I borrowed the title of this post from my friend Ben – a non-profit strategist and consultant based in the US, with over 10 years of experience in managing non-profits. I also borrowed the theme of this post from his most recent op-ed, but I know he will forgive me. Ben talks about the way the recent financial and economic crisic will impact non-profits, but he does that from an American perspective. I intend to do the same (much briefer though) from a European/ Central European/ Romanian perspective, taking into account my 2-3 years of experience in non-profits (working/ consulting).
To sum up Ben’s main points, he believes non-profits have to focus on leveraging individual giving (private philanthropy) – following pretty much the model Obama used to fundraise for his campaign. Firstly, because CSR budgets will be the first to see cut downs. Secondly, because foundations will be much more cautionate in grant-giving and will demand more accountability and measurable impact. Last but not least, because individual giving is the main source of revenue for social causes, despite the fact government grants, corporate sponsorship and foundation grants are more visible (it seems in the US they account for more than 80% of all money raised by non-profits). I agree with most of this points, but I believe business looks slightly different in Europe.
The European Union is – and should remain – one of the main grant-givers for European non-profits acting both in Europe and in developing countries. In times of crisis, government spending goes up and corporate spending goes down. While I definitely support the EU drive towards non-profits (either through structural funds or other funding schemes), this money should definitely be spent in a more transparent way. However, NGOs should start lobbying governments and European institutions to support their business in a more efficient and unified manner.
CSR budgets will be cut down in Europe, too. Unfortunately, the sectors that will still receive corporate money will still be the “trendy” ones (environment is actually the only one I can think of), while major ones like health, education and the arts will experience severe cuttings. Honestly, I cannot think of ways NGOs could mitigate this.
European non-profits have to learn – although they should’ve done so years ago – the intricate ways of social entrepreneurship. Less than 10 % of Romanian NGOs have self-sustainability schemes in place – such as making money through co-payment or fee-for-service programmes tailored for third parties. Social entrepreneurs are a rarity in Europe in general, but now it may be the time for them to bloom, out of plain need unfortunately.
As I was talking recently with some friends from PEEP, and as the recent blog campaign about IHTIS (Romanian bloggers helping an association of young people with physical disabilities that want to live independently in fundraising through independent donations) demonstrates, Romanian and European NGOs should learn how to use individual giving better. My friends from PEEP were amazed to receive small individual donations for their educational projects – which are not at all those type of “make the giver cry by showing him individual tragedies and get his money” type of projects. Currently, fundraising by other mechanisms than grant-writing for international donors is almost never used by the most prestigious Romanian non-profits. When I worked for the Coalition for the International Criminal Court in New York, I witnessed dozens of tactics for fundraising that are never used in Romania.
All in all, it’s time for European non-profits to start using their creative strategic thinking. Or to hire/ convince experienced consultants to help them out.
Is it correct that the EU is the biggest donor in Europe? I’d be surprised, I guess it may be true only in new member states. Anyway, I think it is not sustainable to rely on EU funds for the not-for-profit sector. I have the feeling that those NGOs that do not have a financial connection to citizens usually have a tendency to miss the aim at the public good, too.
I don’t mind at all and appreciate another perspective on the same issue! I’m surprised that entrepreneurship isn’t a bigger part of the culture there, but it’s been interesting to really see that difference here. Earned income (providing services for fees) was a critical strategy that both TakingITGlobal (TIG) and the Global Youth Action Network (GYAN) employed to keep our groups funded. At GYAN, income from contractual services amounted to approximately 1/3 of of our budget and we couldn’t have survived without it. I think for TIG it was even higher. Regardless of cultural differences, social entrepreneurship can only bring good things. Same applies to individual donor bases and non-profits.
Thanks for your positive feedback and encouragement on the writing! Much love.
@adaniel – it’s true, my evaluation goes more for newer members of the European Union than for old ones, though there are still very generous programmes that European NGOs can access whether they are located in old or new European states. an example that easily comes to find is Youth in Action, where European youth organizations can get grants varying between 8000 – 25000 EUR without much fuss. in the US, for instance, they’d have to fundraise that money from donations or sponsorship. also, I believe you’re quite right when you say those foundations that miss the link with their constituency tend to overlook the public good.
@Benjamin – thank you for your comment! you’d be surprised to see that entrepreneurship is much less developed in this part of the world than it should – but then it’s natural, you had 50 years of communism when the very concept of entrepreneurship was wiped out, and then you had a bunch of small businesses opening up and then closing down because of multinationals entering the market. as for social entrepreneurship, people/ organizations never needed it, because large international donors (USAID, Soros, etc.) started pouring in money after 1989, and once they stopped the European Union came in in newer member states. however, organizations are having more and more problems in fundraising and they will soon have to learn to become self-sustainable and creative. what sort of services were GYAN and TIG doing? it’s easier for me to think of TIG services (presumably online ones) than GYAN…
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regards
fluflaken