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By Joanne Sonenshine, Founder + CEO Connective Impact
As we embark on a new year, like most fundraisers and partnership builders, we do so with hope and optimism that this year will bring productive and promising opportunities for funding. To be true, we must unravel the trends in front of us and distill valuable insights to guide us towards these aims. To start, let’s examine what made 2023 a unique year for development funding.
Strategy refreshers and niche focus dominate conversations
In a quest for clarity and purpose, many donors used 2023 as a testing ground to explore new avenues after the exhaustion of post-COVID rebuild funding. This strategic introspection is expected to spill over into 2024, providing fundraisers with a breath of fresh air as donors are ready to re-evaluate new partnerships.
A notable shift among many international development funders, as part of a strategic refresh but also more broadly, was a narrowing of thematic focus areas. This meant, for some, a movement away from big-picture strategies to fund more niche programmes. For instance, climate funders transitioned from supporting generic carbon programmes to those using specific renewable technologies, soil mechanisms, or combining biodiversity protection with adaptation strategies. Funders supporting gender programmes were looking to fund more specific equity programmes or income-generating activities instead of broader programmes that simply included women. This movement towards more focused giving also allowed funders to be more intentional with their funding concentrations, trying to augment their existing focus areas with those overlapping areas that are more “on trend,” like climate. For example, some funders that are traditionally in the disaster response space may be looking to overlap their normal issues of importance, such as conflict resolution, natural disaster prevention, and humanitarian response, with investments in climate resilience. These methods of building intersectionality are expected to persist into 2024.
The rise of localisation
Localisation continued to be a hot-button issue in 2023, evolving from mere discussions in 2022 to a year where many donors redesigned their giving mechanisms to prioritise their local giving. Some of the biggest US Foundations, like the Hilton Foundation, Hewlett Foundation, and MacArthur Foundation, joined forces with USAID to commit to localisation as a priority in their grantmaking. This move has had implications for board redesign and development, as well as how these and other funders look to evaluate partners and new and existing grantees.
Flexibility in funding
The quest for flexible, unrestricted funding for overhead or experimental approaches to solving tricky development challenges was a common theme among fundraisers in 2023. Some donors intentionally shifted to provide more unrestricted and flexible funding to new and existing grantees, while others stayed true to their existing programmatic priorities. While 2024 may not see a massive shift in how grantees obtain flexible funding, there is a growing effort to explore more flexible funding models in the funder community made even more pronounced when donors like MacKenzie Scott make serious yet flexible contributions to organisations that have been stymied by limited resources. Those funders who desire to catalyse growth and be part of transformative narratives will start to act more similarly.
Looking Ahead to 2024
While many of the trends that took shape during 2023 will continue to evolve this year, we’ll see a few bubble up to the top as well.
Match and fit: A priority
Whether through more formal requests for proposals or streamlining how donors select new grantee partners, we’ll start to see funders working with fewer grantees in a deeper, more symbiotic way. Fundraisers must align their focus and niche to fit with funders’ narrowed priorities, making the matching process more important than ever. Donors and grantees will become much more aligned in how they deliver on their missions and, accordingly, how they find each other. We’ll see this notion of fit over favourite take a bigger hold this year.
Climate emphasis
Climate funding will take centre stage in 2024, with climate funders doubling down on commitments and non-core climate funders incorporating climate into their programmes, even if tangentially. What this means is that all programmes, whether focused on climate change or not, will be expected to have some element of climate intervention.
Gender is no longer just about equality
Gender is one of those hot-button issues that has been at the forefront of most funders’ minds, often in the form of investments in education, advocacy and training around financial security and job development. Yet this year, we expect to see a bigger push around gender lens investment, looking at a broader scope of agency and identity for women, as well as how women can benefit from trends around digitisation and AI.
For both climate and gender, we expect an increased focus on influencing and civic engagement, working with grassroots, indigenous leaders and minority groups.
Scrutiny on leadership
Since localisation remains a significant priority for funders, they will scrutinise organisational leadership and profiles, supporting those with truly local leaders, insinuating those are the best to deliver successfully. We will also see donors shifting their own leadership, moving to regional leadership models and decentralising much of their decision-making processes. To make localisation more actionable, larger funders are leveraging regranting partnerships to target grassroots nonprofits in places that they would otherwise not reach.
Questions and uncertainties
As is always the case with a new year, 2024 presents us with a number of uncertainties. In particular, there will be questions surrounding the outcome of conflicts in the Middle East, Ukraine, and several other hotbed regions, the US presidential election, and how we come together as a global community to address climate change. From a funding perspective, there are questions about how committed funders are to making flexible, unrestricted funding the norm. We also wonder how funders will reorient their focus towards grantees as true strategic partners rather than transactional agents.
Embracing uncertainty with creativity and resilience
As we step into 2024, fundraisers and partnership builders must adapt to the shifting trends, exhibiting creativity, patience, and a willingness to embrace new approaches while navigating the uncertainties of the coming year. As the world faces challenges, opportunities for impactful philanthropy remain, and it’s up to fundraisers to seize on them with resilience and innovation.
Joanne Sonenshine is a development economist with a passion for guiding nonprofits in the Global South on a relationship-based fundraising journey, and encouraging philanthropic organizations, government agencies, large and small corporations, and investors to be more transparent in their giving strategies. Passionate about societal change, Joanne has devoted her career to helping non-profit decision makers, corporate leaders and entrepreneurs partner for greater impact in their work by unlocking funds and developing strategies for program growth. Joanne is also author of Purposeful Profits: Inside Successful Businesses Making a Positive Global and ChangeSeekers: Finding Your Path to Impact. She lives in Arlington, VA with her husband and two sons.
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