Punishing those who plan well and deliver

There are an estimated 130 000 non-governmental organisations (NGOs) operating in South Africa and more coming to the fore almost daily. A large number of them — probably the majority — operate on a “hand-to-mouth” basis, at constant risk of having to shut down their projects and close their doors.

Although most of these struggling organisations are set up by truly caring individuals or groups who want to make a difference, their operations are often unsustainable. That is not only because obtaining sufficient funds to continue with a worthy project is difficult and becoming ever more so as tough economic conditions force donors to reduce their corporate social investment (CSI) spend or grants.

The reason so many charity ventures collapse or struggle to thrive is not much different to the reason so many start-up businesses fail: the building blocks for sustainability have not been put in place and carefully nurtured.

Interestingly, many astute business people who would be cautious about investing in a floundering, unsustainable business have no qualms about directing their CSI spend towards not-for-profit ventures in a similar position. One of the reasons for this is that sustainability in the CSI space is usually seen purely as an issue of obtaining sufficient funding to keep delivering a service. Should the money run out or donations dry up, the service would come to an end.

But there is far more to sustainability. There is no question that any organisation that wants to be sustainable requires sufficient income to operate effectively. But it also has to have in place the structures, financial controls, human resources and governance that will enable it to continue its operations into the future, regardless of who is at the helm.

The various elements that organisations need to watch out for in assessing sustainability are:

  • Project sustainability: A sustainable organisation is one that is able to remain relevant in and accountable to the community it serves. It is extremely important that community-based NGOs constantly invest in the community in which they operate to avoid any disconnect between the project and the community.
  • Projects that are “imposed” on a community, however well meaning they might be, and managed remotely have little chance of ongoing success. Sustainability of projects requires recruiting resources, building competencies and skills, and creating accountable structures in communities. It creates a feeling of ownership in the community, which feels it is responsible for the change it wants to see.
  • o Financial sustainability: In addition to receiving funds from donors and sponsors, NGOs should look at generating their own funds through, for example, income-generating projects or endowment trusts. They must ensure that every single cent of income — especially all donor funding — is spent appropriately and effectively and delivers the best return on the financial investment. Transparent financial reporting and effective financial controls are also essential.

  • Financial sustainability demands that an organisation has sufficient monetary reserves to provide a cushion for the all-too-frequent cash-flow crises that could occur. Even a single operational emergency can wipe out an unprepared NGO.
  • Afrika Tikkun’s approach — that it is an NGO in the business of development rather than a charity in need of help — has enabled it to plan ahead and ensure that it continually works towards becoming financially sustainable. It cannot be sustainable if it constantly functions in crisis mode.
  • Governance: This ensures that the project runs as it should and that the NGO adheres to all applicable legislation and societal norms.
  • It is surprising that although the term “sustainability” has become a catchword in the NGO and CSI space, an NGO that begins to show signs of sustainability is often told that “it has too much money” or is “too well established” to be supported. In fact, good practice demands that well-run organisations do not start a new year without sufficient finances in their balance sheets to see them through the first few months of operation. Should any less be expected of the not-for-profit sector?

    But there appears to be a reluctance by business donors to invest in not-for-profit organisations that have shown they are taking or have taken steps towards becoming a sustainable operation. Hence my dilemma: Are we paying lip service to the issue of sustainability, or have I missed something with regard to the actual meaning of the term “sustainability”?

    Onyi Nwaneri is the national development manager at Afrika Tikkun, an NGO that delivers education, health and social services to children, youth and their families in Gauteng and the Western Cape

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