In an era where political landscapes are increasingly volatile, and public funding for development, humanitarian aid, and civil society organisations (CSOs) has been cut back or is under threat, international non-governmental organisations (iNGOs), non-governmental organisations (NGOs), and community-based organisations must navigate treacherous waters to be able to survive.
Because the traditional model of reliance on grants from public bodies, corporate philanthropy, and international aid has, as we have seen in recent week, proven to be especially vulnerable to political shifts and economic downturns.
Survival therefore necessitates a radical rethinking of funding models, and it is my considered view that those of us who are interested in issues of development must encourage these entities to adopt innovative financial strategies which wherever possible embrace profit-making arms and diversified revenue-generation activities.
The Case for Financial Independence
The last few weeks, the new US administration has enacted policies and taken actions that have paused (or withdrawn) funding for institutions committed to social good. And immediately, many iNGOs, NGOs, and CSOs have been affected.
Ofcourse it was known that dependence on governmental or large corporate funding alone often comes with strings attached, which give or take influence agendas and can be misaligned with grassroots needs. But few expected the scale of actions that have been taken recently to be so severe or widespread.
Profit-Making Ventures
One solution to rise above the current funding challenges is for aid organisations, iNGOs and NGOs to work towards establishing profit-making subsidiaries. This isn’t about abandoning their non-profit status but rather about creating sustainable revenue streams that more dependably supports their core missions:
- Social Enterprises: NGOs can look at ways of investing in or pooling together to co-found social enterprises that align with their missions. For example, two or three NGOs focused on education could develop an EdTech startup, and use it’s profits to fund educational programs in underprivileged areas.
- Goods and Services: Some organisations can buy goods abroad (or at wholesale) and sell them at a profit. Similarly, services like vocational training or consultancy can be offered, with the revenue directly supporting their programs. This model also enables direct engagement with the communities they serve, enhancing trust and enabling greater accuracy when measuring impact. So, an NGO that advocates for clean water can for example buy and sell water tanks for new builds, water pumps, and portable filtration systems, among other in-demand products. The profits can then be used to fund the NGOs activities.
Creative Revenue Generation
- Investments in Startups: Long-term investments into startups, especially those with a social commitment can potentially yield substantial returns. These investments not only provide financial benefits but also foster innovation and development in sectors that the NGOs aim to support.
- Short-term Funding Measures: Quick turnaround projects like organising fee-based workshops, pop-up creches, weekend family events or auctioning donated products (artwork, crafts and other goods) can generate immediate funds without long-term commitment.
Empowering Communities Through Investment
A compelling strategy involves empowering local communities directly to achieve sustainability. NGOs can fund social enterprises within communities by providing assets like a tractor, minibus or a van (e.g. a mobile market food stall) or other machinery that’s needed in the community in which the NGO works.
Similarly, farming communities could receive free seedlings, for vegetables or fruit trees, or if they are into animal husbandry they could be empowered by having animals donated to them (e.g. two goats per family). In return, the NGO would negotiate a share of the profits, say 10% of the social enterprise’s profit for say 3 years. In the case of animals like the goat example above, you could have an arrangement where the recipient family agrees to donate back 4 kids (baby goats) to the NGO over the next 3 years.
For lake shore areas or communities by the sea, similar initiatives could be done in relation to fish farming, whereby the iNGO/ NGO procures raw materials and fingerlings, to be donated to the fish farmers.
But the result would be the same. These measures would not only generate an income but they would also build capacity and self-reliance within the communities, and further help with the work of the NGO/iNGO.
Measurable Benefits
The benefits of such strategies are self-evident, and I believe there are already many examples of aid organisations and CSOs that have achieved sustainability using similar strategies as these:
- Financial Resilience: Diversifying income sources would reduce dependency on potentially unstable public or corporate funding, ensuring a level of continuity of operations even during periods of political upheaval or economic crises.
- Mission Alignment: Revenue-generating activities can be directly linked to the organisation’s goals, promoting both social impact and financial sustainability.
- Community Empowerment: By involving communities in profit-sharing schemes, NGOs may be able to foster a sense of ownership, which can lead to greater engagement and long-term social change.
Challenges and Considerations
While some of these strategies are experimental and offer promise, they come with challenges. Balancing profit-making with the core mission requires careful management to avoid mission drift, although there will be a need for flexibility. In the case of animal husbandry, security concerns, vaccinations and other factors need to be properly thought through. In addition, ethical considerations in investments, transparency in operations, and ensuring that profit motives do not overshadow social goals need to be carefully considered and mitigated. Moreover, this model might not be suitable for all organisations, especially those in areas where business development is challenging due to conflict, corruption, or extreme poverty.
Finally, there may exist legal restrictions in some countries which prevent or limit charities, not-for-profit entities or aid organisations from being directly involved in profit making activities, so access to legal advice will probably be necessary in such countries.
In conclusion, as recent political events in the US continue to cast doubt over traditional funding avenues, iNGOs, NGOs, Charities and CSOs will need to innovate or risk shortfalls or failure. Developing profit-making sister companies and engaging in creative revenue generation aren’t just about survival; they’re about thriving in a way that enhances mission fulfillment, community empowerment, and financial independence.
Ultimately, like any other sector, there are breathing living human beings with families, and responsibilities working in these sectors, and being served by these organisations. And what is usually ignored, is the fact that these groups of people tend to be the ones who bear the brunt of funding cuts. By re-imagining the current funding models, these organisations cannot only withstand the pressures from western political arenas but can also set new standards for how civil society organisations can operate more independently in the modern world, to best cater for the people they serve.
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