Can NGOs really do business?
There are about 14,000 non-governmental organisations (NGOs) in Uganda according to data from the NGO Bureau.
Almost 50 per cent of these source funds from donors to implement humanitarian activities around the country, according to Richard Ssewakiryanga, the executive director of Uganda National NGO Forum.
NGOs make a huge contribution to development through different sectors such as health, business, education, agriculture, entrepreneurship and security.
However, for decades, many of them continue to depend on donor funds, an approach that experts say is no longer sustainable.
“The kind of money we are expecting and getting for free is not going to work. Even development partners have got increasingly stringent conditions for support and accountability,” the managing partner of IFE Consultants, Peter Kimbowa, told NGOs recently at a meeting between dfcu Bank and NGOs in Kampala.
His belief is, there should be an immediate shift in the development finance landscape in order to curve out a way through which NGOs can become self-sustaining.
“We call it donor fatigue but there are also donor inferences in processes, sometimes they also run out of money, sometimes they change and start to support local government or go to another region but largely there are always donors around the world who are ready to support justifiable causes,” Ssewakiryanga says about the shift in the current funding model.
However, to further their development agenda, some NGOs have diversified their fundraising efforts towards private companies and government.
According to Ssewakiryanga, the oil sector has been willing to support some organisations working in the environment sector because of the linkages between oil and environment but the funding is limited to some NGOs.
“We do not have as many as we would have wanted but there a few who support either an activity where they are able to mutually benefit because private companies will always want to support something that offers return on their investment,” he says.
Therefore, financial experts believe that the change towards social enterprise as a window to financial sustainability is the way to go for NGOs.
According to Kimbowa, NGOs must get more knowledgeable, innovate using modern technology and find partners to collaborate with.
However in reality, NGOs struggle when it comes to entrepreneurship, and this is emphasized by Ssewakiryanga, who admits that the number of NGOs involved in social entrepreneurship remains low.
But even then, according to Joyce Namirimo, the managing director of Uganda Health Marketing Group, it is time for NGOs diversify if they are to provide sustainable services and programmes.
UHMG has been heavily engaged in social marketing to increase access to health services and commodities with key funding from donor.
However, the organisation has slowly pulled away from donor dependence to build a foundation that is able to sustaiably fund its core functions without the input of donors.
According to Namirimo, UHMG now runs its social goals as an enterprise and has become the largest distributor of health facilities, which among them include distributing more than 30 million condoms every month across the country.
Away from UHMG is Mildmay Uganda, another entity that is building a self-sustaining model.
Mildmay was established about 20 years ago to provide HIV/AIDS care.
One hundred per cent of its funding, according to Barbara Namata, the executive director, used to come from donors. However, the organisation has been making deliberate plans to attain financial independence, which seeks to make it able to provide services even when donor funds shrink.
“We have begun conversations with a number of collaborators and our mindset is we are not [going to continue with the] begging. We have a training institute that we are growing into a university. We have a hospital within the NGO that provides paid for and non-paid for services to fill gaps,” she says.
Apart from this, Mildmay has engaged experts such as Norah Owaraga from the Canadian Physicians for Aid and Relief (CPAR) to come up with a comprehensive plan to move the organisation away from being a relief provider to a development partner.
“We need to make money. But because many of our customer are not always able to pay, we need to find that person who is willing to pay for them so that we can deliver the service,” she says, adding “That is where I think the partnership strengthening needs to happen.”
However, she argues, as NGOs search for financial independence, they should consider overhauling their systems to align them towards income generation.
Measure of sustainability
As NGOs look to move towards self-sustenance, does building partnerships with corporate companies, make business sense?
“It does if corporate companies have a vision and commitment to transform society beyond just taking profits,” according to Ssewakiryanga.
Corporate companies such as banks operate under very tight limits, therefore, according to Godfrey Mundua, the head of development and institutional banking at dfcu, they must look at so many things before they commit money to any programme.
Hence, he says, if NGOs are doing a social investment, the question should be centred on the sustainability of the programme and the ability to repay.
“Can the NGO be able to repay money lent to it? If the answer is no, the bank is likely to say no. But for as long as NGOs have a product range that is profitable, then the investment might be bankable,” he says.
Beyond this, she says, NGOs must also form strong partnerships with corporate entities to model out new approaches.
However, according to Sam Guma, the head of Kawempe Home Care, this approach (of self-sustaining) needs serious planning as some NGOs are engaged in areas that are largely costly.
For instance, he says, the investment scope of some areas that NGOs operate in are expensive that it would be hard to sustainably manage them without funding.
However, even with such concerns, Namata believes there is room for optimism and the mindset of depending on donors should change for the better.
“We can begin with subsidies until we get to a level where people are able to contribute,” she says.
However, according to Owaraga, the mindset change must be able to have a financial impact not only to the organisation but to the community as well.
“You must demonstrate that agricultural enterprise is going to generate a daily income,” she says, emphasising that is it better to help communities afford critical services than offer them free of charge.
SELF-RELIANT
In 2007, a number of organisations experienced financial turbulence resulting from the financial crisis. This resulted into a sharp decline in financing, especially to countries and organisations outside Europe.
Therefore, this was a learning experience for a number of organisations that depend on donor aid as some started to run income generating programmes.
However, much as it created a problem for some organisations, it was a learning point as organisations started to seek ways through which they could become self-sustaining.
