More and more we are starting to read in the news of nonprofit organisations going into liquidation and closing down. CMDS is often called on to assist organisations that are already in financial crisis for reasons such as:
The Minister of Trade and Industry, Rob Davies, says Cabinet has approved the Lotteries Act Amendment Bill, which is aimed at reforming the lottery system.
Davies pointed out that the Bill is aimed at dealing with challenges such as the strict requirements for non-governmental organisations, poor relationship between the National Lotteries Board and the beneficiaries, and the delay in the distribution of funds, among other things.
Many charities do not realise or understand the benefits of being registered as a public benefit organisation (PBO), Hoosen Agjee explains.
In our many years working with the nonprofit sector (NPO) sector, we have identified that a significant number of organisations are still unaware of the specific tax benefits available to them,’ says Hoosen Agjee, managing director of Turning Point Consultants (TPC) and author ofTax Benefits for the Nonprofit Sectorand A Guide to the New Companies Act and Nonprofit Organisations.
This is Part 2 of a two-part series of articles to assist NGOs in the transition towards greater autonomy. We explore some actions that can assist with transition to a more businesslike approach, and also take a closer look at income generation and its viability in the non-profit context.
Think Like a Business
Let’s start by looking at four important ‘re-thinking’ strategies that help an NGO make the transformation to greater success:
1. What is the trade? Understanding the ‘fair value exchange’
It is clear from several articles of recent weeks that the prospect of having to generate income in-house to fund the provision of critical, socially beneficial services is causing deep concern for many NGOs. Similarly, the expectation that nonprofits be run along business lines is being greeted with protest and accusations of unrealistic expectations. Yet, the reality is that in a changing competitive world, those who adjust to the needs and expectations of the customer (in this case the funder) are those who survive and thrive.
A recent series of workshops highlighted a growing trend in the NGO and community-based organisation sectors – more than ever, nonprofits need to make profits too.
Recruiting the right person for a top post as a fundraising manager or development director is challenging. Only a handful of fundraisers with the right level of abilities and experience to raise multiple millions exist in South Africa. There’s a perception that this is a local problem but in fact it is a global crisis!
The ways in which funding is channelled to communities can be an effective way to address poverty and inequality and empower communities to take forward their own development. This is one of the key findings of a recent study conducted by Khanya-aicdd and its partners Concern Malawi and Practical Action Zimbabwe. The results of the review have been captured in a policy briefing published by Khanya-aicdd.
Frank Julie, independent development consultant, has compiled a comprehensive guide for developing a NGO financial sustainability strategy which includes the development of research and communication strategies, and the allocation and expenditure of budget for NGOs.
1. Firstly, determine what your current budget of expenditure is, i.e. start with what you have. Break this down into:
A committed township advice office volunteer has recently landed a full time job at an NGO in the city. She spends long hours in meetings at the office, reading important research reports, downloading documents off the internet to increase her knowledge so that she can improve her performance. Her priorities have shifted. This is not necessarily a negative thing. She remains supportive of the advice office in principle but they only see her at the occasional fundraiser.
What are they doing to maintain her support and turn her into a resource?