Institutional strengthening and the need for core operational costs [2007]
- Date : (2007-01-12)
- Author : Tamzin Ractliffe (GGSA)
- Jump to Introduction
- Jump to The indispensible work of the NGO sector
- Jump to The problem: investing in NGO's development
- Jump to Great programs need great organisations
- Jump to Accountability: measurable social impact
- Jump to Performance without resources?
- Jump to SAIE’s responsibility
- Jump to Call for support – SAIE’s self-sustainability strategy
INTRODUCTION
There is a common view that social profit organisations should be resource-poor, almost as a kind of proof that they are responsibly channeling donations to their beneficiaries and practicing austere cost-saving measures… While it goes without saying that governance and control are necessary, this mindset still yields a multitude of negative impacts on social profit organisations, including: constant vulnerability to the failure to cover operational costs; inability to expand and bring the organisation and its activities to a more meaningful scale; lack of opportunity to implement better practices and improvements (SA Social investment Exchange Strengthening Programme Overview).
THE INDISPENSIBLE WORK OF THE NGO SECTOR
Non-profit organisations are mostly admired for their passionate commitment to mission and their inventive approaches to addressing urgent social problems. Across the country and around the world, non-profits implement programmes that improve the quality of life for tens of millions of people. So much so that, in many instances, NPOs have replaced governments as communities’ principal service providers for a range of human needs. And their success in addressing social issues has increased demand for their services from all quarters, including governments which increasingly turn to them as potential service providers and partners to tackle pressing social challenges.
THE PROBLEM: INVESTING IN NGO’s DEVELOPMENT
The problem is that many NPOs struggle to deliver against these growing expectations, because they are constrained by insufficient resources, are under-capitalised, and are typically funded via a single financial instrument: the charitable donation. Almost without exception, non-profits operate on a ‘pay-as-you-go’ basis or receive their funding per project, which significantly curtails their ability to build the intrinsic value and long-term organisational capacity of the NPO itself.
In truth, traditional grantmaking and social investment does not encourage investment in building strong organisations, because funds flow to the beneficiary projects rather than to the organisations that implement them. Worse still, those NPOs with the lowest overheads tend to be the best rewarded or attract the most project funding, making it virtually impossible for them to invest in their own development. Donors and funders maintain a greater interest in supporting an exciting new idea than in building an organization that can effectively carry out that idea, but this must change if we are to deliver on innovation.
GREAT PROGRAMS NEED GREAT ORGANISATIONS
Investing in the people and systems that make products and services better is well established in the for-profit sector. Consider the millions spent on staff and warehouse facilities before Amazon.com ever went on line. However, what is interesting is: why are those organizations created to eradicate poverty and solve the complex social problems of our society not financed in a way that allows them to develop or maintain their infrastructure? Capacity is vital to the long-term health and effectiveness of nonprofit institutions, both large and small. Nonprofit managers and those that fund them must recognize that excellence in programmatic innovation and implementation are insufficient for nonprofits to achieve lasting results. Great programs need great organizations behind them, and the only way to build a great organization is to build capacity.
ACCOUNTABILITY: MEASURABLE SOCIAL IMPACT
Accountability is a high on the agenda of the corporate world and many corporations are linking themselves to non profit organisations as a part of demonstrating their accountability and legitimacy in business. However, in the same way that investors want assurances that companies are ethically and financially sound, donors and other stakeholders are increasingly demanding to see a measurable social impact resulting from their social investments.
Nonprofits are accountable to as many – if not more – stakeholders as corporations are, including private and institutional donors; local and national government agencies; volunteers; the public at large and, perhaps most importantly, the “beneficiaries” of their activities in whose name they have accessed and deployed financial resources that could have been allocated elsewhere.
PERFORMANCE WITHOUT RESOURCES?
Whilst there is a growing demand on social profit organisations to match their corporate counterparts in terms of accountability, organisational expertise, performance and enhancement – they are expected to do this without resources. However, in being accountable it is not sufficient for nonprofits to only focus their performance and feedback efforts on funders by providing accurate reflections of programmes implemented and funding spent thereon. With the limited resources available and the need for significant intervention to improve the lives of the marginalized, nonprofits have to be accountable for their social impact. Are they achieving with the funding received the goals they set out to – viz. their organizational mission and objectives?
SAIE’S RESPONSIBILITY
Both nonprofit managers and donors thus need to be committed to ensuring that organisations are sufficiently strong and able to dedicate the correct quantity and quality of resources to the mission at hand. SAIE needs to ensure that it not only has world class training materials but also the capacity to effectively implement them. With core funding committed ensure the institute is well-resourced, strong, able to work to scale and employ global good practices in its work, we believe we can deliver even greater impact to the communities where our work is vital.
CALL FOR SUPPORT – SAIE’s SELF-SUSTAINABILITY STRATEGY
With regard to our income generation programme to achieve independence of donor funding in the long term, there is a great deal that the organisation has done to work towards long-term viability and sustainability and considerable success has been achieved by marketing our training products both locally and internationally. The Institute continues to grow partnerships with licensing associates to increase the income generation potential and assist in expanding the reach of its materials and services.
In addition, the Institute has developed a business model to establish a not-for-gain but profit making income generation programme that it aims to put in place commencing in 2008. This will see its expertise and systems being commercialized for individual and business training purposes as well as for business information management.
We there would value any contribution of any size towards our Institutional Strengthening Fund. The target is to raise R30m and to invest this in the money market with an view to only using the interest to cover organizational overheads.
