Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

STRATEGIES TO STRENGTHEN by yurtgc548

VIEWS: 8 PAGES: 25

									                                                 Joint United Nation Program on HIV/AIDS




PDA




       STRATEGIES TO STRENGTHEN
NGO CAPACITY IN RESOURCE MOBILIZATION
      THROUGH BUSINESS ACTIVITIES

           This document was co-authored by
        Mechai Viravaidya and Jonathan Hayssen




       PDA and UNAIDS Joint Publication

        UNAIDS Best Practice Collection

                        2001
Forewo rd
The work of non-governmental organizations (NGOs) – protecting the environment,
helping the sick and needy, preserving arts and culture – is by nature “unprofitable.”
Traditionally, NGOs rely on the goodwill and generosity of others to cover the costs of
their activities through grants and donations. Today, unfortunately, NGOs find that such
traditional funding sources are often insufficient to meet growing needs and rising costs.
In addition, restrictions imposed on many grants and donations, along with the uncertainty
of these funds over time, make it difficult for NGOs to do long-term planning, improve
their services or reach their full potential.

When the costs of an NGO’s core activities exceed the inflow of grants and donations, it is
forced to either reduce the quantity and/or quality of its work, or to find new sources of
funds to cover the difference. Reaching out to new donors with innovative fund-raising
approaches is usually the first step. Redesigning program activities to include cost-
recovery components, whereby the beneficiaries or clients of the NGO pay part of program
costs, is a second approach. A third alternative is for the NGO to “make money” through
commercial ventures.

This UNAIDS Best Practice key material is directed at managers of national and
international NGOs working on HIV/AIDS and other health and development issues. It is
intended to increase their awareness of the opportunities, and possible problems,
associated with alternative resource mobilization strategies, with a special focus on
commercial activities. It is hoped that this will motivate NGO managers to determine and
begin implementing the most appropriate resource-generating strategies to enable their
organizations to continue and expand their important work.

Policy makers, donor agencies and other supporters of NGOs also have a vested interest in
seeing NGOs achieve financial sustainability. It is therefore hoped that this paper will
encourage such readers to increase their efforts to promote such institutional development
for NGOs. Non-government organizations make our world a better place. Together we
can ensure that they continue to grow and prosper.
Table               of
                                 C o n t e n t s

Chapter   I.   The Funding Challenge Facing NGO Managers...............................1


Chapter II.    The Response to Date........................................................................3


Chapter III.   Achieving Financial Security through Diversification......................5


Chapter IV.    Strategies for NGO Commercial Ventures: An Overview...............12


Chapter V.     The NGO as Business Owner: Special Considerations..............14


Chapter VI.    Getting an Idea and Planning the Business......................16


Chapter VII.   Conclusion: The Question of Timing..............................................22
                                                                                       1




C h a p t e r 1.
 The Funding Challenge                                                     Facing
 NGO Managers
 Despite the vast differences among the     funding. Meanwhile, NGOs face
 world’s non-governmental organizations     rising costs for staff and other program
 (NGOs), most share a common dilemma:       inputs, further straining their limited
 Lack of funds limits the quantity and/     budgets.
 or quality of the important work they
 do. Unlimited needs chasing limited        Dependence on grants and donations
 resources is a fundamental fact of         can also inhibit the autonomy of
 economic life in rich countries and        NGOs to choose which program
 in poor countries. It affects large        activities to undertake and to select
 international organizations, such as       the most effective intervention
 the United Nations, down to the            strategies to achieve program goals.
 smallest local NGOs. From rural            To a certain extent, all donors have
 development agencies to museums, and       their own agenda, i.e., their own views
 from health care providers to education    as to which problems are important
 and training institutes, managers of       and the best intervention strategies
 NGOs must often pay as much (if not        to address these problems. NGO
 more) attention to finding funds as they   managers may be compelled to
 do to using those funds.                   “follow the money” and allow donors
                                            to dictate the scope and direction of
 NGOs increasingly find that grants and     their activities, or else receive no
 donations are inadequate to meet current   funds at all. As the old saying goes,
 program needs, much less to expand         “beggars can’t be choosers.”
 program activities. With so many
 worthy causes that address genuine         Another problem is that many grants
 needs competing for the attention          and donations carry restrictions on
 and generosity of the public, even         the types of expenses that they may
 wealthy donors lack the resources          cover. The most common restriction
 needed to fund every worthwhile            is to cover only direct program
 effort. Furthermore, as populations        costs, but not the cost of support
 grow, so do the numbers of vulnerable      services or other overhead costs
 groups needing assistance from             incurred by the NGO. The NGOs
 NGOs. New problems can appear, such        must “contribute” these costs on
 as HIV/AIDS, which demand urgent           their own, or at least cover an
 attention and require substantial          increasing share of these costs over
                                            time. But how?
                                                                            Strategies to Strengthen NGO
2                                                                        Capacity in Resource Mobilization
                                                                               through Business Activities




    Even those NGOs fortunate enough            NGOs – and those they serve – from
    to be fully funded in their current         reaching their full potential; at worst,
    operations may face uncertainty over        the very survival of many NGOs is
    future funding. If the problems they        at stake. The challenge facing NGO
    address are still around in five, ten,      managers is to find ways to increase
    twenty years, will donors keep paying       their financial security without
    program costs ad infinitum? Or will         sacrificing the mission of their
    donors’ generosity shift to other more      organizations.
    needy or more popular causes? As one
    country develops economically, will         There is no standard, proven method
    donations be diverted to other, poorer      to meet this challenge. All NGOs are
    countries? Could local political or         different in terms of their missions,
    social problems lead to a cut-off of        philosophies, client bases, skills and
    donor support? What if a key donor          experience. But increasing financial
    itself goes out of business? The            security is an important part of
    uncertain continuity of donor funding,      planning for all NGOs. Becoming
    be it short term or long term, makes        completely independent of donors
    it extremely difficult for NGO              may be a realistic goal for some
    managers to plan and implement their        NGOs, while trying to self-generate
    organization’s core activities. It also     funds just to cover overhead costs
    may force an NGO to live a project-         may be more suitable to others. Still
    to-project existence, being unable to       others may legitimately determine
    make long term plans to expand core         that relying on grants and donations,
    activities or to improve the quality        at least for now, is the best approach.
    of program services.                        There is no right answer. It is up to
                                                each NGO and its managers to
    Thus we see that today’s NGO                consider all the funding options
    managers face an increasing need for        available and to choose the most
    their organizations’ services, increasing   appropriate mix, just as they must
    costs for providing those services, and     determine which core activities
    an increasingly competitive and             and implementation strategies are
    restrictive environment for obtaining       most appropriate to their mission
    funds through grants and donations.         and goals.
    At best, these problems prevent
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities
                                                                                            3




