Strategic Investments: Fueling NGO Fundraising Success and Resilience

Impact of grants strengthening fundraising capability of NGOs

Jun 15, 2025

A recent white paper, "How strategic investments can fuel NGO fundraising success & resilience," by Gayatri Nair Lobo, Poonam Choksi, and Deepa Varadarajan, highlights the profound impact of targeted grants on strengthening the fundraising capabilities of Non-Governmental Organizations (NGOs). This report examines the period between FY2013 and FY2024, presenting compelling evidence that investing in fundraising is a vital and strategic lever for NGOs, essential for driving long-term growth and sustainability.

The study emerged from the observation by A.T.E. Chandra Foundation (ATECF) founders that many NGOs struggled to scale their impact, often approaching donors solely for programmatic grants while neglecting "institution building" and, critically, fundraising. This led to a pivotal hypothesis that forms the core of the paper: investing in fundraising as a foundational capability can unlock exponential growth and amplify impact.

The study included 11 diverse NGOs, with a median age of 17 years and median annual expenditure of INR 4.2 crores during the intervention year. These NGOs received median annual grant sizes of INR 9 lakhs, with support periods ranging from 4 to 8 years. Sectors represented were 50% in education and 50% across community development, policy advocacy, sports, and urban governance. The white paper evaluated NGO performance across three key dimensions: Payback on Fundraising Investment (POFI), Financial Growth, and Donor Growth & Diversity. The NGOs were categorized into two performance groups: the Leading 5 and the Trailing 6. While the Leading 5 excelled across most indicators, the Trailing 6 also showed notable progress, demonstrating the transformative impact of strategic fundraising investments.

Key Findings: A Closer Look at Performance

Payback on Fundraising Investment (POFI) measures the time it takes for an NGO to recover costs incurred from fundraising efforts through donations. The study found an impressive median payback period of one to four months. When funds were specifically allocated to hiring dedicated personnel, the payback typically began once the person was settled, usually around 4-6 months. NGOs that invested in technology saw the quickest payback periods, as technology often leads to immediate improvements in efficiency.

In terms of Financial Growth, the Leading 5 NGOs achieved a 39% Compounded Annual Growth Rate (CAGR), significantly outperforming the Trailing 6 at 13%, and the sector median of 15%. This highlights the impact of strategic fundraising investments and organizational readiness to scale.

Donor Growth & Diversity demonstrated significant expansion. NGOs achieved an overall 2.5x increase in their donor base. This underscores the impact of improved donor outreach. Donor retention rates notably improved from a median of 50% to 70%. Furthermore, grant ticket sizes for institutional donors increased by a median of 59%.

What Worked Well: Best Practices from Successful NGOs

The success of leading NGOs was attributed to several best practices:

Strategic Fundraising and Budget Planning: Leading NGOs implemented three-year financial plans with clear fundraising strategies, aligning with organizational and operational goals. They set clear, specific annual targets, broken down by donor type and ticket size, aiming for a 10-20% increase from existing donors.
Effective Donor Engagement Strategy: This included regular and personalized communication, providing targeted updates, and creating meaningful opportunities for donors to engage directly with beneficiaries. They also focused on building "champions" at every level within donor organizations, fostering advocacy and strengthening trust.
Hiring Dedicated Fundraising Personnel: Initially, founders often drive fundraising, but as organizations grow, investing in dedicated teams becomes essential. Six of the 11 NGOs allocated over 90% of their grants to hiring these professionals. The median team size grew from one to three members, allowing founders to reduce their time on fundraising from 60% to 40% (median) and focus on strategic priorities. The payback period for these hires is short (1-4 months), making it a low-risk, high-return investment.
Investing in Building Systems & Processes: Accelerating NGOs recognized the need to invest in systems for compliance, reporting, and end-to-end donor management. Technology, such as donor databases, was transformative, enhancing efficiency and opening new funding opportunities, particularly for organizations with large donor pools.

Challenges Hindering Growth

Despite successes, challenges persisted:

Inability to Raise Corpus: This remains a significant hurdle, as donors often prefer programmatic funding with short-term outcomes over unrestricted corpus funds. NGOs also struggled to effectively communicate the long-term importance of corpus funding.
Hiring Senior Fundraising Professionals: Many NGOs found it challenging to determine if a senior fundraising or communications professional was the right hire. For organizations with complex interventions, process-based support (donor research, pipeline management, reporting) managed by junior staff was often more effective, with founders still needing to be involved in securing specific funding types.
Challenges in Retail Fundraising: Most NGOs did not explore retail giving due to limited bandwidth and perceived high costs, despite its potential for flexible, untied funding and public awareness.

Recommendations for Donors and Future Outlook

The white paper provides clear recommendations for donors to maximize their impact:

Fund Strengthening of Fundraising Function: This includes investing in talent (hiring skilled professionals), building capacity (upskilling teams), enabling systems and tools (technology), and offering multi-year and flexible funding.
Provide Mentoring Support: Beyond financial aid, donors can offer strategic fundraising guidance, connections to sector experts, and assistance with designing or adopting open-source tools for donor management.
Advocate and Influence: Donors should share success stories of targeted fundraising grants, engage in thought leadership, encourage collaborative funding models, and create peer learning platforms to influence sector-wide change.

The white paper makes a compelling case for reimagining fundraising as a strategic enabler rather than just an administrative cost. The evidence strongly suggests that targeted investments in fundraising capacity lead to financial resilience, expanded donor bases, and sustained mission-driven work. For the social sector to thrive, donors and NGOs must collaborate to embed fundraising capacity as a cornerstone of organizational strategy, fostering a resilient ecosystem that drives profound and lasting change.