Community Scoop

Are today’s NGOs destined to become tomorrow’s social enterprises?

Josie PaganiJosie Pagani

Director | Council for International Development (CID)

Social enterprise is the buzz word right now, and new ones are popping up everywhere.

Some are getting amazing results. Eat My Lunch is feeding kids in schools. Indigo and Iris sell mascara and use the funds to help Fred Hollows prevent blindness. Trade Aid imports products like coffee from all around the world and helps small scale farmers package and sell stuff in the New Zealand market.And the list goes on.

Those of us working in Not-for-Profits look on in envy at many of these self-sustaining organisations who avoid the fundraising events, the complicated grant processes, the visits –  cap in hand to government for funding, the charity shops and the expensive public fundraising campaigns.

We know the pressure has been on the New Zealand NGO sector to consider mergers (because there are too many of us for a small country), or to re-think how we contribute to development goals and support local NGOs in developing countries instead (for international NGOs) rather than ‘do’ development ourselves. We know we have to  ‘Uber’ the NGO business model before ‘Uber’ comes along and makes us irrelevant. Looking at the success of these social enterprises, its hard not to believe that one day we might all become a version of a social enterprise.

At the Council for International Development (CID) –  the umbrella organisation for international NGOs, we are very excited to have just accepted our first social enterprise as a full member (the Akina Foundation – not exactly a social enterprise itself, but the umbrella organisation for social enterprises – with a mission to grow the social enterprise sector). Our principle is that if you’re working in development, whether a business, a social enterprise or an NGO, we want you ‘inside the tent’ so we can share our experiences, influence each other and promote the best development approaches that work.

The UK Office of the Third Sector describes social enterprise as: “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.”

Some of the best social enterprises are getting great results. Teach a Man to Fish, an international NGO supports educational institutions in developing entrepreneurial activities – often in agriculture – as part of their curricula. Students learn useful skills, their products enter local markets, and activities contribute to schools’ sustainability.

In Mozambique, Wings Like Eagles is developing year-round commercial helicopter services in order to locate and operate disaster relief operations during the rainy season. As well as building indigenous disaster relief capacity, the programme will result in additional jobs, technical expertise, and commercial infrastructure.

Rather than support dependency, social entrepreneurial tools such as microfinance enable poor people to develop their own opportunities.

Fairly traded goods (like Trade Aid) are another area in which NGOs support poor people to engage with markets.

But as Akina has pointed out, social enterprises aren’t necessarily a silver bullet for NGOs looking to increase revenue or development impact. It takes a lot of energy to make a social enterprise work commercially, and given NGOs are often stretched, taking on a social enterprise to raise revenue could mean you have to cut back on your ‘real’ work.

Some social enterprises have been criticised for making bold claims, like ‘buy our bottle of water, and someone in a developing country gets the water they need,’ without having to prove that the water really reaches those who need it most.

Eat My Lunch came under fire the last few weeks for claiming that 290,000 New Zealand kids were going to school every day without lunch when KidsCan estimated that the number was closer to 55,000. Turns out it was just a typo on the web site and founder Lisa King corrected it.

But she also hit back at the critics, saying that she didn’t think social enterprises should be required to report on outcomes in the same way that NGOs do.

She rebuffed calls for Eat My Lunch to be transparent like charities, which are required by law to publish financial statements showing how much of the money we receive goes towards the cause we are seeking to help.

“Sadly, rather than pulling together to address social ills, there are now some organisations and pundits targeting Eat My Lunch – this detracts from resolving real-world issues in a real-world way,” she said.

While there is a lot for NGOs to learn from social enterprises about funding models and entrepreneurial flair, for example, there remains a question over how accountable social enterprises are required to be over their development claims. Should they be required to report on their development outcomes?

There are many options though, and it doesn’t have to mean changing our whole business model – you might commercialise only part of your services, or you might set up a separate business, like the Laura Fergusson Trust has with Can Do Catering in Christchurch.

CID is hosting a panel discussion on what social enterprises and NGOs can learn from each other at the Sustainability Trust in Wellington (2 Forresters Lane) on August 10, midday to 2pm. Please come along (for a small koha) to explore these issues more fully. It should be a dynamic session.


This blog has been contributed by a member of the ComVoices network

ComVoices is a Wellington based network of national community and voluntary sector organisations. It was established so that sector organisations would have a more powerful voice at Government level and in the community.

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