The future of non-profit funding in South Africa

South Africa’s non-profit sector stands at a defining moment. Nearly a year after the USAID funding freeze sent shockwaves through the development community, organisations are being forced to rethink sustainability, diversify revenue streams and strengthen partnerships in an increasingly complex funding environment.

Recognising the urgency of this shift, BDO South Africa recently convened a high-level webinar bringing together sector leaders to examine the future of non-profit funding. The discussion formed part of BDO’s ongoing commitment to supporting governance, financial resilience and strategic sustainability within the sector.

The webinar featured Professor Linda-Gail Bekker, Chief Executive Officer of the Desmond Tutu Health Foundation, and Clive Wamambo, Senior Director of Finance and Operations at mothers2mothers. Together, they offered candid reflections on the disruption facing NGOs and practical insight into how organisations can navigate what lies ahead.

The impact of the USAID funding freeze has been profound. Organisations working in HIV and AIDS, tuberculosis, health systems strengthening, early childhood development and other essential services faced immediate uncertainty. Many were forced to scale back programmes; some closed altogether.

“It’s safe to say that the HIV and TB landscape really was shaken to the core,” Professor Bekker reflected. “We’ve had months of thinking about what’s happened and what can be done in this setting.”

Yet, as highlighted during the BDO webinar, the challenge extends far beyond USAID. OECD data shows that official development assistance declined in 2024 and is projected to fall again in 2025 by between 9 and 17 per cent. European donors, including traditionally reliable Scandinavian countries, have also reduced commitments amid increased defence spending and inward-focused political priorities.

As Wamambo noted, “We are operating in a fundamentally different donor funding landscape than even five years ago. Globally, funding is becoming more constrained, more competitive and far more politicised.”

One of the central themes of the BDO discussion was that the sector is not facing a short-term downturn, but a structural reset.

The traditional funding model, where organisations relied heavily on a handful of large donors providing long-term, predictable grants, is no longer viable. Today’s environment is defined by shorter grant cycles, tighter restrictions and heightened governance, compliance and reporting requirements.

“The old funding model is no longer sustainable,” Wamambo emphasised. “The future will favour NGOs that are not only mission-driven but financially sophisticated , organisations that can demonstrate value, manage risk and adapt quickly.”

For BDO, this shift underscores the growing importance of robust financial management, transparent governance and strategic planning and capabilities that will increasingly distinguish resilient organisations from vulnerable ones.Despite the pressure, the webinar also highlighted encouraging developments. A notable shift has been the rise of philanthropic foundations stepping in to support critical research and innovation.

The Gates Foundation, for example, has supported research gaps and new approaches, while acknowledging that philanthropy cannot fully replace government funding at scale. Other foundations have launched significant initiatives focused on women’s health and reducing longstanding inequalities in healthcare innovation.

“What has happened, encouragingly, is that we’ve seen a rise in philanthropy,” Professor Bekker observed. “It’s exciting, although perhaps not yet to the same extent locally. We must continue advocating for stronger philanthropy within South Africa and the region.”

Wamambo drew an important distinction: “Philanthropy is catalytic rather than compensatory. Foundations can fund innovation, pilot models and absorb risk in ways that government funding structures often cannot.”

A key takeaway reinforced throughout the BDO webinar was the need for disciplined financial leadership.

“Survival starts with cash,” Wamambo stated. “In a crisis, it doesn’t matter how well-designed your budget is. You need real-time cash forecasting, scenario modelling and a clear understanding of how unrestricted funding can sustain your organisation.”

Professor Bekker echoed this pragmatic approach: “Don’t spend money you don’t have. We do not spend unless there is a funded project line. And in times of abundance, build reserves for leaner moments.”

For many organisations, this represents a cultural shift, from programme-led growth to financially anchored sustainability.

Innovation must not come at the cost of identity. Professor Bekker cautioned that funding pressure can distort organisational purpose.

“It is important to be creative, to read the room and innovate within your mission. But this moment can distort strategy if we’re not careful.”

Chasing every funding opportunity risks undermining long-term impact. The challenge is to remain responsive while preserving strategic clarity.

As highlighted in the BDO discussion, governance frameworks and strong leadership play a critical role in maintaining that balance.

Another clear message emerging from the webinar was the need to redefine the relationship between NGOs, government and funders.

“The opportunity is to move from being supplicants to becoming partners in learning, innovation and systems change,” Wamambo explained.

Professor Bekker added: “Many NGOs have been doing work that government should be doing. That now needs to be reframed. Government must fulfil its role, and NGOs should come alongside as partners, adding value and strengthening systems.”

This ecosystem approach, where foundations fund innovation, government funds at scale and NGOs deliver impact with accountability, offers a more sustainable model for the future.

The webinar also explored the growing influence of Generation Z in philanthropy. More than 90 per cent of Gen Z donors engage through mobile-first platforms and expect transparency, immediacy and authenticity.

“They don’t just want to donate,” Wamambo noted. “They want to contribute skills, ideas and time. They want to see impact and be part of creating it.”

Organisations that embrace digital engagement, crowdfunding and mobile giving are likely to thrive in this evolving donor landscape.

“Young people see through smoke and mirrors,” Professor Bekker remarked. “They expect honesty and impact. We must be clear about what we do and what difference we make.”

When asked to envision the sector five years from now, both speakers expressed cautious optimism.

Wamambo hopes for “a sector that is more resilient, more confident and more locally owned — one with diversified income, healthy reserves and strong financial leadership.”

Access the recording of the webinar here