NGOs and Social Entrepreneurship – Part 2

Posted on 09 November, 2020 at 15:21

By Kudakwashe Ngoma 

Non-governmental development organizations are searching for new models to enable them to fulfil their missions. The common goals they strive towards, like eradicating poverty, inequality, insecurity and injustice, remain relevant. It is the way NGOs are organized and financed that is changing rapidly. In the development world, facing the reality of dwindling grant funding should be a wake-up call to any NGO and a sure sign that they need to change. As explained in our last issue, being a social enterprise may be explained as offering valuable products and services, in line with the organisation’s mission, that are (partially or wholly) paid for and at the same time contribute to meaningful social impact. Social entrepreneurship combines a market orientation with a social purpose, generating both financial and social revenues. Some of the benefits of incorporating social entrepreneurship into the organisational strategy are explained below.

Looking for self-reliance and independency

Many development organizations are turning to social entrepreneurship as a way to become more financially self-reliant with the promise of financial sustainability. Self-funding is the new mantra, helped by a pro-business ideology that has made for-profit initiatives more acceptable. As a result, sources of funding available to non-profit organizations are shifting in favour of approaches that are more commercially oriented. Furthermore, there is an increasing belief, rightly or wrongly, that institutional charity and social movements like development NGOs, do not only do good, and that there is a danger that they undermine beneficiaries’ self-esteem and create a sense of helplessness and dependence.

Integrating business values in the organization

In recent years a new earning model has emerged in which a third party pays, but has no vested interest. With these ‘buy one, give one’ initiatives, a consumer buys a product and someone less fortunate receives the same product for free. However, this model, based on the charitable act of donating a product, serves as little more than a short-term fix in a system in need of long-term, multi-faceted economic development, health, sanitation, and education solutions. Supporting projects that go further than giving may solve this problem. Most social entrepreneurs will seek to generate some profit to improve their operation and scale up their activities. Commercial programmes, however, do not need to be profitable to be worthwhile. They can improve the efficiency and effectiveness of the organization, can enhance the quality of programmes by instilling market discipline, and can better respond to the real needs of and be more accountable to the communities they serve.

Innovation / New Goods and Services

Social enterprises develop and apply innovation important to social and economic development and develop new goods and services. Issues addressed include some of the biggest societal problems such as HIV, mental ill-health, illiteracy, crime and drug abuse which, importantly, are confronted in innovative ways. This innovation will enhance the way of operations, and in turn increase the social capital of the organisation. Next to economic capital, one of the most important values created by social entrepreneurship is social capital, usually understood as “the resources which are linked to possession of a durable network of relationships of mutual acquaintance and recognition" It is all about recognizing business opportunities that can, at the same time, solve social and civic problems.

To sum up, social enterprises should be seen as a positive force, as change agents providing leading-edge innovation to unmet social needs. Social entrepreneurship is not a panacea because it works within the overall social and economic framework, but as it starts at the grassroots level it is often overlooked and deserves much more attention particularly from academics as well as policy makers. This is especially important in developing countries and welfare states facing increasing financial stress.