 C h a p t e r II.
        The Response to Date
        The funding challenge described earlier    Likewise, Goodwill and Oxfam
        is already well understood by most         have long operated retail stores
        NGOs, and many have responded with         to subsidize their development
        the same entrepreneurial spirit, good      activities, and T-shirts and other
        planning and hard work that brought        promotional items sold through
        them success in their core activities.     shops, catalogs and the internet are
        They have expanded fund-raising            net sources of cash for CARE, Save
        activities directed at the general         the Children, the World Wide Fund
        public, tapped new corporate donors        for Nature and many other NGOs.
        for monetary and in-kind support,          Cards and calendars from UNICEF
        and held one-time events such as           are popular worldwide, while the
        the LIVE/AIDS concert. They have           UN also operates shops at its major
        redesigned program implementation          offices, implements programs in
        strategies to include cost-recovery        partnership with private companies to
        components whereby the beneficiaries       offset costs, and seeks donations
        of the program pay part, and sometimes     outside its traditional source of
        all, program costs. And today we even      payments by governments.
        see NGOs owning and managing
        restaurants, tour companies, banks,        Large, broadly based NGOs are
        clinics and other businesses.              generally better equipped to diversify
                                                   their funding sources than smaller
        Consider the case of museums. A            NGOs. They can take advantage
        generation ago, most covered their         of their recognizable name and
        costs through wealthy patrons, civic       logo. They have more technical
        grants, and minimal admission fees.        skills on which to build commercial
        Now, museums commonly have                 activities. They have more contacts
        restaurants to feed their visitors,        and connections with outside groups
        operate shops that sell reproductions      with which to form partnerships.
        of their unique artworks along with        And internally they have more
        other products that appeal to the tastes   experience adopting new programs
        of museum goers, and rent out their        and adapting to organizational change.
        exhibition halls for private receptions    These NGOs also often have a greater
        and events.                                need to seek outside funding
                                                   because of their higher costs for
                                                                          Strategies to Strengthen NGO
4                                                                      Capacity in Resource Mobilization
                                                                             through Business Activities




    support services and overhead. On the     laws and other regulations that
    other hand, smaller NGOs have             restrict the ability of non-profit
    the advantage that relatively small       organizations to charge fees or engage
    amounts of self-generated funds can       in profit-making ventures.
    make a big difference in ensuring
    their financial viability. For example,   The large international donor agencies
    Green Line, a small environmental         have long encouraged NGOs to
    NGO in Slovakia, covers approximately     become self-reliant, while only
    three-fourths of its operating budget     recently starting to fund projects that
    through membership fees, training         include commercial components. But
    charges, and the sale of books, games     many donors still have restrictive
    and promotional items.                    rules and political or philosophical
                                              concerns about financing business
    Among outside supporters of NGOs          ventures, and none have major
    there is the beginnings of a movement     programs directed specifically
    to help NGOs become more                  at empowering NGOs through
    financially secure, but much more         profit-making enterprises. Smaller
    needs to be done. National and            donor agencies such as German Agro
    local governments increasingly are        Action, Enterprise Works Worldwide,
    providing program grants for NGOs         the Roberts Enterprise Development
    to undertake activities that the          Fund, NESsT, the Aspen Institute and
    governments support but can’t             other private foundations have been
    provide as effectively by themselves.     more active in helping individual
    Some also give general support            NGOs establish businesses, and in
    grants to cover NGO overhead costs,       trying to upgrade the commercial
    reasoning that these funds will be        skills of the NGO community as
    leveraged many times over by the          a whole. Unfortunately, these efforts
    grants the NGOs receive from outside      are still small and largely
    donor agencies. And more and more         uncoordinated.
    governments have begun changing tax
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities




  C h a p t e r III.
        Achieving Financial Security through Diversification

        Any smart private investor will say         sources to meet their particular
        that the key to financial security is       financial security needs.
        diversification, i.e., holding a mixed
        portfolio of investments rather than        NGOs can obtain funds to run their
        depending on a single investment to         programs from three sources:
        meet current and future income needs.
        If you “put all your eggs in one basket”        1) Interested third parties, who
        you – and your family – run the risk of            give to the NGO in return,
        hardship, or even ruin, if the basket              primarily, for the personal
        drops. This cardinal rule of investing             satisfaction derived from
        also holds true for NGOs that need                 doing good (grants and
        a secure flow of income to meet                    donations);
        current and future program needs.               2) Beneficiaries of the NGOs
                                                           programs, who value their
        In choosing the optimal mix of                     participation more than
        investment holdings to provide                     the cost of participating
        financial security, private investors              (cost recovery);
        match their portfolio to their individual       3) Unrelated third parties, who
        situation, i.e., their current living              will pay the NGO in return
        expenses, planned future expenses                  for something of value that
        for children’s education, a bigger home,           the NGO can make or do for
        retirement needs, etc., with their                 them (commercial ventures).
        personal philosophy or attitude toward
        risk. In selecting specific investments,    Problems and opportunities related
        they focus on areas where they have         to each of these funding sources are
        special knowledge, experience or            discussed in turn below. How they
        interest, and weigh the expected return     fit with each NGO’s particular
        on the investment with the time and         needs, abilities and philosophy,
        effort required to oversee it. And in       however, can only be determined by
        overseeing their portfolio, they keep       the management of the NGO itself.
        abreast of developments affecting
        their investments and change the mix        Grants       and        Donations
        as circumstances dictate. This process
        parallels how successful NGOs               Grants and donations have traditionally
        manage their portfolio of funding           been the mainstay of NGO funding,
                                                                           Strategies to Strengthen NGO
6                                                                       Capacity in Resource Mobilization
                                                                              through Business Activities




