How Social Capital Drives Sustainability for NGOs
Posted on 18 January, 2021 at 11:22
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.