Friday, September 10, 2010

More Business, Less Charity: Fast Company, Alice Korngold

Great piece from friend Alice Korngold on Fast Company regarding an emerging and soon-to-be-best practice in 'charity.'

Quick commentary: This is not a controversial piece that Alice has penned. If an initiative/project/program is not making ends meet financially, it is not sustainable. Period. It doesn't matter whether the initiative is nonprofit, for profit, or a hybrid. The traditional dichotomy is lost on me. An effort is either built to last, or just a nice thing to do that won't fix the problem over the long run.

More Business, Less Charity

BY FC Expert Blogger Alice Korngold
Tue Sep 7, 2010

There's a new trend emerging among a small number of NGOs (non-governmental organizations, used in reference to global nonprofits). Here's what it looks like in comparison to the traditional nonprofit approach:

Traditional: NGO raises charitable dollars. Hires expert staff to send abroad. Expert staff sets up offices and the necessary facilities (clinic, school, etc.). Expert staff proceeds to provide services. NGO counts and reports on the number of people it helps abroad. NGO continues raising money to fund the staff it has established in its international offices. Or, in some cases, the expert staff moves on to another community, and there is no infrastructure at the local level to ensure ongoing services and implementation, nor any external system for monitoring and reporting.

New School: NGO raises charitable dollars. Hires expert staff--most often local--to work on programs. NGO leverages its dollars to raise funds from the local community and local government, thereby forming a three-way partnership to achieve the goal--whether that's to establish a new health clinic, school, or access to clean water, etc. NGO provides expertise to help local government and community to achieve the goal, train people from community or region to provide the ongoing service, establish a viable revenue model for a sustainable business model, and perhaps establish a local business enterprise to provide long-term services. NGO counts and reports on the number of people it helps abroad. More importantly, NGO monitors the project to ensure longer term success--making sure services are being provided over time, not just after the project is finished. NGO moves on to other communities, thereby increasing its impact. NGO seeks to have their models spread virally by being replicated by others, beyond just the areas where it works.

A good example of "New School" is Water for People. The challenge they address is the lack of access to water, sanitation, and hygiene (known as WASH) in developing countries. According to the World Health Organization, "Around 1.1 billion people globally do not have access to improved water supply sources whereas 2.4 billion people do not have access to any type of improved sanitation facility. About 2 million people die every year due to diarrheal disease, most of them are children under 5 years old."

Building Sustainable, Business Solutions

Ned Breslin, CEO, Water for People, advocates for business-oriented solutions that are community-wide, serving homes and schools in developing countries. In a private interview, Breslin explained to me that his organization leverages its investment to involve the local government and community in partnering to establish the WASH infrastructure and revenue model.

Furthermore, Water for People uses its know-how to help establish a locally owned business that will service the community's WASH needs for the long-term. Breslin says his organization's position can be controversial among NGOs. Comparing the local WASH business to telephone service, Breslin explains that setting up a community water and sanitation service is useless unless it is regularly serviced. "The outcome will have to be a combination of sanitation coverage without donor dollars, high user satisfaction with the service, and a price point that does not prohibit the poor from participating but is still profitable for the service provider."

Sustainability is the true test, according to Breslin. That is, "How many people did you help five years ago, and what percentage of these people still have water today?"

Businesses as partners

My enthusiasm about working in CSR for 20 years is that the smartest companies and NGOs/nonprofits join their expertise to solve global challenges. Water for People's experience with ITT is an excellent example. As Breslin explains about companies as partners and donors, "businesses are creative. They understand experimentation and risk, as well as the need for rigor and monitoring." Breslin says that companies don't just provide funding but they also help find solutions. The partnership with ITT is one example. Additionally Breslin explains that "when we look at how to move spare parts for toilets in developing countries, a business like Pepsi or Coca-Cola is an expert resource, given their experience as a global distribution and service model."

I'll be blogging from the Clinton Global Initiative for my third year during the week of September 20. Stay tuned here to read about innovators who are addressing global challenges.

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