    and much has been written on how to              AIDS patients in return for
    organize fund-raising campaigns.                 experience or school credit.
    Clearly, the more an NGO can tap the          2) Retirees with professional
    goodwill of the public for support,              skills to be pro bono consultants.
    the more it can devote its time               3) Other concerned individuals
    and energy directly on its mission.              to help with administration
    After considering their funding                  and fund-raising.
    options, many NGOs might determine
    that relying fully on philanthropic       •   Corporate donors can be
    support is the best fit with their            segmented into potential sources
    organization’s needs, abilities and           of in-kind donations of needed
    values. But even in these cases, NGOs         equipment and supplies, or sources
    are wise to diversify their base of           of cash. Companies whose
    philanthropic support rather than             businesses somehow relate to
    being dependent on a single source.           the NGO’s work could be
                                                  approached differently from
    The “market” of potential donors to           companies with totally unrelated
    NGOs doing good work in an area of            businesses. Businesses located
    genuine public concern is very large.         in the NGO’s neighborhood are
    It is also a very diverse market that         another possible segment.
    can be broken down into “market
    segments.” Possible ways an NGO           •   Community clubs and associations
    fighting HIV/AIDS might segment its           can give donations or organize
    potential donor market are given below.       one-time charity events with the
    The list is far from exhaustive or            proceeds going to the NGO.
    detailed. Rather, it is intended to           Another segment could be the
    illustrate the “market-driven” approach       social clubs of the expatriate
    that successful NGOs use to tap               communities.
    donor support.
                                              Goodwill is not the only reason
    •   The market for cash donations         people give to worthy causes. To
        from individuals might require        appeal for donations, NGOs must
        different approaches for:             understand the motivation of their
        1) Wealthy individuals who can        potential donors, just as commercial
            donate large sums,                marketing executives must understand
        2) Middle income earners who          the different “tastes and preferences”
            can give regular, moderate        of their varied customers. Some donors
            amounts, such as through          may wish to support only one aspect
            membership fees,                  of the NGO’s work. Corporations
        3) The general public who might       are often especially interested in
            give to collection boxes placed   the public relations benefits of
            at local businesses, and          supporting NGOs, while individuals
        4) People with internet access.       may also want some form of
                                              recognition of their support. Some
    •   The market for volunteers might       donors may want the chance to
        include:                              interact with the end recipients of
        1) Medical students to care for       their donation or to otherwise
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities




        participate in the NGO’s efforts.           giving away their services, NGOs can
        Others may require direct feedback          recover part or all of their costs, better
        on how their donations were used.           allocate their services to those who
        And even donors with purely altruistic      truly value them, and enhance the
        motives may increase support if they        self-esteem and commitment of
        are kept abreast of the organization’s      participants. More and more NGOs
        activities. Sometimes a donor’s motives     are thus designing intervention
        may actually be detrimental to the          strategies that incorporate cost
        organization, e.g., to obtain political     recovery components through
        support or to impose his or her will on     “fees-for-services” or various loan and
        the direction of the NGO’s work. NGOs       credit arrangements.
        that recognize and respond to the
        motivations of potential donors will be     For example, Les Centres pour
        more succesful at competing for             le Developpement et la Sante (CDS)
        their support.                              in Haiti received a grant to install
                                                    a drinking water system in a slum
        The concept of segmenting markets           area of the capital Port-au-Prince.
        and designing different approaches for      Residents pay a per bucket fee for
        each segment is really not all that         the water, which covers all operating
        new to most NGOs. An NGO fighting           and maintenance costs of the system
        HIV/AIDS, for example, segments             and also generates a surplus that
        the market of potential program             is used to improve solid waste
        participants into intravenous drug users,   collection in the neighborhood. In
        the homosexual community, commercial        another example, social marketing
        sex workers, students, etc., and designs    programs      for    contraceptives
        different intervention strategies for       typically charge for condoms and
        each. NGOs that have been successful        oral contraceptives, albeit at
        at applying for grants have learned to      below-market prices. Requiring
        segment the market of potential donor       participants to contribute labor is
        agencies by the types of projects they      another form of fee-for-service. For
        support (training, women’s issues, the      example, food aid recipients may be
        environment, etc.), the intervention        asked to donate labor to sort, package
        strategies they prefer and the amount of    and deliver food supplies.
        funds they can provide. These NGOs
        tailor their grant proposals to match the   In Sri Lanka, the rural development
        “tastes and preferences” of different       philosophy of the Sarvodaya
        donors.                                     Shramadana Movement is centered
                                                    on the principle of the “gift of labor”
        Cost                    Recovery            and hundreds of thousands of
                                                    individuals have taken part. The value
        When an NGO’s programs bring real           of that labor is immeasurable.
        value to its beneficiaries, many            Loan and credit arrangements
        beneficiaries (but perhaps not the          require recipients to pay back costs
        poorest of the poor) will gladly pay        over time. The loans may be interest
        something to participate in the             free, or with interest rates below
        programs. By “selling” rather than          what participants could get from
                                                                          Strategies to Strengthen NGO
8                                                                      Capacity in Resource Mobilization
                                                                             through Business Activities




    private banks and money lenders. The       potential customers recognize the
    Grameen Bank of Bangladesh                 value of the products and will happily
    pioneered in this area through its         pay something for them. But the law
    micro-credit programs, and other           of supply and demand says that as
    groups such as KREP in Kenya and           the price of contraceptives goes up,
    BancoSol in Bolivia have also been         demand for contraceptives goes down.
    able to establish profitable banking       Charging higher prices can improve
    operations that directly serve the poor.   the bottom line of these programs,
                                               but at the expense of hurting their
    All such cost recovery activities add      ultimate goal to increase family
    a commercial component to the work         planning practice rates. Furthermore,
    of NGOs. The staff must start              no matter how little the NGO charge
    thinking in business terms, and have to    for their products, some people may
    learn specific business skills and         still be unable to pay.
    concepts such as pricing, distribution
    channels, and cost accounting. They        Cost recovery programs demand that
    must also learn the ins and outs of        NGO managers make a trade-off
    the businesses of their borrowers if       between their programs’ social goals
    they are to administer loan programs       and financing needs. They must
    effectively. The skills and experience     try to serve the greatest numbers
    gained may be the first step in enabling   of beneficiaries while generating
    these NGOs to start their own              sufficient funds to meet whatever
    commercial ventures.                       percentage of program costs are not
                                               covered by donations or subsidies
    Cost recovery activities also bring        from other activities of the NGO.
    NGOs face to face with the harsh           There is no optimal balance, and
    realities of the marketplace, which        some may have to be left out. But
    can fundamentally conflict with an         being able to help some people on
    NGO’s compassionate mission and            a sustainable basis is better than
    values. In the commercial world,           helping no one at all. Hopefully, each
    businesses that don’t make enough          NGO can find alternative ways to
    money have to cease operating. For that    subsidize or otherwise assist those
    reason, people who cannot pay must do      unable to participate.
    without, risky loan applicants are
    turned down, and defaulters lose their     This dilemma demonstrates why it is
    collateral. Sadly, NGO programs that       so much more difficult to manage an
    depend on cost recovery components         NGO compared to a strictly for-profit
    to sustain themselves may have to          business. The predominant goal of
    exclude from participation some of         business managers, even in the most
    the people that the NGO most wishes        socially responsible companies, is to
    to help.                                   maximize the return to shareholders.
                                               If a price increase is expected to
    Consider the social marketing of           reduce sales but increases profits,
    contraceptives. These programs need        the price increase is approved. If
    to bring in sales revenue to help          a product line or service loses money,
    cover their costs, while most of their     it usually is dropped. NGO managers,
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities




