How Social Capital Drives Sustainability for NGOs
Posted on 18 January, 2021 at 11:22
Social Capital
Social capital is a critical enabler for
financial sustainability, especially when organisations have limited
connections to donor funding. This factor has often been overlooked as
a key contributor to financial sustainability. There is a link between social
capital and financial sustainability. This link appears to be particularly
strong in more difficult enabling environments, where the market for funding
sources is severely limited. The different factors considered under the Social
Capital category represent very different ways that organizations can build
social capital. These different ways of building social capital are explored in
more detail in this section.
1.1
Community Participation
In cases where visibility and access to
funding poses a significant challenge to organizations, they can pursue Community
Participation as a viable alternative resource for maintaining financial sustainability.
Engaging community members in project planning and implementation will sustain
the organisation in times when funds were low or absent; community members can
continue operations. Organisations can provide community members with technical
training for projects, and then community members directly support the project
implementation. In some cases, community members can provide resources, such as
funding or supplies to help implement projects if they are engaged in every
stage of a project. By engaging the community in different aspects of a
project, community members became more invested in both the long-term project
and organisation’s success. Consider when community members are involved in
project cycles, the projects tend to be more relevant to local needs, more sustainable
in the long-term, and more successful overall.
An example is Jeunesse a l’oeuvre de la charite et du development (JOCHADEV) in
DRC, has operated since 2005 with little to no external funding, primarily as a
result of being located far from any of the larger towns or cities in Eastern
DRC where donors tend to provide funding. Despite this challenge, the
organization has cultivated local community Social Capital in a way that allows
the organization to sustain itself through a base of local volunteers and
community contributions. This approach is possible because of their deliberate
programming strategies. JOCHADEV involves the community in every stage of a
project. This includes having community consultations to identify the most
pressing needs of community members.
An organisation can work with local leadership
and key community members to design a project that will address the core needs
identified in the consultation, implementing the project in collaboration with
the community. Engaging the local community, allows community members to feel
invested in the success of the project and the organization and can provide
support for project implementation when finances are low.
Community Participation can also be an essential
tool for garnering and communicating organizational credibility amongst both
donors and beneficiaries, which organizations considered to be core to their
sustainability.
1.2
Network Participation
Network Participation is an important
mechanism for building social capital. This helps an organisation by increasing
visibility and developing strong connections to donors, peers, and technical
assistance providers. Some organisations may face difficulties around securing
international funding due to lack of visibility, especially when faced with
competition from larger NGOs operating in the same areas.
Active involvement in local, regional
and/or international networks is key to gaining recognition of capacity and
credibility amongst donors. Through engaging in networks, donors will have more
opportunities to learn about the organisations’ work and legitimacy as a future
operating partners. Network participation can lead to direct funding
opportunities with donors on multiple occasions.
However, the benefits of Network
Participation extend beyond donor recognition. This can also provide training,
knowledge, and capacity building in essential technical skills such as project
planning, M&E, resource mobilization, and financial planning.
For organizations that are severely
under-resourced, this present an opportunity to increase organizational
capacity and gain essential skills that will support an organization’s
operations and resourcing in the long-term.
For example, through network participation
organisations can link with consultants who might be offering to provide free
support in writing a funding proposal. In addition, an organisations can
receive direct support for project implementation from other local
organizations they will be connecting with via these networks and it also
organisations to gain a better understanding of how to navigate the complex
bureaucratic processes associated with funding applications for large donors,
such as USAID and DFID.
1.3 Volunteer
Support
Volunteers play a pivotal role in
supporting financial sustainability. Although some organizations might manage
to develop long-term and flexible donor relationships that provide the
financial resources needed to maintain full paid staffs, organisations can also
rely on non-financial resources such as volunteer support to carry out
essential work. However, the roles of volunteers can differ depending on
organization and context. In weaker enabling environments, organisations can
rely on volunteers for essential organization roles, ranging from finance and
administration officers to project managers.
With a stronger community participation
back-up, organisations can train and mobilize a corps of community volunteers
to participate, monitor and report on every stage of their different projects
and this provides critical inputs into the organisation’s programs. If
externals are invited to participate in some programs this might cost them lots
of money to cater for these individuals but with a strong community
participation back up, community members can be committed to work and are able
to do it for free, thereby allowing organisations to use its scarce financial
resources for other needs.
Harnessing the Power of
Social Capital for Sustainability
Although the relationship
between Social Capital and financial sustainability may be more indirect than,
say, technical fundraising or accounting capacity, in the long run it is a
powerful force for organizational resilience. The up-front costs of
establishing structures to respond to community needs can pay dividends later
during funding transitions or other external shocks.
Furthermore, institutional
social capital strategies connecting organizations to the local community are
particularly powerful because they operate at the organizational rather than
personal level, and as such, are not reliant on the personal connections of an
individual organizational leader. Unfortunately, the current structure of the
funding environment often hinders rather than enables the development of local
Social Capital (CSO
Sustainability Index, 2016).
Short-term and highly
restricted funding structures might force organizations, even with a strong
commitment to responding to the community, to implement programs in a way that
actually reduces Social Capital. For example, with short-term funding, an
organisation can start to progress and the community gets excited, but when the
funds runs out and they can’t continue. Although in the short-term, it may seem
that no harm is done by a such a program, in the long run the potential
degradation of Social Capital for local organizations involved may reduce those
organizations’ sustainability.
Therefore, local
organisations need to harness social capital in their operation to ensure
sustainability for their organisations.