Have you ever wondered: how much of my donation to a charity goes to those in need? It’s tempting to restrict funding only to activities that seem to directly serve beneficiaries to get the biggest impact for the money.
Now imagine you’re at a bakery. To bake bread, you only need flour, water, yeast, and salt. But a lot more goes into a successful bakery than these ingredients: experienced bakers, a safe and clean kitchen, electricity and an oven, and more. These are the operational essentials that make the difference between just making dough and baking delicious bread. Customers don’t think twice about paying for these costs.
It’s the same with nonprofits. They require quality staff, including trained professionals in finance, fundraising, and communications to build trust and resilience. Yet, many donors underestimate, or, in some extreme cases, exclude, these operating costs indispensable to deliver impact.
Under-investment in the core operations of nonprofits results in organizations with poor infrastructure and technology, difficulty attracting and retaining talent, and less bandwidth to focus on their own performance. They may struggle to measure their impact and or have the expertise and training to deliver their programs and services as effectively as they would like. Without funding to do the inner work of organizational development, gaps in capacity and governance risk become pronounced, further fuelling the trust deficit in the sector that led to the under-investment in the first place.
This vicious ‘nonprofit starvation cycle’, has been well-studied and documented, leading to a trend towards ‘trust-based philanthropy’. However, in the Asia-Pacific region, this movement is relatively nascent; only 16 percent of nonprofits surveyed in 17 countries in Asia receive consistent donor support for capacity-building. In Hong Kong, one of the region’s biggest financial motors for philanthropic wealth, that figure is only 4 percent.
While many funders in Hong Kong took a bold step in offering unprecedented core operational funding and flexible practices during COVID-19, post-pandemic, many of these funding streams have since decreased. We now seek to normalize these practices to ensure that Asia does not lag behind other regions in philanthropic giving trends and innovation.
We, at Voice for Social Good, launched our ‘Bake A Difference: The Full-Funding Principle’ campaign on International Day of Charity to spotlight the critical need for full-funding of nonprofits, operationally as well as programmatically. The video employs this simple baking metaphor. In just over a month, it was viewed 85,000+ times, with 700+ reshares. Clearly the message resonates.
The campaign is the culmination of conversations between nonprofits and funders in Hong Kong which we have facilitated over the past three years aimed at fostering greater partnership. Previously, we had penned an Open Letter to Funders in April 2020 to rally for more support during COVID-19. This was followed by a series of roundtables, providing a safe space for philanthropic and nonprofit organizations to engage in meaningful discussions. Insights from these conversations informed our Guiding Principles for Collaboration between nonprofits and funders published in 2022.
Voice for Social Good is an informal volunteer group of women social impact leaders, who originally came together out of crisis, but our relationship continued beyond it, working collaboratively on top of our demanding day-jobs.
Why? Because we have seen how investing holistically in our respective nonprofits has yielded tangible positive effects. It enabled us to sustain our operations during COVID-19; provide mental health support to our employees; digitize working methods and services; build financial reserves to weather crises; and, importantly, create headspace for senior management to forge strategic partnerships with other nonprofits. In short, to bake resilience and sustainability into our nonprofits – which are also aspirations shared by our funding partners.
While many funders in Hong Kong took a bold step in offering unprecedented core operational funding and flexible practices during COVID-19, post-pandemic, many of these funding streams have since decreased. We now seek to normalize these practices to ensure that Asia does not lag behind other regions in philanthropic giving trends and innovation.
We yearn for the courageous, tireless work of nonprofit professionals to be recognized and valued. Hong Kong’s high inequality levels, with one in five living in poverty, highlight the urgency of our vocation. The nonprofit workforce in this city is predominantly female, and, like other sectors in the care economy, its professionals are often undervalued or even expected to come for free in the form of full-time, indefinite volunteering. This frugal mindset, while sometimes well-intentioned, invalidates the expertise, skills, and dedication of our talent, who should be able to do purposeful work and earn their bread and butter too.
What nonprofits provide is just as essential to nourish a community as loaves of bread. They champion causes that matter deeply to us, like social justice and equity, the environment, animal protection, or the arts. As societal problems grow more complex, supporting the core costs of running nonprofits enables our staff to focus their time and attention on finding solutions to our biggest challenges and new ways of working with the community. We have witnessed the transformative power of trust-based partnerships; how much more impact could we unleash together if we funded full costs?
Victoria Wisniewski Otero is the Founder & CEO of the Resolve Foundation, Pia Wong is the Chief Impact Officer at B Purpose Bureau, Angelyn Lim is a Social Impact Advisor & Leader
The authors are all representatives of Voice for Social Good
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