        on the other hand, must try to maximize      of operations and the businesses of
        the use of their services, while being as    their beneficiaries. The level of
        concerned about the bottom line as           sophistication may vary, but the basic
        their for-profit counterparts. NGOs          skills are there.
        value the continuation of their
        “money-losing” core activities and           Two NGOs from the developing
        must earn resources from other               world that have been particularly
        activities specifically to help pay for,     successful at diversifying their
        or “cross-subsidize” those activities        sources of funding and expanding
        that are not financially viable.             into business ventures are the
                                                     Bangladesh Rural Advancement
        Commercial                  Ventures         Committee (BRAC) and the
                                                     Population       and      Community
        Millions of farmers, street vendors,         Development Association (PDA)
        artisans and tradesmen manage                of Thailand. BRAC was founded
        successful businesses around the             in 1972 to aid refugees returning
        world. And the success and rapid             home after the country’s war for
        expansions of micro-credit programs          independence. It has since grown to
        have shown that even the least educated      become one of the largest and most
        and poorest of the poor can run profitable   broadly based NGOs in the world, with
        business enterprises. Despite this, many     a staff exceeding 25,000 and an
        people still believe that NGOs are           annual operating budget over US$ 100
        inherently unequipped to compete in          million, of which less than forty
        commercial markets.                          percent now comes from grants and
                                                     donations. BRAC’s core activities are
        Actually, successful NGOs already have       targeted at the destitute, the illiterate
        most of the skills required for business,    and the landless, encompassing rural
        and their managers think in business         development, education and training,
        terms more than we realize. The best         health and population, and urban
        NGOs are clearly as entrepreneurial as       programs.
        the best private companies, being able
        to make things happen and create             Managers at BRAC recognized early
        something out of nothing. Like               on that self-reliance for its target
        commercial marketers, these NGOs             groups and self-reliance for the
        find under-served segments of the            organization went hand in hand. All
        population and design products and           of its programs –from animal raising
        services to meet the needs of those          to credit programs to the production
        markets. Good NGOs are effective in          of low-cost education materials – are
        hiring and training staff, planning          designed to optimize cost recovery
        and budgeting, strategic planning,           while serving those in need. Programs
        purchasing, public relations and other       that generate surpluses above their
        areas of management. Finally, these          ongoing costs are used to cross-
        NGOs have a proven ability to acquire        subsidize other valued programs. Sixty
        specialized knowledge and technical          percent of BRAC’s budget comes
        expertise related to their fields            from these surpluses.
                                                                               Strategies to Strengthen NGO
10                                                                          Capacity in Resource Mobilization
                                                                                  through Business Activities




     BRAC has also been very successful           Mechai Viravaidya, the founder of
     at expanding into commercial                 PDA, has been one of the earliest and
     ventures that are consistent with the        most vocal proponents of NGO self-
     organization’s mission and generate          reliance. Today, PDA covers over
     substantial profits. BRAC Printers           seventy percent of its annual budget
     began in 1977 to meet BRAC’s own             from its own resources and it aims to
     printing needs, and has since been           be 100% self-sufficient by the
     spun-off as a separate entity that           end of the decade. Most of the income
     provides high quality printing services      generating activities are managed
     to private sector clients. The Aarong        by PDA’s affiliate, the Population
     craft shops owned by BRAC bring              Development Company Limited
     income to thousands of rural craft           (PDC), which is incorporated as a
     producers and profits to the                 business entity but with by-laws
     organization. BRAC’s Cold Storage            requiring that all profits be donated to
     Facility helps potato farmers to store       PDA. PDC operates for-profit medical
     their output until prices rise, benefiting   clinics in Bangkok and major
     both the farmers and BRAC, while its         provincial cities, owns restaurants
     Dairy and Food Project generates a           (“Cabbages and Condoms”), mini-
     surplus by linking rural milk producers      marts and a handicraft shop, and
     with urban markets. Recently, BRAC           markets a creative line of promotional
     has joined with other non-profit             items (key chains, t-shirts, coffee mugs,
     and for-profit organizations in              etc.) using condom and other family
     establishing the Delta BRAC Housing          planning motifs. Other income earners
     Finance Corporation to promote               for PDA include contracting out its
     affordable housing, and its new BRAC         research and training divisions to
     Information Technology Institute             private clients and the rental of office
     (BITI) aims to become one of the             space and conference facilities.
     largest such institutes in South Asia.
                                                  The growth of PDA’s Cabbages and
     Thailand’s PDA is most well known            Condoms restaurants illustrates how a
     internationally for its early pioneering     “mini-venture” can grow into a highly
     work in family planning and more             profitable enterprise. It all began
     recently for its success in tackling         when PDA staff and their friends
     Thailand’s AIDS problem. The                 used to gather informally after work
     organization began in 1974 by                for snacks, drinks and conversation
     establishing one of the world’s first        in the small garden attached to PDA’s
     rural-based social marketing programs        headquarters. As its popularity grew,
     for contraceptives, supported by             menu items were added and the
     international grants, a network of over      restaurant expanded several times.
     16,000 volunteer distributors and fees       It now operates out of a separate
     charged for its products. Once this          building next to PDA, has become one
     program was well established, PDA            of Bangkok’s most popular Thai
     expanded its efforts to improve rural        restaurants with gross revenues
     living standards with projects               approaching US$ 75,000 per month,
     in primary health care, water                and has expanded with branches in
     resources, agricultural marketing            other cities.
     and small-scale industries.
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities




