Article 4: The most uncertain money

Series: subsidies and financial health

When we help organizations build a strategy, we always challenge them to think very long term. What is the point on the horizon you want to move towards? What are the long-term effects of what you do that contribute to the impact you want to have? When is your work done, so that you can dissolve the non-profit and tackle another societal problem? The answer to those questions rarely lies within five or ten years. To move a substantial stone, you need decades, during which you focus on the goal and adapt to a changing context. Influencing a societal narrative, helping neighborhoods find cohesion, preserving heritage: you measure that kind of work in generations, not in legislative terms.

Yet the opposite often happens. While we challenge organizations to think long term, the subsidy frameworks they work with are becoming increasingly volatile. The organization ends up doing the splits: one foot in a mission that spans decades, the other in funding that can change with each legislative term. The longer you have to hold that split, the more painful it becomes.

The primacy of politics

Where does that volatility come from? Largely from a shift in how politics views civil society. From a political perspective, scarce public resources today go to a field that is unruly, does not always cooperate and sometimes outright obstructs. At the same time, the executive branch is claiming more and more room for itself. Preferably no decree-based conditions that automatically lead to recognition, preferably no independent committees that separate the wheat from the chaff, preferably the right to judge dossier by dossier.

In a favorable reading, this shifts the norms about who decides over public money. In an unfavorable reading, the aim is to silence voices or even an entire field, the slippery slope from the piece on strategic fit.

Whichever reading you choose, the side effect affects every organization. Stability and predictability disappear. Decrees are amended more quickly, and within decrees decisions are increasingly made on the basis of individual assessments. This undermines legal certainty, and with it any attempt to think in the long term. Even structural funding, which should be the most stable, thus becomes unpredictable.

The loyal donor

Put the individual donor next to that, and especially the regular giver who contributes monthly or annually by direct debit. Someone who gives forty euros a year has thought about it. That person believes your organization should exist. Unless something significant changes in their own life, that gift will keep coming, year after year. A one-off gift is unpredictable, but a convinced regular giver is among the most stable sources of income an organization can have.

The source that was considered the most reliable, structural funding, thus turns out to be the most uncertain. The source that many organizations see as fragile and incidental turns out to be surprisingly stable. Funding thereby loses none of its value; it just should not be confused with certainty.

That donor also proves something I wrote in the first piece. Where the recipient cannot or may not pay, funding remains the right form. In the other two gaps, there is often a payer hidden away, and the loyal donor is such a payer who has become visible. Diversification therefore looks specifically within those two gaps.

Diversification is not free

Diversification sounds like a free solution. It is not. Economists speak of crowding out: government funding can displace private donations, because people give less to something the government already pays for. Conversely, organizations that lose subsidies do not automatically find donors.

Building your own revenue stream takes time, money, and skills that you may not have in-house today. It is an investment with an uncertain return and a long lead time. Still, the core point remains: anyone who relies entirely on one uncertain source is more vulnerable than someone who spreads their funding, even if that spreading is difficult.

Moving away from the Romance model

Crowding out also works in the other direction. When a government loudly announces that it no longer wants to fund certain things, space arises, and sometimes willingness, among others to fill the gap. That is also the argument you hear in politics today. It is only half true.

What then emerges is indeed a paradigm shift. Our civil society has grown within what we call the Romance model: a strong government that supports and funds the social field. If that government lets go, we move towards a model in which foundations, patrons, companies and individual donors play a much larger role. The little phrase “then they should just look for private funding” underestimates what that shift requires: a culture of giving that has to grow from the bottom up, a new narrative, and a great deal of awareness-raising among people who are sympathetic to your work but do not yet translate that into support. That is the work of years.

Our message is therefore twofold. To the government: letting go of a model so abruptly leaves a field behind without a receptive culture. To organizations: precisely because that shift is slow, it is best to start today. Position yourself, and build a broad base of supporters. Those who wait until the government lets go further will be too late.

Sustainability

This brings us to the third dimension of financial health: sustainability. We see it as the ability to continue financing your mission over the long term, even when one source disappears. Strategic fit determines which money you want, operational strength whether you can handle it, sustainability whether it keeps coming.

That requires a funding mix that makes you less dependent on the rhythm you have the least control over: the political one. Renouncing subsidies is not part of that. It also requires reserves that can absorb a blow, whether that is a cancelled subsidy line or the late payment from the previous section. And it requires a clear picture of which source supports which activity. What value do you create, and for whom? Who, besides the government, could or would be willing to pay for that? Which sources of income fit your mission, and which push you back toward the waffle sale? You build a healthy funding mix deliberately, with subsidies as a solid pillar alongside others.

Anyone who reads this series as a plea to reduce subsidies is reading it wrong. Most of the problems we described lie in how subsidies are organized, not in the principle. A well-considered subsidy policy remains a prerequisite for a strong civil society. Anyone who views subsidies in this way can also defend them better.

This brings the series to a close. Subsidies are a fantastic instrument; that is where we started, and that is where we still stand. But they are not the best-fitting, the cheapest, or the safest money there is. Anyone who faces that reality chooses more consciously, and builds an organization that can sustain its mission for decades.