How innovative finance can improve organisational sustainability

As the pool of traditional donor funding shrinks, an increasing number of non-profit organisations (NPOs) are looking towards more sustainable forms of funding. At the Trialogue Business in Society Conference 2019, under the theme of innovative finance for development impact, panellists discussed how NPOs are circumventing the drying well.

How Afrika Tikkun is leveraging corporate funding for sustainability

Afrika Tikkun has been on a decade-long journey, shifting from traditional fundraising, to creating financial sustainability that would free the organisation from donor-dependency. Rather than rely on corporate goodwill, the organisation began to explore ways of fundraising that aligned with the strategic objectives of prospective corporate funders. Recognising Broad-based Black Economic Empowerment (BBBEE) as a key focus of corporate giving, the organisation began to structure itself so that it could leverage all the elements of the BBBEE Codes, thereby serving as a strategic partner to companies. “We started positioning ourselves as a ‘one-stop-shop’ for transformation,” said Onyi Nwaneri, group executive for strategy, partnerships and communications.

“Afrika Tikkun develops young people from cradle to career. Our big, hairy, audacious goal is to reduce child poverty in our lifetime, if not to end it completely. So, if the ultimate outcome is to enable economic access for young people, compared to the strategic objectives of our government, then we are strategically aligned,” explained Nwaneri.

Afrika Tikkun has structured itself into three organisations in one, with an Afrika Tikkun Investment Trust which conducts low-risk BBBEE investment deals. The essence of these deals is to leverage capital in the short term, in the form of a transformation fee, and in the long term in the form of dividends, and to channel this income to the NPO. “It’s no longer about what money we need from corporates or institutions; it’s about what’s the shared value – when we go in [to a company] we ask, ‘what’s your strategy, what are your key outcomes, what are your pain points as an organisation?’ and then we leverage the different instruments and structures that we have to meet those needs, at the same time enabling the companies to tick the BBBEE boxes.”

Levels of awareness about the various funding models available

“We, in the civil society space, are sitting in a cusp of change. If we are to look at the global geopolitical landscape and what that has meant for multilateralism; development aid is simply not available at the scale that it was.” This, according to Masego Madzwamuse of policy advocacy organisation, Southern Africa Trust. The organisation has been in existence for 13 years and for a good portion of that was comfortably positioned, with guaranteed funding from international development agencies. With that funding now at risk, the organisation has been compelled to consider the kinds of partnerships that will help to make it more sustainable.

Madzwamuse commented on the disparity of information available in the non-profit sector. “A lot of the urban-based organisations that have access to the private sector and media know about the space of social impact investments and innovative financing. However, when you go into the rural spaces where poverty levels are deeply entrenched… We need to stop looking at communities as homogenous entities and begin to ask the question: who is affected by poverty, and to what extent are the conversations about innovative financing taking place within women- and youth-run organsations?” To this end, Southern Africa Trust works to connect these conversations at a community level.

In recent years, Southern Africa Trust has been working with the MOTT Foundation to mobilise what is widely understood as ‘black tax’; organising and structuring it in a way that communities can coordinate the money that is available at a local level and channel it towards community development-driven initiatives. “What that does is to change the power dynamics where communities are no longer recipients of aid, but they are part of the process of social change,” said Madzwamuse. She acknowledged that, while this level of funding may not be significant, corporate funding could help to scale these types of initiatives.

Trends in diversified income streams for non-profits  

According to Madzwamuse, some regional NPOs have gone into property development; buying up office space which they rent out and use to convene and mobilise civic voices.

In the policy research and advocacy arena, organisations like the Southern Africa Trust and Institute for Security Studies are also beginning to monetise their knowledge products and capacity-building services.

About NPOs that are shifting towards impact investing and social enterprising, Madzwamuse cautions that the latter may affect an organisation’s non-profit status unless a parallel investment arm is established, and that the former would require an evaluation of the type of private sector engagement that an organisation is prepared to participate in and who they are willing to take money from.

IMAGE: Flr-Dr Susan de Witt (Bertha Centre for Social Innovation and Entrepreneurship), Onyi Nwaneri (Afrika Tikkun), Masego Madzwamuse (Southern Africa Trust), Kudzanai Chankaza (Greater Impact)

Article written by Zyaan Davids and Khumo Ntoane

Photo taken by Cobus Oosthuizen

2019-05-21T17:14:49+00:00 May 15th, 2019|Business in Society 2019, Uncategorised|