        In 1988, PDA began one of its most            An exemplary TBIRD initiative has
        innovative and potentially far-reaching       been the Nike Village Development
        programs ever, the Thai Business              Project in rural Chakkarat district of
        Initiative in Rural Development, or           Northeastern Thailand. PDA has
        TBIRD. The TBIRD concept is to                worked in Chakkarat for many
        match rural needs for better business         years, and Nike joined TBIRD as
        skills and marketing opportunities            part of its newly developed social
        with the money – and especially the           agenda. The project began with the
        talents – of private companies. Who           establishment of a shoe factory in
        better to show the way, argues PDA,           the remote district; its success
        than the business community? TBIRD            has led to other Nike-supported
        takes advantage of the increasing             initiatives benefiting almost 3,500
        interest of corporations to contribute        families who previously struggled
        to their country’s development and            with lack of resources, employment
        foster their public image. The                opportunities and frequent drought.
        private companies provide the funds           The relocation of factories outside
        and business-specific knowledge               Bangkok’s industrial zone has
        and experience. PDA acts as the               strengthened local communities and
        intermediary, supplying the skills,           dramatically reduced poverty.
        lacking in the private companies,             PDA calls this the privatization of
        to plan and organize village-level            poverty alleviation.
        activities.
                                                      The achievements of PDA and BRAC
        Linking private companies to rural            offer lessons to all NGOs seeking to
        development can take several forms.           reduce their dependence on donors.
        Some TBIRD companies provide                  First, both groups view self-reliance as
        resources to meet the basic needs of          a key organizational goal, but also as a
        villagers in water, sanitation or other       long-term goal that cannot be reached
        infrastructure. Other companies               overnight. Second, they focus on
        provide funds and technical expertise         ventures that match their skills and
        to improve income-generating activities       experience and are consistent with
        of villagers in agriculture and cottage       their mission. Third, in their business
        industries. Several TBIRD participants        ventures, as in their development
        have even set up factories in the villages,   work, they show flexibility and a
        producing shoes, textiles and jewelry         willingness to experiment, while
        for domestic and export markets, with         starting small and expanding only
        PDA (through its business affiliate PDC)      when they are confident of their
        holding an equity stake in some of these      technical, marketing and other skills.
        ventures. To date, TBIRD has involved         Finally, they look for partners who
        over 150 companies in 280 projects,           share their goals and can provide
        bringing over US$50 million in                expertise that the NGO lacks.
        resources to otherwise neglected
        areas of rural Thailand.
                                                                                  Strategies to Strengthen NGO
12                                                                             Capacity in Resource Mobilization
                                                                                     through Business Activities




     C h a p t e r 1V.
      Strategies for NGO Commercial Ventures : An Over-
      view
       Strategic planning theory for business       A break down of commercial strate-
       teaches that companies which expand          g             i           e         s
       face less risk if they focus on new          being used by NGOs, large and small,
       businesses that take advantage of, or        is given below. Note that some
       “ leverage off ” the existing core           commercial ventures may combine
       competencies of the company. Thus            elements of more than one strategy.
       travel companies tend to expand into         All the strategies require NGOs to
       other travel-related businesses, while       divert some of their time and energy
       companies with strong marketing              away from their core mission. NGO
       and distribution networks try to             managers must strike a balance that
       sell new product lines through those         optimizes resource generation
       existing channels. NGOs take a similar       without compromising the quality and
       approach when making strategic               quantity of the services they provide
       decisions to expand into new core            to their core beneficiaries.
       activities; not all NGOs have the core
       competencies to work in HIV/AIDS,            • Conduct core activities for paying
       and many NGOs working in HIV/AIDS              clients
       rightly choose not to be active in all       Yayasan Kusuma Buana (YKB) of
       aspects of the AIDS problem.                 Indonesia provides primary health
                                                    care services in poor neighborhoods
       NGOs that want to start commercial           of Jakarta. It helps subsidize these
       ventures, while avoiding undue risk,         services by operating a for-profit
       should also focus on businesses that         clinic in middle-income district of the
       relate to their core mission and take        city. The Thailand Business Coalition
       advantage of their existing skills, staff    on AIDS provides AIDS education
       and facilities. Such ventures are less       and counseling services charging fees
       risky because they can start out small,      on a sliding scale based on their clients’
       require little capital investment or         ability to pay. SIQL of Croatia
       other start-up costs, and cause the least    promotes environmental awareness
       disruption to the NGO’s core                 among the general public supported in
       operations. They can also be exited          part by fees for training programs it
       quickly if they fail to meet expectations.   provides to government and private
                                                    groups.
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities




        • Contract out support services to          • Maximize utilization of assets
           the private sector                       and
        FUNREDES in the Dominican                      facilities
        Republic capitalizes on its information     Asklepyos in Romania brings mobile
        technology expertise to offer website       health services to the poor, and rents
        design, internet courses and network        its vehicles to outsiders when not in
        consulting to private companies. The        use. Several NGOs rent office space,
        Lotus Foundation in the Czech               training and conference facilities,
        Republic uses a similar strategy.           audio-visual and other equipment.
        BRAC’s ability to produce and publish       Others leverage off their convenient
        high quality printed materials led to       locations to open restaurants and
        the formation of BRAC Printing. PDA         mini-marts serving neighborhood
        and other NGOs with field research          residents. PSI/Zimbabwe took
        skills charge private clients to conduct    advantage of its distribution network
        field surveys and focus groups.             for condoms to sell feminine hygiene
                                                    and baby products produced by
        • Market products made by their             Johnson & Johnson on commission.
           beneficiaries
        The Organizaçao de Ajuda Fraterna in        There is no reason why an NGO can’t
        Brazil assists street children to build     be involved in businesses totally
        a better life and sells furniture made by   unrelated to its core activities, so long
        the young people to cover all its costs.    as that business is not antithetical to
        Other organizations from Nyumba             the NGO’s mission. (Imagine an NGO
        Ya Sanaa in Tanzania to Oxfam sell          owning a liquor store or gambling
        crafts and folk arts through shops,         casino!) However, the impetus for
        catalogs and internet sales. Many rural     such a business is likely to come from
        development NGOs benefit their              an outside supporter of the NGO.
        beneficiaries and themselves by             For example, an in-kind donation of
        marketing agricultural products.            buildings would enable an NGO to
                                                    become a landlord while a donation
        • Tie-ins to public relations activities    of computers might lead to an internet
        Environmental NGOs such as                  or e-mail service. PDA would not
        NACOBTA in Namibia, the Sierra Club,        have invested resources in a shoe or
        and country affiliates of the World Wide    jewelry factory were it not for its
        Fund for Nature run tourism businesses,     TBIRD project. Finally, those few
        publish nature books and own other          NGOs fortunate enough to have
        “eco-enterprises” that generate             endowments invest in a variety of
        profits and promote environmental           businesses.
        awareness. Numerous other NGOs sell
        promotional items to earn funds while
        spreading the word about their mission
        and goals.
                                                                                   Strategies to Strengthen NGO
14                                                                              Capacity in Resource Mobilization
                                                                                      through Business Activities




