 |
Receive an email when new publications or events of interest to you become available |
|
News & Events
WDI and Pontis Foundation Conference: Rethinking the Way in Which NGOs Do Business
Thursday, March 03, 2005
This 3-day conference, co-sponsored by WDI and Pontis Foundation brought together leaders from non-governmental organizations (NGOs) based in Central and Eastern Europe and Eurasia to share best practices and various methods by which NGOs can become increasingly sustainable and less donor dependent. Conference attendees included a diverse group of more than 20 NGO representatives from over ten countries in the region.
.jpg) |
|
Kelly Janiga and Lenka Surotchak opening the conference.
|
This interactive conference highlighted the fact that many NGOs in these developing regions are adopting extremely innovative approaches, in part because foreign-based donor funding is being redirected to more “needy” areas and is not being replaced by an increase in domestic giving. Although many of the countries in the region face common challenges, the policy and legal environment vary greatly and thus affect the development of the third sector differently. It is this legal environment coupled with additional local conditions, which dictate the feasibility of implementing various funding strategies, such as the establishment of social enterprises, which most NGOs agree is good practice in theory but often difficult to implement and not always appropriate for all organizations.
Partnerships
.jpg) |
|
Participants at the "Rethinking the Way in Which NGOs Do Business" conference co-sponsored by WDI and Pontis Foundation.
|
Conference participants agreed that it is becoming increasingly necessary for the third sector to collaborate with both the private and government sectors. The Eurasia Foundation representative from Armenia provided some interesting case studies in which NGOs have taken steps to provide municipal services not being provided by local governments. In these examples, after the programs were successfully implemented, the local governments went on to institutionalize these programs, even providing a line item in their budgets to fund the NGO for the service provision. This type of collaboration is ideal when local governments are unable to provide these quality services. The Pontis Foundation in Slovakia shared their experiences in building up a network of responsible companies which pay significant fees to participate. A representative from an Ukranian NGO talked about their partnership with Phillip Morris and the benefits as well as hurdles of this sort of relationship. A Serbian NGO discussed the natural partnerships which can occur between small and medium-sized enterprises and NGOs, specifically through the foundation of regional development agencies across the country. Regardless, most NGOs agreed that it is still difficult to attract domestic partner companies as these companies are largely cash-constrained. NGO-Public sector partnerships are also difficult in some countries given the belief among some public officials that government alone should be active in service provision. In some contexts, transparency is also an important consideration when implementing NGO-Public sector partnerships.
Launching Social Enterprises
The feasibility and purpose of Social Enterprises was repeatedly questioned throughout the conference. Presentations by representatives from Counterpart International offices in Bulgaria, Kyrgystan, and Kazahkstan highlighted that different social enterprise strategies abound. Counterpart Bulgaria supports launching social enterprises only when the social enterprise complies with the mission of the NGO. Some argued that even a non-profitable social enterprise is effective as long as it furthers the organizational mission. Others maintained that as long as the enterprise subsidized the activities of the NGO it was not essential that it was mission-based.
The discussion emphasized that the local legal and policy framework played a central role in the feasibility of social enterprises. Some conference participants argued that NGOs should face tax regulation as does the private sector. Other participants maintained that non-profits should be eligible for additional tax exemptions given that they face additional hurdles such as restricted access to capital sources. An additional issue of concern raised was that in some cases, founders of a profitable social enterprise may place business goals or profits above social goals and choose to become a regular for-profit business.
The Nonprofit Enterprise and Self-Sustainability Team (NESsT), a conference attendee, emphasized the need to design programs to support social enterprises tailored to local realities, the critical role of business planning and capacity building support, the importance of realizing that social enterprise initiatives are not appropriate for all NGOs, and the fact that social enterprise should be considered as a means toward - not an end to - financial sustainability.
Regardless of the questions that arose, the underlying fact is that many successful social enterprises already exist across the region and even more NGOs are thinking about adopting some version of a social enterprise strategy.
Innovative Methods for Generating Funds
The conference highlighted the fact that NGOs across the region are adopting numerous strategies to raise funds. A Red Cross representative from Belarus explained the system by which they now charge fees for their first aid training services to corporate clients. A Slovak-based NGO talked about how it has developed a “fair trade” brand, is marketing the products of its microfinance clients from 6 countries in the region, and is opening a retail shop in Bratislava. Another group talked about selling hand made Christmas trees and yet others discussed charging for publications and consulting services. A Bulgarian organization presented its efforts to promote charitable giving through a payroll deduction program in that country. It became clear that most successful NGOs in the region no longer depend solely on donor funds.
Legal and Policy Issues
.jpg) |
|
Conference participants from Kyrgyz Republic, Serbia, Kazakhstan and Belarus.
|
Although the importance of the existing legal and policy framework within countries was evident throughout the entire conference, a specific panel discussion was devoted to legal issues. Representatives from European Center for Non-profit Law (ECNL) as well as the Bulgarian Branch of the International Center for Non-profit Law (ICNL) presented interesting overviews of legal issues and provided a brief comparative analysis of legal frameworks across the region. Conference participants discussed the various stages of the legal environment for the third sector in the different countries. All participants agreed that laws affecting the development of the third sector are considered low priority by their governments and it appears that only those more developed countries have adopted NGO laws. Although the types of laws vary from country to country, the set of laws central to third sector development are often complex, present significant challenges of interpretation and can promote or discourage the adoption of commercial methods among NGOs. The ICNL highlighted four general principles which should be included in a countries legal framework: a law which defines and regulates economic activities of NGOs, tax regulations which include obligations and some exemptions, separate legal status for mission-related and non-mission-related businesses, and a legal framework which establishes a level playing field for social enterprises and for-profit businesses. Participants also discussed the positive impact that laws which encourage charitable giving can have on the development of the third sector.
Technical Assistance
A further aim of the conference was to provide participants with useful business skills and strategies that they could apply to their organizations. Three topics were covered: (1) communication strategies, (2) drafting a business plan, and (3) the importance of social capital and reciprocity. These sessions were led by faculty and staff from the University of Michigan’s Ross School of Business. Further, several of the conference participants received Robert M.Teeter Scholarships to attend WDI’s Strategic Management Program which was held for two weeks immediately following the conference.
Next Steps
 |
|
Conference participants at the "Rethinking the Way in which the NGOs Do Business".
|
Conference feedback was positive and this will be the first in a series of NGO conferences the Davidson Institute will host in the region. The mix of research, networking and technical assistance provided participants with a number of takeaways which should prove valuable to NGOs in their on-going work. Conference participants who were not already members of the Davidson Institute’s NGO Alliance, a coalition of public interest groups based in Central and Eastern Europe and Eurasia, were encouraged to join. WDI will continue to collaborate with the organizations represented at the conference and we have asked them to help us engage other quality organizations with whom they work.
The William Davidson Institute will launch a NGO alliance in Latin America later this year and will host a similar event in Latin America in the spring of 2006.
Information about the conference:
Draft Agenda 
Participant List
Papers
Presentations
For more information about the Social Enterprise initiative at WDI click here.
|
|