As the Institute of civilian Affairs we have been observing the same recurring script for years: Polish NGOs (NGOs) are in continuous running. They race with grant terms, adapt the mission to grant requirements and live in constant financial uncertainty. This creates frustration, burnout and, most importantly, limits our strategical independence.
Enough life “from grant to grant”
That's why we advance the thought so powerfully Iron capital {C:$00FFFF} endowment fund). This is not just another financial instrument. This. management philosophythat allows the organization to full control its future.
Iron capital is simply a non-refundable and inviolable fund whose The only task is to make investment gains.
These profits are then allocated to the statutory objectives of the organisations. The regulation is simple but revolutionary: Main capital works forever, financing the mission endlessly. This stableness and longevity of operations is our most crucial objective.
Where do we start building? 3 phases of the strategy
Building iron capital is simply a strategical task for years. It's not adequate to have 1 fundraiser. due to the fact that at the Institute of civilian Affairs we conduct actions to build iron capital and at the same time we are close to strengthening civilian organizations – we share our thoughts and observations. Our experience to date shows that 3 phases are crucial:
Phase I: decision and legal power
Iron capital must be strategic decision of the Management Board and have attachment in the Statute.
- Legal audit: Check whether your statute allows you to rise funds for peculiar intent funds (including the Iron Fund) and to conduct investment activities. If not, make a change.
- Resolution of the Management Board and Rules of Procedure: make Internal Rules of Procedure for Iron Capital. It must specify what measures are ferrous capital (it is frequently accounting separation) what are the principles of its integrity and how investments will be managed.
- Strategy and objective: specify what this fund is for. Should it cover fixed costs (pays, rents) or finance a circumstantial programme (e.g. the “Save Children!” campaign)? Remember, you request first capital. The more the better. But think of the amount of the order minimum PLN 200 thousandthat investments make real economical sense.
Phase II: Creation Case for support and Building credibility
Iron capital must be attractive to donors. You request strong message.
Iron capital builds the organization's image as a thoughtful and financially responsible. The Donor doesn't give money for an ad hoc project, but for The eternal continuation of your mission. This is the “magic” argument that goes to large donors and companies.
Phase III: relation building and transparency
Iron funds are built for years, mainly through relations.
- Collection diversification: Run targeted campaigns for iron capital alongside collections for current projects. Tell the communicative of success – what profits from the fund have already financed and/or made a kind of promise – what they will finance.
- Capital Council: Appoint a board (consisting of members of the Management Board and external financial experts) will advise on investment issues. It guarantees professionalism and minimises risk.
- Sound reporting: Be absolutely transparent. Regularly print investment results. Show how much capital has grown, and how much profit has been spent on the mission. Trust is the currency of iron capital, and transparency is its purchasing power..
Responsibility of the Management Board: not only to earn, but besides to invest
Liability of the Management Board Overriding attention to the integrity of the chief capital and guarantee that its real (inflation-adjusted) purchasing power is preserved over the centuries.
Investment policy: safety is simply a priority
The Management Board must approve the detailed Investment policy. This is simply a road map for means. It shall specify:
- Acceptable hazard level (usually low to moderate).
- Asset allocation (e.g. breakdown into government bonds, real estate).
- Objective of the rate of return – it must be real and exceed inflation so that the capital does not lose value.
Investing in accordance with the mission
Modern management of iron capital is not only a maximization of profit, but besides ethical and liable investment.
NGO money should work in accordance with her mission. This is where the concept comes in. ESG (environmental, social, governance). The ESG investment means that:
- Avoid environmental harm (E).
- You choose those that respect labour and social rights (S).
- You like companies with transparent and ethical management (G).
Your iron capital isn't just profit, it's social impact tool. By giving donors a warrant that his money is invested ethically, you build an additional layer of trust.
Iron capital in Poland: promised land NGO
Do Polish NGOs have iron capital? Yeah, but it's inactive a small, although growing, segment. Large, mature institutions like the Foundation of them. Stefan Batory or the Foundation for Polish Science, has long understood its value. They are a pattern.
W Institute for civilian Affairs We see iron capital as “the promised land” – the state to which we are going.
Despite the support of the National Institute of Freedom under the civilian Organization improvement Programme in creating these funds, we inactive lack:
- Culture Endovment in society (ordinary donors seldom think of ‘everlasting’ support).
- Financial knowledge in tiny and average NGO.
Therefore, as 1 of the Institute's objectives is to constantly educate and advance long-term thinking.
Iron capital in the face of financial challenges
Does this pay at current interest rates? This is an absolutely legitimate question in a dynamic economical environment. In periods of low interest rates, it is hard to accomplish a profit above inflation by investing only in safe instruments (such as government bonds). advanced inflation becomes A silent enemy capital.
However, the answer is: Yes, it pays off, but it requires professional management.
- Long-term perspective: Iron capital is simply a possible ageNot a year. Rate fluctuations and inflation are included in this model. It's about making a profit. average annual In the long term.
- Active allocation: In a period of higher interest rates, bonds and deposits gain and in periods of growth and stableness – stocks. The tasks of the Management Board (and the Capital Board) are dynamic allocation funds to respond to economical cycles.
Real property as part of ferrous capital
Many experts believe (including more and more frequently we agree) that real estate should form part of the diversified iron capital.
Advantages of the property:
- Inflation protection: Property value historically frequently increases with inflation.
- Fixed money flow (opener): Rents from rental are fixed, predictable income which can be allocated to statutory purposes.
- Social dividend: The property can service as a office or community centre, generating savings (you don't gotta pay rent) and at the same time usability (the implementation of the mission).
Property defects:
- Low liquidity: Real property sales are time-consuming and complicated.
- Management costs: They require current investments (remonts, taxes, lease management).
- High baseline: They require quite a few capital for the start.
- Diversification (shares, bonds, real estate, funds) remains a golden rule and the only real strategy in the fight for preserving the real value of the capital.
Work!
Iron capital is the most effective way to become independent of the unstable grant market. It takes courage, discipline and strategical management, but in return it gives NGO a real Freedom and durability – warrant that your mission will last you and subsequent generations of the Management Board. Today, more than ever, we request this stableness to effectively influence citizens' affairs. Start building your foundation now.
