Sustainability of NPO’s is critical in today’s economic environment
(Linda Morrison’s USB Assignment)
For a ship to leave a harbour, it needs four things in place; an intact structure, the resources to move (i.e. fuel and manpower), a purpose or reason to leave and an environment in which to do so. The same can be said for ensuring the sustainability of an NPO in today’s economic environment. In order to tackle the topic effectively, definitions need to be addressed upfront. Cannon’s (1999) description of sustainability is useful; “sustainability is the ability of an organisation to secure and manage sufficient resources to enable it to fulfil its mission effectively over time without excessive dependence on any single funding source”. A NPO (non-profit organisation) is an organisation that in itself cannot distribute any profits among its board members. It is set up to serve a need in the community that is not adequately addressed within the government sectors and is not profitable for a company to address. South Africa’s current economic environment, though technically showing that we have exited the recession, still is abysmal. There is low confidence in investment and political interference causes much concern (Focus Economics, 2017). This is the turbulent environment that the NPO ships face as they attempt to deliver their service to the community.
Like the structure of a ship enables the ship to float and perform a function, organisational clarity provides structure that empowers the NPO to deliver its service. Without organisational structure the NPO is going to sink (pun intended). It allows for all stakeholders to operate effectively so there is maximum benefit. The structure is created by the Board through good governance, management practices and strategic direction and translated through the leadership to everyone in the organisation so that all understand and buy into the unique identity of the organisation. In applying the King IV codes of good conduct and specifically the addendum for NPO’s or Inyathelo’s Independent Code for Good Governance, to the organisation, the organisation’s Board set themselves up for the benefits of good leadership and ethical well-run organisations. Good governance ensures accountability, transparency, responsiveness, dealings that are equitable and inclusive, the organisation is meeting strategic imperatives, it follows the rule of the law, it is participatory and is consensus orientated (Boyd, 2017). Strategic plans are key to ensuring the organisation is thinking long term. What are the plans for the next three to five years? How are we going to achieve them? Who is needed to achieve them? What is needed to achieve them? What budget is required to do so? When thinking of these questions the NPO reduces surprises in their futures increasing their ability to deliver their services to their beneficiaries, long term. Stemming out of good strategic plans are the appropriate management practices to bring about those plans. What are the structures in place that ensure the work that needs to be done, is done in the correct time frame? Management practices also ensure services are delivered to the required standard. Identity is such a key, but often forgotten, aspect of sustainability. Many NPO’s spend all their time focusing on service delivery that they forget the brand that they are building and end up building it haphazardly. In today’s world of social media, it is so key to always, in every dealing with people; deal with them in a manner that is consistent to the vision, values and identity of the NPO. Failing to do so can result in a judgment being made of the organisation that is not necessarily a representation of the organisation. This can be so easily avoided if leadership is clear and those who are a part of the organisation are bought into the vision. York says “that organisations that have strong internal leadership and leader vision are significantly more sustainable than those that do not”. If all people in the organisation whether the board, management, employees and volunteers are all working together towards a common goal with clear guidelines and an inspiring vision, the organisation will achieve a great measure of sustainability as all efforts are unified. When there is a sound organisational structure of good governance, management practices and strategic direction and translated through the leadership to all involved, it enables NPO to move forward and make long term impact on the community they wish to serve.
Resources are required to move a ship forward. It is not good enough to have a ship that will just float, but that ship needs to be able to move. In order to do so, fuel and people are needed. The same in a NPO, except fuel takes the form of finances. Funding is required to fuel everything. Most people understand the need for finances; without it there would be no facilities, staffing or raw materials. Here consideration needs to be made to both income generation through fundraising, grants, donations or self-generation and to appropriate management of that finance. In today’s economic climate, it is becoming more and more essential to diversify streams of finance. (Coblentz, 2002; Tyler 2017). The more varied the organisation’s income base the more sustainable they are (if one source dries up it does not jeopardise the entire project). With increasing donor fatigue today, it is imperative that funds are managed appropriately and to the highest standards. Good financial management ensures greater impact and reduces wastage of resources. The second resource, that is equally valuable to the organisation, is the correct human resources. There is no point in having a great, structurally sound ship, and the fuel to go where you need to, if you do not have the correct staff on board. Each person in the organisation needs to be bought into the vision, understand their roles and responsibilities and have the capacity to act within the policy guideline for the organisation. Having the right people in the organisation allows the ship to move in the right direction in line with the purpose it was intended. In order for the organisation to be sustainable, and long term, the resources needed (i.e. finances and human resources) for it to deliver its services demand consideration and appropriate management, otherwise the NPO will fail its mission.
The third important factor to consider with a ship, is its intended purpose. Just as with a ship there is going to be a problem if people sign up for a cruise, to discover they are being loaded on a cargo ship, or vice versa. If your organisation has a mandate in a certain area, it is purpose-built to deal with that certain need in society. There is no point in wasting time building a structure and capacitating it with fuel and people, if the purpose of the ship is not clear or even existent. The purpose of the organisation is its value it adds to society and its service delivery. Often an organisation that is addressing a prevalent or even trendy problem will find it easier to raise funds and find good funding partners. When an organisation develops a positive reputation funding often finds them too. Society will often fight for a well-known but struggling organisation, when they face a funding crisis, as has been the case with Childline KZN in recent years. Key to this is good monitoring and evaluation ensuring stakeholders all know the benefit the organisation adds to society. When the purpose of the organisation is clear and all stakeholders are aware and bought into the value of the organisation, the organisation is likely to sustain for the long haul. Latham (2016) says that an organisation “will never leap the chasm of sustainable success with small thinking and cost cutting”. She goes onto say that when the NPO shift their focus from money and capacity, to value they add, they will “leave their woes behind”.
In conclusion, there are many factors that need deliberation when looking at sustainability of a NPO. The common thinking, is always to look at the funds coming in to know whether an organisation is set to last, but there are far more factors that affect the longevity it. “Organisational sustainability represents an ongoing process rather than a state of perfection”, Coblentz (2002). When looking at a NPO, just like a ship, the whole needs to be considered. When the organisational structure, resources and purpose are developing and improving continually, the organisation stands itself in good stead to last, even in the tumultuous South African economic climate.
References:
Boyd, M (2017); Governance issues specific to NPO’s and their Boards; MRB Bus ©
Cannon, L (1999) Life Beyond aid: 20 strategies to help make NPO’s sustainable; Innitiative for Participatory Development
Coblentz, J (2002); Organisational Sustainability: Three aspects that matter; for ERNWACA’s first strategy session
King IV: Report on Corporate Governance for South Africa 2016; Institute of Directors Southern Africa
Latham, A (2016); The Secret to Sustainability for Non-profit Organisations; Forbes
South African Economic Outlook; (2017) Focus Economics; https://www.focus-economics.com/countries/south-africa
The Independent Code of Governance for Non-Profit Organisations in South Africa; (2015); Inyathelo: The South African Institution for Advancement ©
Tyler, P (2017); USB Management Programme for NPO’s: Financial management; C Masters Development Services CC
Weerawardena, J, et al; (2010) Sustainability of non-profit organisations: An empirical investigation; Journal of World Business 45; www.elsevier.com/locate/jwb
Wenreb, E (2012); When sustainability meets human resources; GreenBiz; www.greenbiz.com