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NGO: From Charity to Social Enterprise

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With the dwindling funds and grants that are available, many NGOs are struggling to survive. They are either shutting down their operations or moving into new fields that have nothing to do with their mission but rather are chasing the money.

Majority of the people I meet, when I tell them “NGO” the first thing that comes to their mind is “Charity”. Now the fact that most NGOs depend on donations, grants and fundraising activities to sustain make it reasonable enough to have people link the word NGO to charity. Nevertheless, new innovative ways in income generation have been making their way to the NGO world.

In this context, and for the past few years, I’ve been advising and consulting NGOs on how to adopt a business model into their operations and projects, to create a shift in how they think about their work in an NGO not only as a way to generate enough income to sustain and grow but also a whole new mindset in what an NGO.

The point I focus on is to transform the NGO from a charity to a social enterprise. This happens when the NGO integrates into its work an income generation model that allows it to make money while leaving the positive impact it hopes for. It’s not just a matter of selling something, but rather a mind shift in how the NGO perceives itself in the community.

So here are few tips I usually share with the NGO leaders on how to go through this transformation:

  • Consider diversifying your income sources; not only donations and grants, but rather start considering fundraising activities, sponsorship,  membership fees, services, products and income generating activities that are aligned with your mission.
  • Income generating activities can be the same exact service you give to your beneficiaries, but include in it a small fee that goes as a donation to your organization. This is step one into becoming a social enterprise. Definitely more complex models can be considered on what services or products are offered for free and which are billable.
  • Invest in R&D to better understand what are the other players is in community, what services do they offer, where can you add value, what does the community really need and what is the best way to package your services/products. Utilize Design Thinking throughout the process, consider empathy and your community, really try to understand what their needs are and how can you package your work in a way that they would be willing to pa for the value they are getting.
  • Invest in Marketing to have a better outreach to your users/beneficiaries, potential partners, donors, sponsors and supporters.
  • Consider that your users/beneficiaries will be willing to pay for a service that fulfills their need, as long as it’s conceived value outweighs its costs. At its core, this is a social business transaction where you are trying to merge social value with the business value. Moreover, it’s important to clarify that the fees they pay will be considered as a donation for the NGO to ensure its sustainability, so that you can serve more people for a longer period of time. This transforms the relationship with your beneficiaries to become service users and partners in the community, a win-win situation for both of you.
  • Develop a Volunteer System into your organization to make it an integral part of its daily work and projects, this in turn gets you more community support, helps you get a better understanding of what the community really needs as the volunteers are most probably going to be from the community itself and it can held reduce running costs on human capital.

The above are just a starting point, but usually are enough to start building on them to transform the NGO from a “Charity” to a “Social Enterprise”. With good analyses, research and hard work, usually NGOs start seeing the impact within a year and will reap its benefits both on the short and long term.

So my advice to all NGO leaders, activists and good-doers, change starts with us. It’s about time we start utilizing some of the lessons learned and best practices in the business world and use them to better serve our communities. So start thinking of how are you going to help your organizations sustain, grow and become more self-dependent on securing its finances rather than having to constantly chase funds, grants and following donor agendas, not for your sake or your staff’s sake, but for the community itself to keep on benefiting.

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  1. July 28, 2013 at 1:45 am

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