"It's a challenging time for fund-raising for NPOs," says Vayanos. "More often we read about another organisation facing closure - such as the Saartjie Baartman Centre for abused women in Cape Town - downscaling or closing offices. This is a real travesty as funding may have slowed down but the need for the organisation's services is usually greater than ever.
"Those organisations with reserve funding though are in a more certain position than those without. Some are accessing those reserves and some managing to fund-raise without doing so, but with the comfort that their reserves are there to fall back on to cover any delays in funding or any funding gaps," Vayanos continues.
"Over the past few years, more and more organisations have realised the importance of financial sustainability. In our provision of specialised investment services towards this over the years, we have seen a major mindset shift. Almost all organisations we now meet with either have built up a reserve or have a serious strategy for doing so. To quote a fundraiser: 'A reserve is no longer a nice-to-have but is a have-to-have.'
Vayanos says there are many reasons why it is essential to have a long term financial sustainability plan that these now far outweigh the increasingly less popular viewpoint that organisations should not have reserves. "We tend to hear this view less and less from both donors and NPOs who realise the importance and necessity of this. In actual fact, donors are increasingly insisting on evidence of an organisation's sustainability plan before they will fund them as not only as this is an indication or comfort to the donor that the organisation is financially sound, but also that it is likely to continue to be so for the duration of the projects that the donor is seeking to fund.
"The success of any financial sustainability strategy that involves a reserve does not only depend on having a reserve. It is about what the organisation does with the reserve too - more specifically, how this is invested so that the appropriate level of risk is taken and so that it fulfils the needs of the organisation in the longer term.
"For example, there is the common misconception that keeping the funds in cash would be the safest whereas in fact the fiduciary duties of the board members require that the funds be invested in such a way as to ensure that the capital is not eroded in the longer terms by inflation which is something that cash is almost always likely to do in the South African inflationary environment," she concludes.
