Insights

Jeff Barnes, NPI EXPAND Project Director

A recent issue of The Economist included a report about the latest trends in philanthropy, including donor collaboratives, effective altruism, trust-based philanthropy, and localization. One passage resonated with me: 

“Philanthropy in Asia is very different from its Western counterpart. As in all societies, there is an age old culture of generosity across the region. Most research into philanthropy defines it as formal financial gifts to registered charities and by that definition, America is the most generous nation on Earth. But a lot of philanthropy in Asia and the rest of the developing world is informal.” 

This reminded me of discussions I have had with CEOs of non-profits in West Africa and Nepal. To support organizational strategy development in these countries, I suggested that they try to solicit contributions for their social activities from local businesses or prominent people with the means to support social activities. The general reaction was to dismiss the possibility out of hand, if not respond with outright laughter. They pointed out that in their culture, when people give, they give to extended family members or perhaps the local temple or mosque. Locals often perceive local organizations as a mechanism to create support of foreign donors, for foreign donors, rather than seeing them as worthy of their own generosity. Whether that perception is fair or not, it appears to be sufficiently prevalent that pursuing local businesses or individuals for funding may not be the most effective way to mobilize resources.  

There are happy exceptions, of course, and among NPI EXPAND local partners, a number of organizations in Brazil have benefitted from corporate philanthropy. Brazil may be something of an exception since it is a middle-income country, and the cultural perception of philanthropy is similar to western norms.  

In Senegal, ADEMAS, a social marketing organization, has received support from a private bank foundation to build latrines in schools, but most local charity is not directed at NGOs.  

The Indian government provides tax incentives to private companies to support the social sector, so our grantees there have also benefitted from corporate support. However, the vast majority of EXPAND grantees and many non-profits in Africa do not benefit from local, private support. Faith-based networks sometimes support local affiliates of the faith-based organizations, but in such cases, most of the funding comes from foreign donors to the networks.  

Many local non-profits also do not consider requesting support from national governments as a viable strategy for resource mobilization, even when the local organizations have capacity to provide services that the government needs. In Kenya, our program was highly praised by the Narok county government, and we knew that this county government had recently received a big increase in revenues from tourism to wildlife areas. However, our staff indicated it would not be worth our time to ask the government to support the local organizations that had been implementing our program. Sadly, in several other countries, the government sees local non-profits as adversaries, competing with them for donor resources. Even when some people in government view local organizations positively, the systems and processes for contracting out government resources to local organizations are very weak, making it very difficult for government to play a greater role in sustaining civil society organizations while achieving their goals.  

Given these challenges, what model (or models) of organizational sustainability should we, an organization trying to strengthen local organizations, be recommending? Does it make sense to encourage local non-profits to pursue the model of an organization like CARE or Save the Children, who benefit from a combination of individual contributions, corporate donations, and government contracts? Is this realistic or even desirable to promote a western model of philanthropy in societies where western norms do not apply? Can local organizations change norms around charity to make institutional giving more acceptable? Or do we simply accept that most of the NGOs in these countries will rely on foreign, western donors for their financial sustainability? What are other models that we can suggest? 

One possible strategy for local organizations is to pursue social entrepreneurship models to generate their own sources of revenue. NPI EXPAND recently did a review of several organizations that have improved their financial sustainability with revenues coming from entrepreneurial activities, including the sale of products or services in line with their social mission. This model may not work for all organizations and in most cases, it takes several years for these types of initiatives to mature, but social entrepreneurship is at least worth considering for organizations looking to improve their financial independence and diversify beyond foreign donor contracts and awards. The brief, Success Factors for Sustainable Social Entrepreneurship and Social Enterprise Models in Health, describes several cases where this strategy was effective and highlights some of the challenges local organizations face if they want to pursue this approach to sustainability.  

Of course, NGOs don’t need to rely on a single strategy for resource mobilization. Local organizations can continue to look for local contributions while they respond to foreign donor solicitations and pursue income generation from entrepreneurial activities. Whichever strategies they pursue, local organizations–and international organizations who may advise them–need to be realistic about the national and cultural realities they face and adapt their plans for organizational sustainability to that context. 

Given the importance of resource mobilization to localization, NPI EXPAND has also just published a new paper on resource mobilization and is organizing a webinar to share the findings on Sept 4th to explore some of these issues with representatives of local organizations from Kenya, Uganda and India.  Please join us and share your views.