It’s a well-known fact that some for-purpose organisations cannot move the needle on big issues while their funding sustainability is challenged. In a landscape where there’s much competition for all forms of funding, what must a for-purpose organisation consider to ensure that they are funded sustainably?
We sat down with Marcus Godinho, CEO of FareShare, to discuss their funding mix and the key considerations they make before important organisational decisions.
Marcus, thank you for chatting with us. Can you tell us about FareShare’s mission?
We rescue food that would otherwise go to waste, cooking it into nutritious meals for people in need. We operate Australia’s largest charities kitchens – one in Melbourne and a second in Brisbane which opened in 2018. We cook food from supermarkets, food businesses, our own kitchen gardens and even the general public. Our 50,000 meals a week are distributed to more than 400 frontline charities to feed those experiencing food poverty.
Last year, what was FareShare’s revenue mix like?
Last year our revenue mix was: 30% major gifts from philanthropy, 45% general fundraising (which includes appeals, monthly donations and events); 20% corporate support and 5% government. This funding covered the operational costs required to cook 2.5 million meals.
Which revenue line keeps you awake at night?
It’s not government as I see that as a bonus. I don’t foresee government being a growth area as it is always tied and exceptionally administrative. Corporate support is strong and diverse. We’ve built a model where companies can support at a corporate level which enables their staff to come in and volunteer, increasing their connectedness.
Significant support from trusts, foundations and major donors are my greatest area of concern. As we’ve scaled up our operations and impact, some of our supporters have asked whether their support is still needed. But we’re only doing well because of their support. If they take their support elsewhere then we’ll need to scale back, unless we can secure support from elsewhere.
Philanthropic funding is often announced and provided at the end of the financial year. With expenses incurred evenly throughout the year, we’re vulnerable to funding decisions made in June. There’s a lot of competition for support and if funders decide to discontinue their support then we’ve got no time to make up the deficit.
FareShare has a modest team of staff who are experienced, professional and motivated. They need little day-to-day management which frees me up to spend more than half of my time with our backers. From my experience, many funders prefer to speak to the CEO as he or she is normally the best-placed to explain the organisation’s direction and communicate activities and impact.
How does financial sustainability impact your growth and/or steps toward your mission?
Before we expand or grow, we ask ourselves “If we can achieve this growth, how will we fund it into the future?” The last thing we want is to set up a new operation and fail to meet the running costs, leaving us with a stranded asset.
We constantly review our revenue-generating options and keep coming back to philanthropy as the best return on our investment in terms of time.
We’ve recently set up a second kitchen in Brisbane largely thanks to philanthropic support from Melbourne. As well as providing funding for Capex, donors – including Gandel Philanthropy and the Mazda Foundation – have provided us with grants to cover some of our operating costs for the first two years. Essentially this has bought us valuable time to build a new community of supporters in Queensland.
We’ve canvassed many social enterprise ideas but ultimately dismissed them due to the risks, the time and effort required, and low margins. These ventures also threaten mission creep. We would prefer to focus growth on our very popular corporate volunteering model which is essentially our social enterprise arm.
What are some of your major challenges?
In Melbourne we’ve evolved organically over 18 years, scaling up as we go. In Brisbane we’ve immediately gone to scale with a skeleton staff. The funds we have available have gone into our operations, but we quickly need to build a community of supporters in Queensland as we’ve done over nearly two decades in Victoria.
When I started as a volunteer with FareShare, we had a chef and a driver and operated a few hours a day out of a kitchen we rented. We now have nearly 40 staff – mostly chefs, drivers and volunteer coordinators – and cook 25 times more meals. Donors rightly assess charities’ efficiency. I’m still the payroll, HR and accounts payable officer, but all the time spent on these activities is time I’m not spending on further developing the organisation, leadership and working with major stakeholders. Yet as a supporter said to me recently, as soon as I see a charity appoint a fundraising manager I take my support elsewhere. PwC is now helping us, pro bono, to free up my time to significantly increase
FareShare’s impact in the most administratively efficient manner possible. The challenge is to bring supporters with us.
What do you wish everyone knew about running a charity?
Donors are drawn to funding exciting capital projects, such as buildings or new equipment – and that support is essential! However, following the success of that the capital project, the charity is lumped with its running costs.
Electricity, insurance, staff, petrol and maintenance are all things that charities need to find funding for but there’s often a natural aversion for supporting these. I wish more donors in Australia took the approach that “This is an important issue. The organisation operates efficiently. I can see its impact. It is accessible and keeps me informed. I’m going to provide untied funding for the organisation to continue its work.”