     C h a p t e r V.
      The NGO as Business Owner :
      Special              Considerations
      When an NGO gets into business it              any business venture, NGOs must first
      encounters opportunities – and problems -      be clear about the legal ramifications of
      not faced by other business owners. For        the business on their tax-exempt status.
      example, the “do-good” image of an NGO
      may help it find donors to fund start up       Cost allocation is another issue. The for-
      costs, hire professional staff at “below-      profit activities of an NGO will share
      market” salaries, obtain supplies and          overhead and other costs with its non-
      services at discount prices, use its network   profit activities. It is in the best interest
      of supporters to promote the business,         of the NGO to allocate as much of these
      and get free publicity from local media.       costs to its for-profit activities, so as to
      In addition, many potential customers          reduce the for-profit’s tax liability. But
      are positively inclined to patronize           allocating costs to the for-profit
      businesses that use their profits for          operations, however justified and in
      social betterment, and to give those           compliance with the law, may invite the
      businesses a second chance when minor          unwanted scrutiny of tax authorities. In
      problems occur. On the other hand, other       addition, when an NGO undertakes
      potential customers may assume that            for-profit ventures, the financial records
      NGO-owned businesses are inherently            of the entire organization may be subject
      less professional and efficient than their     to public disclosure laws pertaining to
      competitors, while private banks may be        business entities.
      biased against lending to untested NGOs.

                                                     Internal          Conflicts
      Legal     and      Taxation       Issues
                                                     Much of the success of NGOs can be
      Laws governing NGOs vary from country          attributed to the shared vision of their
      to country. Some countries allow tax-          dedicated employees and volunteers.
      exempt organizations to own for-profit         Bringing commercial enterprises into
      enterprises; Other countries require that      an NGO will disrupt internal cohesion if
      the for-profit enterprise be “directly         staff view “profit” and “business” as
      related” to the principle work of the          inherently unethical. To prevent this
      NGO; And in many developing countries,         conflict, managers must communicate
      laws concerning commercial earnings            to their staff the vital importance of
      of NGOs may be unclear. Before starting        financial security to the organization’s
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities




    social goals, demonstrate that the NGO         Government tax authorities may
    will operate its businesses without            reconsider the NGO’s tax status. In
    exploiting others, and remind staff that       addition, traditional donors may disagree
    all donations ultimately originated from       with the direction the NGO is taking,
    someone’s profit, either freely given          or decide that the NGO no longer needs
    or paid in taxes.                              their donations to support its good work.

    The staff of the NGO may also argue that       As an NGO’s businesses become
    the organization’s core mission will           successful, private competitors may
    suffer if scarce resources are diverted        also start complaining that the NGO has
    to profit-making ventures. This is a           an unfair advantage due to its lower cost
    legitimate concern, especially in the          structure and exemption from income
    short run. (In the long run, the whole         and value added taxes. The case of the
    point of the profit-making ventures is to      YMCA, one of America’s oldest
    increase resources to the core mission.)       NGOs, illustrates this point. The YMCA
    Similar concerns can also arise whenever       has long provided athletic facilities at
    NGOs expand their core activities into         low rates as part of its mission to
    new areas to the possible neglect of their     promote the physical and mental
    existing work. Good management always          development of young men. In recent
    requires effective allocation of scarce        years, the organization has upgraded
    resources throughout an organization.          these facilities into full-service fitness
                                                   centers profitably serving the middle
    When non-profit and for-profit activities      class. As a result, private health club
    operate side-by-side, some “culture clash”     owners are asking local governments to
    is inevitable. For-profit staff are usually    review the YMCA’s tax exemptions, and
    compensated differently, evaluated             some of its traditional donors are
    differently, and have different skills and     questioning why its resources are not
    educational backgrounds than non-profit        serving those most in need.
    staff. The non-profit staff may resent the
    higher salaries and other perks of their       Social           Responsibility
    for-profit counterparts who, in turn, may
    feel like “hired hands” unappreciated          All private companies face pressure
    for their contribution to the NGO’s            to be good corporate citizens. For NGOs
    mission. Good leadership may reconcile         this pressure is particularly strong, and
    these conflicts: If not, separating the two    rightly so. NGOs must make special
    arms may be the best solution.                 efforts to be socially responsible in
                                                   their business affairs. They must offer
    The             Dangers         of   Success   good wages and benefits, ensure worker
                                                   safety, protect the environment, etc.,
    When an NGO’s business ventures,               even when this puts them at a cost
    individually or collectively, grow to          disadvantage vis-à-vis their less
    significant size, the above-mentioned          responsible private competitors. Ideally,
    issues may be exacerbated and new              NGO businesses can show that
    problems may arise. Staff may feel that        profitability and social responsibility
    business activities have overshadowed          are indeed compatible, and thus serve
    the organization’s mission. Other local        as a model for the rest of the corporate
    NGOs may resent its success.                   world to follow.
16                                                                           Strategies to Strengthen NGO
                                                                          Capacity in Resource Mobilization
                                                                                through Business Activities




     C h a p t e r VI.
      Getting an Idea
      and       Planning                           the                Business
       When a business fails (and most new       that is well implemented will succeed
       businesses do fail) it is due to one of   regardless whether the owner is a
       three reasons:                            large NGO, small NGO, private
                                                 corporation of individual entrepreneur.
          1) An ill-conceived idea – the
             entrepreneur misjudged the          The process of getting a business idea
             extent to which potential           begins with assessing the skills and
             customers wanted or were            strengths of an organization (its core
             willing to pay for the product      competencies) and coming up with a
             or service;                         broad list of things that it could
          2) Inadequate research and             possibly make or do. The next step is
             planning – the entrepreneur         a preliminary look at the current
             failed to consider important        market for these products or services,
             factors affecting the business,     paying particular attention to what
             and/or failed to have               motivates each segment of the market
             contingency plans to address        to choose among alternative suppliers
             problems that might occur;          (price, quality, location, etc.). Then
          3) Poor implementation – the           one analyzes current suppliers
             entrepreneur overestimated          (the potential competitors), looking at
             the organization’s ability to       their strengths and weaknesses to see
             provide the product or service      how one might have a competitive
             and to operate the business as      advantage over them, or a competitive
             planned.                            disadvantage that must be overcome
                                                 to compete against them. These
       Even the most sophisticated               steps are repeated in a series of
       corporations with MBAs from the           brainstorming sessions among top
       best business schools, high-priced        management, staff who will operate
       consultants and the latest computer       or provide support services to the
       forecasting models often start            ventures, and perhaps trusted outsiders
       businesses that fail spectacularly.       who can contribute valuable insights,
       This is because business is part art      adding more detail and refining the
       and part science, with the art, i.e.,     business concept(s) at each stage.
       creativity and judgment, the more         Only then can one select the most
       important of the two. A good idea         attractive concept(s) and begin
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities




