one to profit financially from the venture. Its only a distinction among organizations. PIH falls in this category of, it is a nonprofit organization that leaves to advance high quality medical care to the poorest and vulnerable communities. It is fully funded by individual philanthropists, foundation, corporation and multilaterals and is run by run by a senior management team that reports to its board of trustees and governor (PIH Annual Report, 2015: 2).

Today, non-profit sector has been acknowledged widely as an enormous area that has grown tremendously. In the United States of America (USA), by 2001, nonprofit revenues surpassed $700 billion, and the assets hit the $2 trillion mark ("The nonprofit almanac", 2008). During the 1990s, the number of NGOs shot up and in some states, it even doubled. Therefore, the number of people finding employment opportunities in this sector increased too. Today, over ten million people are working in this sector in the USA alone (Weil, Reisch, and Ohmer, 2013:12, 13). It is because of the increasing number and increasing scope of NGOs that most of these organizations become more complex and wide especially for the international agencies and organizations (Schroeder, 2015:3-4). It has led to challenges in the way such NGOs are managed. These setbacks are several and are inclusive of but not limited to, lack of effective fundraising strategy, poor management, lack of clear mobilization framework (Jha, 2009:16-35)

Fundraising

Fundraising has been defined in the Developing Fundraising Strategy Module for Rwanda as the procedure of soliciting and gathering aids as funds or other resources, by requesting contributions from individuals, businesses, charitable foundations, or governmental agencies. The same module has described fundraising Strategy as a long term plan of action intended to accomplish a particular fundraising goal. There are a variety of strategies that can be employed by NGOs to mobilize resources to facilitate service delivery (Fundingcentre.com.au, 2016).

Some NGOs have experienced the setback of coming up with a clear framework for fundraising (Jha, 2009:16-35). Partners In Health is just an example of the NGOs that have faced a myriad of drawbacks in stipulating a blueprint of actions for successful fundraising especially at the sites (Best, 2014:10). Quite often NGOs complain about not having adequate resources and funding to achieve their objectives, goals, and visions (Fundingcentre.com.au, 2016). It is also quite crucial to note that most NGOs locally depend on singular funding streams from funders and or sponsors that are in provision over limited timeframe (Weil, Reisch and Ohmer, 2013:43).

Recent studies have focused much on understanding NGOs management strategies. This is not the framework for this study but it is important to note that solid information regarding fundraising strategies has been illustrated (Bannister and Smith, 2014:3-17). Many studies have also focused on those who donate to charitable causes, and the outcome typically offers solid fundraising strategy information for this matter (Weil, Reisch and Ohmer, 2013:65-71). A group of scholars has vested their interest in delving into research in this field especially in this topic in light with the motivation of donors as a fundamental element in fundraising strategy (Ritchie, 1999).

In my suggestions, there is not nearly enough research to explain fundraising strategies for NGOs (Boenigk and Scherhag, 2013:307:336). Bennet suggest that a critical review of relevant academic literature material acknowledges that, even though scholars have investigated strategies that can be out in place by NGOs for successful fundraising, plentiful research have not been emphasized to give a clear picture of these strategies that would work both at grassroots level and internationally (Bennet, 2013).

Historically, fundraising strategies was a discipline found primarily in the for-profit sector, where traditional competition that arose between organizations required promotional activities to distinguish one from another. Today, fundraising and strategies are no longer becoming optional for these organizations success in effective implementation of its activities (Betzler and Gmuer, 2014). Just like in the focus of this dissertation acknowledged that PHI Rwanda had experienced failure due to lack of a proper fundraising strategy (Bannister and Smith, 2014:13-17). PIH Rwanda had always failed to implement some of its projects and deliver on some of its commitments made to its Rwanda Ministry of health partners (Pih.org, 2016). It was set to benefit from the applied solution of forming its dedicated site based fundraising team despite the lack of a strategy to guide the functioning of the site based fundraising teams (Epstein, 2010:82-85).

Strategy

The term strategy has been widely defined by different authors but the most prominent one who have done extensive research on organization strategies (both for profit and not for profit) include: Michael Porter, (1966:60) Alfred D. Chandler and Henry Mintzberg. Alfred (1963:13), defined strategy as the determination of the long run goals and objectives of an enterprise and the adoption of course of action and the allocation of resources necessary for carrying out these goals Porter (1966:60) defined strategy as being different. Deliberately choosing a different set of activities to deliver a unique mix of value. Whereas Mintzeberg (2007:3) defined strategy as a pattern in a stream of decisions about the long term direction of an organization. All of these strategy definitions incorporate important elements of strategy that include: making choices about goals and objectives (future) of the organization, laying strategies to achieve them and defining what makes the organization unique to others in the business.

The above definitions of: NGO, fundraising and strategy recurs more often in the following sections of this chapter as they form part of literature sought to answer the research questions of: What are the major strategic principles and guidelines that and should consist a typical and successful fundraising strategy for a non profit like PIH, what are the major elements of a fundraising strategy that PIH Rwanda may pivot and implement to successfully raise adequate funds to finance its budget and Which infrastructure in terms of staff, stuff, systems and space needed by to implement a successful fundraising strategy that PIH should deploy to equip and strengthen fundraising function to successfully meet its fundraising goals.

The Sources of Donations and Avenues for Fundraising

Researchers have studied and established literature about donations to charitable and nonprofit organizations. It is important to note that most of them have categorized the sources into similar sections (Rao, 2015). Even though this is not the primary focus of this dissertation, it is an important element of understanding the broader aspect of fundraising strategy. It boils down to the source of the funds and resources (Masaoka, Zimmerman, and Bell, 2013:21). Many NGOs have relied on donations from individuals, foundations, bequests, governmental agencies and corporations (Rao, 2015). However, without a sound fundraising strategy, there would be a gap in internal mechanism for maintaining financial stability and also a lack of strategic directions (Bannister & Smith, 2014:13-17).

Like majority of many other nonprofits, PIH Rwandas sources of funding are not distinct from these common sources of funding mentioned by Masaoka (2013:32) thus bringing many insights in as far as PIH fundraising strategy is concerned. PIH needs to clearly understand its major funding sources; understand which ones it has done better than others and why. This will later help it in laying actionable strategies to maximize its potentials and make improvements where they are needed which will also help its fundraising team to set informed realistic and achievable fundraising goals aimed at maximizing resource mobilization efforts to support PIH work in Rwanda

Scholars agree that at least 65% of individual households donate funds to NGOs and other charitable causes (Fisman, Kariv, and Markovits, n.d.). Some studies claim that in more recent years that the number of these households has increased to 89% this is good news for Resource Mobilizers, who are tasked with the duty of establishing an implementable fundraising strategy (AlTabbaa, Gadd & Ankrah, 2013:590-612). PIHs funding current funding sources consists of 50% individual giving, 25% family foundations and 25% public sector and multi-laterals (PIH Annual Report 2015:16). Understanding the balance between the external donor landscape and the internal funding patterns is critical and would bring much acumen to PIH management in as far as how its fundraising strategy could be structured and targeted to well serve its needs

Non-Profit Fundraising Strategies and Concepts

Fundraising is an art, but it needs expert knowledge, techniques and tools to ensure success (Elischer 1996, 93-94). Likewise, as Ekaterina Kim (2009:7) argues, fundraising is a science, but its rules are more like a rainbow than a formula. You need to paint with the most delicate shades of colors and moods. You will surely become a success if you paint with love and friendship (Kim 2009: 7). There are several articles, books, blogs, journals and many other materials that suggest different fundraising strategies non-profits can use to...