Achieving NGO sustainability

Guest column by Durwin Humphrey*

In Guyana and across the Caribbean, many NonGovernmental Organisations (NGOs) are dying because they cannot generate enough funds to support the work they do. Given the global financial crisis of 2008 and the recent graduation of several countries, including Guyana, to the status of middle-income countries, it is no surprise that donor funding, which was the main income source for NGOs, has significantly decreased both in frequency and quantity. NGOs are now faced with a daunting task of addressing monthly expenses, such as utility bills, salaries and other operational expenses. Many have lost highly-skilled human resources as a result of dwindling finances and find it frustrating and counter-productive to use their limited resources in a seemingly never-ending and often unsuccessful effort to pursue funding from donor agencies. With little resources, NGOs must look to implement important programmes and projects, which are vital to our communities.

Development literature speaks about three main actors in development processes: government, the private sector and civil society. A robust civil society, which comprises NGOs, is very important in both democratisation and hearing the voices of the people. Research has shown the invaluable contributions made by NGOs via service delivery and advocacy in several sectors. Tremendous impact has been made in addressing HIV/AIDS, Genderbased Violence, Governance, Women’s Rights, Children’s Rights, Human Rights and countless other areas of importance. In the absence of the services NGOs provide, there is likely to be a significant loss in momentum and progress with the work being conducted in these areas.

Donor funding is the model most NGOs have grown accustomed to. While this worked well for a period of time and perhaps still has an important role in the overall model to be considered, the time has come for NGOs and donor agencies to embrace a more contemporary model for sustainability. Therefore, NGOs must consider a paradigm shift in their approach to financial, programmatic and governance sustainability. I believe that if NGOs fail to adjust, they will perish. Guyana and the Caribbean will also lose important players in key areas of work that are integral to development, particularly in a social context.

I recently attended a forum held in Guyana by the Barbados-based Caribbean Policy Development Centre (CPDC) in collaboration with the Caribbean Community (CARICOM) Secretariat. The forum was a reminder of the challenges now faced by NGOs. I was quite happy that stakeholders from across the Caribbean discussed the concept of Social Entrepreneurship. I advocated for this concept many years ago. Social Entrepreneurship, according to investopedia.com, involves “businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or community, rather than being driven by the need to maximise profit for shareholders and owners.”

In this context, NGOs can create viable business models in a product or service industry that falls in line with the strengths of the respective organisation. For example, an NGO that specialises in creative arts can use its skills to provide services in the areas of public education using an ‘edutainment strategy.’ This NGO can look to either invest its savings in products or services or create a value offering that will provide significant financial returns in time to come. Some NGOs have embraced this concept and have invested in areas such as agriculture, valueadded processing, and hardware and commodity sales, among others.

A social enterprise model asks how activities central to an organisation’s mission can generate income. These ensure sustainability and scalability – the ability for projects to expand based on investment funding rather than ever—increasing grant funding.

When donors bring funds to NGOs, they also bring conditions that must be followed. Failure to comply can result in the loss of funding. For example, many international donor agencies refuse to support key operational costs, such as utilities, salaries/stipends and project management fees. But have these donors really considered the implications of these policies? If NGOs’ overheads can be taken care of, then they can be significantly more effective in the quality and quantity of work they provide in communities.

When donor agencies require sustainability components in proposals, they should be willing to negotiate and be practical about investing in potent strategies that both parties are confident will bear fruit.

Donor agencies should see project funding to NGOs as a long-term investment. If there is a fee dedicated to a specific investment for the NGO on any project agreement, the organisation can then craft a sound plan for investing that money. NGOs would have to enhance business and other related skills to this end. This is a component that NGOs must begin to negotiate into new project arrangements as an initial step to sustainability.

NGOs must also value their work and refrain from providing highly valued services for less than their worth as this results in other NGOs having to accept funding and fees way below acceptable levels. Undervaluing or underestimating the significance of their contributions is to their own detriment.

NGOs must also change their way of thinking to be more business-oriented and savvy. Donors must be willing to empower NGOs for sustainability. As the saying goes “Give a man a fish and he will be hungry again; teach a man to fish and he will feed himself for a lifetime.” This is a sound concept that must be seriously considered.

Social enterprise is also a potent tool for poverty alleviation. Rather than support dependency, social entrepreneurial tools, such as microfinancing, enable NGOs to develop their own opportunities. Microfinance schemes are already well-known and used by organisations ranging from NGOs to social banks. With capital available from financing institutions such as banks, lending institutions like IPED and even the Government of Guyana, NGOs are advised to capitalise on the opportunities made available. Further, government ought to ensure policies are put in place to facilitate NGOs accessing funding under favourable conditions for purposes of investing in social enterprises, as this will be tremendously beneficial to the country.

There are countless examples around the world that show NGOs brokering and investing in relationships and opportunities that stimulate markets to achieve social ends. Such thinking moves beyond the traditional, bureaucratic logic of time-bound projects and sees NGOs as catalysts of social change, introducing relevant external knowledge and finance at points where they can leverage opportunities for sustainable social benefit. It recognises that markets can support positive social outcomes in a way that grant funding cannot, and it often exposes NGOs to the disciplines of focus and relevance that come with operating within a market.

NGOs must not be fearful when it comes to investing in social enterprises. They should be bold in exploring new policies and ideas that will contribute to national social and economic growth while helping to transition the NGO itself to a sustainable financial path. By extension, this will allow NGOs to create a laser focus on their mandate and achieve same.

NGOs can utilise markets to create sustainable social benefits and create a new paradigm for how they structure and fund themselves. Major donors, including the European Union, USAID, IADB, UN agencies, also need to adopt a greater focus on social investment rather than just grant-giving.

In pursuit of sustainable income, NGOs must be careful not to move away from their core strengths and focus. Social enterprise might not be the development panacea for all NGOs, but it is a useful tool in the sustainability toolbox, and one, which may become more important over time.

It is my hope that we bring all stakeholders together and have an honest discourse about these issues, with concrete outputs that lead to action, as we look to move Guyana and the Caribbean to the next level of development.

*Durwin Humphrey is currently a member of the Board of Directors of the NGO Merundoi Incorporated. He holds a B.A. in International Relations, a PostGraduate Diploma in Development Studies and a Master’s Degree in Business Administration. Mr Humphrey, who has also studied Project Leadership at Cornell University, has extensive experience in strategic policy areas, strategic management, entrepreneurship and sustainability and institutional strengthening particularly in civil society organisations and government agencies in Guyana and the Caribbean.