       preparing the business plan(s).                     habits, the factors that most
                                                           influence their purchasing
       An NGO’s strengths, whatever its size,              decisions, and reasons for their
       may include, but not be limited to, the             satisfaction or dissatisfaction
       following:                                          with existing suppliers;
                                                         • Visits to potential competitors
              • Skills and technical expertise in          to see how they operate, or
                its core activities;                       actually purchasing their
              • Skills and technical expertise in          products or services to learn
                its support services such as               their prices, policies and
                training, research, publishing,            procedures, and to test their
                and computer technology;                   strengths and weaknesses.
              • Network of local supports as
                potential customers, providers        A note on hiring consultants. There
                of skills lacking in the NGO and      are three reasons why an organization
                promoters of the NGO’s business;      may benefit from hiring consultants:
              • International donors as potential     management doesn’t have the time
                providers of funds, technical         to do the work, management
                expertise and links with              lacks particular knowledge or
                international markets;                skills required to do the work, or
              • Convenient location;                  management feels that it lacks the
              • Physical assets such as vehicles,     objectivity than an outsider can
                conference facilities, office         bring. But good consultants are
                space and equipment;                  expensive. As they say, “If you
              • Distribution channels;                pay peanuts, you get monkeys.”
              • Understanding and ability to          Hopefully, an NGO’s donors can be
                organize its beneficiary group(s);    convinced to pay the costs of outside
              • Name recognition;                     consultants if required.
              • Dynamic or charismatic leadership.

       Information about the total market and         The      Business      Plan
       market segments for an NGO’s products
       or services, along with the strengths and      Business plans are very similar to the
       weaknesses of existing suppliers, can          project proposals that NGOs use to
       come from numerous sources:                    apply for grant funds from donor
                                                      agencies. Both tell the story of
              • Published materials (government       an underserved segment of the
                statistics, trade association,        population, and the strategy and
                publications, local business media,   implementation plan whereby the
                brochures and promotional             NGO will meet the needs of the target
                literature of existing suppliers,     group(s) more effectively than
                etc.);                                other organizations. Both are intended
              • Discussions with potential            to communicate the story within the
                customers,       individually or      organization and to obtain funding
                through focus groups and surveys,     from outside sources. And there is
                to determine their buying             no standard format or optimal level of
                                                                             Strategies to Strengthen NGO
18                                                                        Capacity in Resource Mobilization
                                                                                through Business Activities




     detail for either a grant proposal or a    2. Description of the Business
     business plan.                                This section is also generally quite
                                                   brief (usually two to three pages).
     In some cases, NGOs expand into new           It begins with background
     program or start business ventures            information on the NGO – its
     using only their own funds. The plan          mission, goals, activities and the
     becomes strictly for internal use and         skills and expertise it has developed
     there is a temptation to forego the time      over time. This is followed by
     and trouble of writing the document.          a description of the services the
     This is usually a mistake. Putting            proposed business will offer, the
     it all on paper certainly isn’t fun,          market segments on which it
     but it does force careful, thorough           will focus, its strategy for
     consideration of all factors that             differentiating its services from
     may bring success or failure, often           those of its competitors, and the
     uncovering inconsistencies or potential       goals and objectives of the
     problems that must be reconciled.             business. The purpose is to show
     Furthermore, verbal communication             how the business matches the core
     alone may be inadequate to ensure             competencies of the NGO and fits
     that all staff members understand             with the NGO’s overall mission.
     the purpose and strategy of the
     business and their roles and               3. Market Analysis
     responsibilities in its implementation.       This section describes the existing
                                                   marketplace in which the NGO
     What follows below is a brief summary         will conduct its business. It begins
     of the key components that should             with an overview of the total
     be included in a business plan. The           market for the services to be
     summary is particularly relevant to           provided by the NGO – the size of
     businesses that provide services rather       the market, growth trends and
     than manufacturing businesses. This           economic, social, technological or
     is because most NGOs are already in           other factors that affect demand.
     the “business” of providing services,         Then the market is broken-down
     and their core competencies are most          into market segments, with an
     directly transferable to service-based        analysis of the size of each segment
     business ventures. More detailed              and their different “tastes and
     guides to writing business plans are          preferences” i.e., the factors that
     available at most bookstores and              influence their buying habits and
     libraries.                                    determine how they choose among
                                                   alternative suppliers. The market
     1. Executive Summary                          segment(s) whose tastes and
        A brief (usually less than one page)       preferences most closely match the
        overview of the entire business            services to be provided by the
        plan intended to help readers              NGO thus become the target
        understand the big picture before          market(s) it will pursue.
        they begin reading the details of
        subsequent sections.                       There are many possible ways to
                                                   segment markets. The goal is to
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities




