The business of running a sustainable NGO

 

Today’s global economic climate has compelled a drastic shift from selfless emotional philanthropy to sensible giving.

Organizations with CSR portfolios are not just sitting and dipping their hands into their pockets to give to any non-profit that comes along.

Corporations and donors in general, are beginning to expect more from NGOs than was the case. To be sure, they will not ask you to make profit for them, but what qualifies you for grant is more than mere having an NGO label.

From the beginning, it is important to establish that in some sense a non-profit organization is a business regardless of the ideology or vision of the founder. This is one fact that many non-profit, particularly in Nigeria will prefer not to admit. Many of them are wont to say “you know we don’t make money, we have to depend on other people’s charity,” yet they would love to survive.

Consider Connie Nielsen and David Warner, two entrepreneurs that wanted to make a difference in the slum community of Kibera in Kenya, where scarcity of water forced hundreds of people to live in very unhygienic circumstance. The situation was so dire that essential services like toilets, bathrooms, freshwater to drink and hygienic food was unavailable.

Nielsen and Warner came up with a novel solution that resulted into the launch of the first ever Community Centre – the Kibera Town Centre – that brings clean water as well as provide all the essential services and more to slum residents in one place. Their idea however was going to cost the residents a token to access. To subsidize the services, the two founders reached out to Procter & Gamble, P&G, for assistance. P&G has two giving models, one is philanthropy and the second is giving for sustainable growth in communities. They convinced the company to open an Ariel laundry service to pioneer less painstaking and more sustainable washing solutions.

“It was brilliant,” recalled Vanessa Catherine head of New Business Creation at Procter & Gamble who spoke to BusinessDay, “They were providing value to the community and at the same time making the business sustainable. We bought into their idea.”

The center has already demonstrated enormous benefits for the local community – serving currently more than 600 customers per day – including access to clean water, clean energy, sanitation and superior washing. Beyond this, the center provides economic empowerment through facilities such as a cyber café, an education center and a microfinance support structure. Not only employing local people, the center aims at reaching financial self sustainability for a true and sustainable empowerment.

At the moment, “the center contributes 30 percent from its income and the rest comes from donors,” Vanessa revealed. “There are companies that want to donate to non-profits but it is always difficult to find ones with good business models. NGO’s must think like businesses.”

The challenge of monetizing services even at a subsidized rate is what Nielsen and Warner encountered in Kenya, “The people were always asking why they should pay for this or that, is this not an NGO? But we have to make them understand that the money will be used to keep the place running and do other things that are necessary to improve the quality of service they receive. People are not used to paying for something here,” said Vanessa who is in Kenya to provide intelligent support.

Does paying for services benefit the recipients? Vanessa said “it is not just the recipients because of the added value it will bring; it will also help the center stay open which is even more important.” Kibera Town Center employs about 28 full staff. “You can’t expect the donors to always come through all the time. Hence, both parties win,” she added.

There is an imperative that NGOs must realize that along the way existing donors become partners and feel that their grant are turned into investments the moment the organization has a sustainability strategy. You may be running an orphanage, which means the services provided to the children are completely free but what about the services you can provide to the immediate community where the organization is located? In most cases, people in the community will willingly pay for the added value once they are able to connect their spending to the welfare and upkeep of the organization.

Most serious donors are easily impressed by the business-partnership model of managing an NGO. Keep records like a financial statement where you can proudly reflect the sustainability ratios. On the statement they can see your projected growth pattern, “Kibera Town Center has a plan to break even by the end of 2016. To do this, they are already thinking of other avenues to generate more money,” Vanessa noted.

It is important to note that building a sustainability strategy might be difficult at the beginning stage, especially for non-profits who didn’t have it as an integral path for growth. In this case, an organization which is starting to implement the strategy requires a phased approach according to Sharda Naidoo, a senior economic development specialist who has worked on enterprise and financial sector for 25 years. This is so that organizations can ease into the new way of thinking and working and while still focusing on their mission. It is important to recognize that it is not a one-of thing that will take an organization from total dependence to independence from donors. It is a gradual transition and requires loads of patience.

 

FRANK ELEANYA