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Getting Funding

The method used to generate funds depends largely on how the organisation will be perceived by potential donors, whether individuals or institutions, as well as its ability to engineer financial support through campaign successes and accountability and trust.

Consumer organisations have traditionally adopted three models to achieve financial sustainability: (1) membership contributions (2) sale of magazines, publications and other derived products and (3) grants from governments and external donors. Other alternative income-generating initiatives are also now coming to the fore.

Membership fees

The most obvious source of revenue for most consumer organisations is their members' ability to pay a small annual contribution. This has also the advantage of providing an unrestricted source of income though it is often not enough to meet the minimal operating needs of organisations.

Recruitment of fee-paying members remains a challenge in many developing countries where the provision of information services is not seen as value for money by consumers. Many organisations do not have the skills and capacity or an environment conducive to developing a mass member base.

Product testing and publication

This model has been successful in Western Europe, USA, Australia and New Zealand and continues to be robust there. Besides, the testing and publication model has been implemented by consumer organisations in Brazil, Russia, Thailand, South Korea, Indonesia, Hong Kong and India.

Attempts to establish this model in countries even with a sizeable middle-class have failed and many organisations are struggling to sustain consumer information services at a time when so much free material is available for free on the Internet and through public information.

Successful product-testing organisations   are now extending this model into providing multifold services and benefits to their members through their online platform. This includes: access to archived test results, podcasts on particular issues and exclusive video content; access to online comparison/calculation tools and even tailored testing service where members can request their individual home, cars or kitchen appliances tested for asbestos, heavy metals, etc.

Grant funding

This is by far the most prevalent model relying on grants from foundations, private trusts, international institutions, regional agencies, local municipalities, governments and even universities. Even organisations who carry out product testing and publish magazines combine this model to generate funds.

In a number of countries governments have come to play the role of a strategic ally for growth. However, consumer groups should be wary of strings and risks attached to receiving financial support from governments or private foundations controlled by corporate interests who can damage their independence or limit their ability to criticise.

In any case, it is recommended that grants and subsidies should form part of a broader mix of funding.

Additional initiatives

A few organisations are known to have achieved financial viability via the model of cooperative buying. This requires a strong grassroots network, proven management skills and financial capacity, which few consumer organisations have been able to acquire. Typically, basic-need items such as staple foods are acquired in bulk by a network comprised of several thousand families. A member will save about 15% to 20% on his household budget.

Attempts to replicate this model elsewhere have generally not been successful. However, there is a recent variation to this model: direct farmer-to-consumer organic cooperatives are starting to enjoy a boom in developed countries as an alternative model to supermarket-controlled and industrialized food distribution and production.

Depending on the peculiarities of national legislations, consumer organisations have also derived some of their revenues from legal instruments. Court settlements such as settlement money obtained through successful class-action suits are to be highlighted here, particularly in North America. There are also tax-free donations: in some eastern European countries, tax payers are free to donate a percentage of annual tax to NGOs of their choice.

In some cases, consumer groups have generated income through the provision of paying services to consumers, local governments and even businesses. Alternative Dispute Resolution Centres handling and resolving complaints for consumers against a nominal fee have proved a thriving model for organisations in developing countries. Some organisations have engaged in the sale of consumer data and analysis such as market data surveys and consumer polls to businesses. Providing training on consumer legislation for civil servants, council workers, businesses, journalists and other NGO activists has also proved a successful alternative.

Others

• Attendance fees and perdiems from meetings and seminars
• Speaker fees
• Fund raising event (organising a golf tournament or a gala dinner for instance)
• Interest earned on financial investments
• Management of public/private compensation funds: fees earned for managing financial protection schemes for holidaymakers when a tour operator fails for instance.

Read more

For a useful resource about the development and implementation of fundraising plans and strategies, read CI's manual 'The Management and Funding of Consumer Organisations'