                      divide all potential customers into     5. Marketing Plan
                      groups that share similar buying           A marketing plan consists of two
                      habits and thus can be approached          parts. First is the marketing
                      using a similar strategy. For              strategy, a detailed description of the
                      example, consumer markets                  market segment(s) on which the
                      differ from corporate markets;             business will concentrate followed
                      individuals can be segmented by            by an explanation of how the
                      age, occupation, gender, income,           business will match the strengths
                      geographic location and ethnicity;         of its competitors and capitalize
                      corporate markets can be                   on their weaknesses, thus capturing
                      segmented by size, location,               market share from them. The focus
                      industry sector and the types of           of the strategy is what marketers
                      customers they serve.                      call your “unique selling
                                                                 advantage” which is the special
                      Most private companies assume              benefit or benefits you will offer
                      that their potential customers have        customers such as lower prices,
                      no moral or ethical reason for             higher quality, greater convenience,
                      preferring one supplier over another.      more personalized service or
                      NGOs are different. They can               contribution to society.
                      segment their market by “attitude.”
                      Thus many NGOs specifically                The second part of a marketing
                      target their businesses to customers       plan describes how you will
                      who support their core mission.            promote your product, i.e., how
                      Their competitive advantage is that        you will make potential customers
                      they provide services as good as           aware of the services and benefits
                      their competitors while also               you offer. Options available to
                      helping society.                           most businesses include direct mail,
                                                                 sales forces, advertising in print
               4. Analysis of Competition                        media, radio and television and
                  This section begins with a broad               personal contacts. NGOs can also
                  overview of other companies that               use their volunteers, members and
                  compete in the market for the                  other supporters to promote their
                  services to be provided by the                 businesses via word of mouth, and
                  NGO. It includes who they are,                 try to get free publicity from local
                  their geographic coverage, market              media to spread the word about
                  share, pricing and other policies,             their services.
                  etc. It is followed by a more
                  in-depth analysis of companies              6. Implementation Plan
                  that directly compete for the                  The implementation plan, also
                  market segment(s) targeted by the              called the operating plan,
                  NGO, emphasizing the strategies                delineates the day-to-day activities
                  they use and their strengths and               that will be undertaken to set up
                  weaknesses in serving those market             and operate the business, starting
                  segment(s).                                    from the day the business plan is
                                                                 approved. Implementation plans
                                                                 vary considerably depending on
                                                                          Strategies to Strengthen NGO
20                                                                     Capacity in Resource Mobilization
                                                                             through Business Activities




        the type of business, but are likely      for the business (vehicles,
        to include the following:                 equipment, legal and professional
          • Obtaining the site for the            fees, etc.). This is followed by
            business and making any needed        a breakdown of the monthly
            physical improvements;                operating expenses to run the
          • Purchase or rental of equipment,      business (salaries and wages,
            furniture and other assets;           rent, utilities, etc.).
          • Hiring and training of personnel;
          • Supply of support services            The next step is to determine your
            (information       technology,        “Break-even Point” i.e., the
            maintenance, security, etc.);         volume of sales that is required to
          • Supply of raw materials and           cover the direct costs of providing
            other inputs;                         the service plus other operating
          • Production and distribution of        expenses. For example, assume
            sales promotion materials;            that you sell a service for $100
          • Development of monitoring             and the direct cost of providing
            and evaluation systems;               the service is $60. You then have
          • Public relations activities;          a “gross profit” of $40 for each
          • Incorporating the business.           $100 in sales. If monthly operating
                                                  expenses are $400, you must sell
        For each of these areas, the              $1,000 in services each month to
        implementation plan breaks down           earn $400 gross profit and just
        the activity into its sub-components,     break even. If you increase your
        specifies what is to be accomplished,     prices so that each $100 in sales
        assigns who will be responsible and       brings a gross profit of $50, then
        sets a timeframe for completion.          you only need sales of $800 each
        It is difficult to prepare because        month to break even.
        there are often direct linkages
        between activities and because            Unfortunately, it is impossible
        many staff may have to split their        to accurately forecast the volume
        time between the new business             of sales that can be achieved at
        and their existing responsibilities       different prices. You have to make
        to the NGO’s core activities.             your best judgment based on your
        Until you start preparing the             understanding of the market and
        implementation plan you may not           your target customers. If you
        realize how much time and effort          determine that the break-even point
        will be required to actually start        is unattainable, the business
        and run the business.                     cannot be viable. The next step
                                                  is to prepare “profit and loss
     7. Financial Analysis                        statements” for the business given
        The financial analysis quantifies         your best judgment (best case,
        the NGO’s business plan in                worst case and expected case) of
        monetary terms. It begins with a          sales volumes you can achieve.
        detailed list of all the start-up costs
Strategies to Strengthen NGO
Capacity in Resource Mobilization
through Business Activities                                            21


        In its most simplified form the formula is:

                                        Total sales
               Less                 :   Cost of Sales
               Equals               :   Gross profit
               Less                 :   Operating expenses
               Equals               :   Net profit (loss) before tax
               Less                 :   Taxes
               Equals               :   Net profit (loss) after tax

               The profit and loss projections are your
               best estimates of the amount of profit
               the business is likely to bring to your
               NGO. You might have to decide that the
               business, although profitable, simply
               will not bring in enough profit to justify
               the time and effort required.

               One of the most common reasons why
               many businesses go under is that the
               planners underestimated the time it
               would take for sales volumes to reach
               profitable levels. Each month the
               business has “negative cash flow”
               meaning that it spends more money
               each month than it takes in. If the
               owners don’t have enough money to
               keep supporting the business until it
               becomes more popular they are forced
               to go out of business. In planning the
               amount of funds needed for the
               business it is ,therefore, important to
               include sufficient funds to cover such
               possible negative cash flow.
                                                                             Strategies to Strengthen NGO
22                                                                        Capacity in Resource Mobilization
                                                                                through Business Activities




     C h a p t e r VII.
      Conclusion :
      The      Question                                   of                 Timing
       Many entrepreneurs spend years               think about yourself and your
       thinking about and planning a business       NGO as members of market
       before they actually start operations.       segments.
       For NGOs, starting a business is only
       one possible route to achieving            • Develop your contacts, especially
       greater financial security, which in         in the business and academic
       itself is a long-term goal that cannot       world. Let them know of your
       be reached overnight. It is counter-         plans to eventually get into business
       productive to rush into business             and encourage them to think of
       before your NGO is ready. But it is          ways they might support you.
       never too early to start laying the          Perhaps an MBA student could
       foundation for your entry into the           work as an intern or a private
       business world. Start by doing the           company could hire your
       following:                                   research staff to do a field survey.
                                                    Remember that you must find
        • Learn more about business in              opportunities because they rarely
          general and about the specific            find you.
          businesses your NGO could
          undertake. Read business journals,      • Finally, talk up your plans with your
          visit trade shows, surf the               donors. Lobby them to establish
          internet, collect brochures and           programs to promote commercial
          advertisements from potential             ventures for NGOs through grant
          competitors, site out locations, take     funds for management training,
          management courses and so on.             hiring business consultants, and
                                                    providing investment capital for
        • Analyze your own consumer                 NGOs to start their own businesses.
          behavior. Why does your NGO               Ultimately the most effective way
          patronize certain suppliers and           for donors to use their own limited
          not others? What influence does           resources to help the world’s 1.2
          price, quality, convenience and           billion people who live in poverty
          other factors have in determining         is by actively promoting financial
          where you eat, shop and hire              security for the world’s NGOs.
          professional services? Learn to

								
To top