Percent of annual revenue generated from diverse sources
The ability to reduce dependency on single-source funding.
Revenue are monies or the equivalent received from sales, services, fees, donations, and grants. In the case of grants, only the portion actually spent is considered revenue; the balance may have to be returned to the donor.
Typically, the primary sources of funds available to reproductive health programs and organizations include: national governmental entities (such as Ministry of Finance/ Ministry of Health), local governmental entities (municipalities or districts); international donors or foundations; sales of services (through charging fees, contracting with other agencies and or insurance schemes)12; sales of supplies such as contraceptives; and donations from local donors, corporations or individuals.
Total resources (funding or in-kind donations) generated or received by the organization/program from each source.
Income statements; revenue reports; audit reports or other financial records.
This indicator measures the ability of managers to use financial management systems to make decisions that will reduce dependency on single sources of funding. Diversity of funding sources spreads the organization’s or program’s risk of over-dependency on a single source of revenue, and allows the organization/program greater flexibility in determining future directions. Many NGOs find diversification critical to their sustainability over the long term. In addition, with decentralization and the subsequent requirement for local governments/health departments to generate some of their funds, public sector revenue diversification and cost sharing are now relatively common in developing country settings.
This indicator assumes that organizations/programs have basic financial management procedures in place to provide revenue information. For newly decentralized public sector entities, this indicator may be difficult to measure because systems for aggregating information on the revenues generated from service delivery fees, for example, are nascent.
An important consideration in measuring this indicator relates to how funding is earmarked. An organization or program may have diversified sources of funding, but the donors may demand that money be used only for very specific programmatic activities, rather than for general operating or developmental costs that are crucial for sustainability. In addition, the earmarks may not align with the current strategic directions of the organization or program, and this situation may necessitate additional unforeseen expenditures. Hence, evaluators should use this indicator in conjunction with other indicators that permit a more in-depth financial analysis.
12 These represent the principal forms of direct cost recovery although other mechanisms may exist.