Comparative Advantages of NGOs in Delivering Services Ken Phillips, Organization Futures LLC OSI/ISSA Conference Belgrade, December 8, 2007 Vision & Mission Institutionalizing Mainstreaming Cooperative Competitive Innovative 2007 Organization Futures 2007 1
Objectives of the Session Understanding how to build sustainability through providing services and products to governmental bodies of different levels and others interested in quality in education 1. Why change and how to manage change 2. Comparative advantages of NGOs 3. Understanding market development 4. Developing your organization 2007 Organization Futures 2007 2
Status Quo and Change What to Change and What to Keep Best of status quo Keep and expand Best of change Adopt and expand Worst of status quo Change Worst of change Avoid 2007 Organization Futures 2007 3
Trends for Organizations 1. Geopolitical focus moves south and east. 2. Reductions in foreign and government funding 3. Increased role and importance of the civil society / organization sector 4. Increased competition for funds 5. Rising expectations for results 6. Donors and participants press closer to NGOs 7. Growing competence in strategic planning, capacity building, fundraising, public relations, branding, community involvement, and board development 2007 Organization Futures 2007 4
Change Change is taking place whether we like it or not. The only choice we have is to actively shape it or to passively endure it. If we choose to be passive, the future will punish us. Alex Krauer, Chairman, Novartis 2007 Organization Futures 2007 5
Steps in NGO Development Step 4 - NGO Scales Up (+Step 3) National Coverage/Branches/Services National and International Advocacy Regional and International Support THE OD CHALLENGE Step 3 - NGO Takes Control (+Step 2) Vision and Strategic Thinking to Meet Needs Effective Governance to Assure Trustworthiness NGO Ownership of Its Strategic Planning Positive Public Image and Diversified National Funding Step 2 - NGO Delivers Good Program (+Step 1) Good Proposals and Program Plans for Foreign Donors Reliable Financial Management Good Programmes and Reporting but Programmes are Not Sustainable Step 1 - NGO is New or Weak Meets Basis Conditions to be an NGO 2007 Organization Futures 2007 6
Organization Development Stage 2 Good program following donor initiatives 1. The donor determines the mission, sets the budget, and issues a Request For Proposal (RFP) 2. Your organization writes good proposal in response to RFP 3. The donor does the strategic thinking and sets the goals 4. You carry out the donor s intentions if you get the grant 5. Your board is a program oversight board with a financial assurance role 6. Your executive director is a program director for the donor 7. You respond to what the donor asks you to do 8. You are a contractor for that donor 2007 Organization Futures 2007 7
Organization Development Stage 3 Taking control of your destiny by initiative 1. You determine your mission, plan the budget, and seek donations for the mission 2. Your organization finds and develops new markets of donors 3. You do the strategic thinking and set the goals for yourself 4. You carry out your organization s mission 5. Your board is a strategic board with a fundraising role 6. Your executive director is the organization leader and fundraiser 7. You play a strong leadership role and get others to follow 8. You are more independent with a diversified base of many different donors 2007 Organization Futures 2007 8
Progress from Stage 2 to 3 Stage 3: the NGO creates its own strategic plan to work toward its own vision for the country. It takes control through its own strategic thinking, a culture of self-reliance, diversified fundraising initiatives, good image, local stakeholder focus, and a separate board that assures trustworthiness and helps in fundraising. Organization Development Stage 3 Stage 2 Stage 2: the NGO prepares good proposals, implements good programs, has sound financial management, and provides good program reports. It is a program arm for a few foreign donors. Strategic thinking is done by the donors and the NGO responds to funding opportunities. 2007 Organization Futures 2007 9
The How Is Different Leadership Setting a direction Creating future vision Defining strategies to achieve vision Aligning people & vision Motivating/inspiring Keeping people moving in the right direction despite obstacles Appealing to human needs, values, emotions Management Planning/budgeting Setting targets/goals Establishing detailed steps Allocating resources Creating structures Organizing/staffing Informing Delegating Monitoring Controlling 2007 Organization Futures 2007 10
Key Strategies to Lead and Manage Change 1. Articulate a vision that motivates 2. Incorporate the vision in real strategic planning 3. Develop strategy that makes you stand out 4. Build a learning approach in your NGO 5. Convey why it is important (again and again) 6. Set individual responsibility to achieve objectives 7. Focus on results not change 8. Lead for the vision and manage for results 2007 Organization Futures 2007 11
Civil Society s Three Sectors Three indispensable roles -- working together better Government Business Organisations 2007 Organization Futures 2007 12
The Role of Civic Society Organizations Promote a socially worthwhile cause Provide services in health, education or welfare Advocate to society, business and government Educate the public regarding this cause Use voluntary contributions and volunteer time Maintain their independence and free voice 2007 Organization Futures 2007 13
Essentials for Organizations 1. Mission Value How important is it society? 2. Effectiveness Quality How big a result is there? 3. Efficiency Price What is the cost for results? 4. Trustworthiness Ethics How well does it behave? 5. Transparency Accountability How involved are constituents? 2007 Organization Futures 2007 14
Comparative Advantages of NGOs 1. Created for and dedicated to its vision 2. Independent boards to provide oversight, control and policy 3. Added value of NGOs from their vision and competition Better services through innovation and dedication Better results through profession, motivation and expertise Public support through information and fundraising Lower costs through volunteer service, psychic pay and donated matching funds Better government through advocacy for laws, regulations and enforcement 2007 Organization Futures 2007 15
NGO Revenues 50% government 25% fees for service 25% contributions and grants 25% volunteer time 125% total This is the 2007 Organization Futures 2007 16
What Do Donors/Cities Expect from NGOs? Donors are paying an NGO to help someone else. They feel they are shareholders in organisations they support. Their expectations are high. Meeting an important need Integrity and transparency Program effectiveness and success Operational efficiency Excellent service and reports on the use of their money Donors want the best value they can get for their contributions. 2007 Organization Futures 2007 17
City Grants to NGOs New era of city / NGO cooperation City gets more value, less cost and maintains control Sets objectives, uses competitive process, publishes openly requests for bids, and sets terms of contract Sets specific indicators, e.g. cost per unit of service, matching funds generated, and on time delivery Monitors, reviews reports and evaluates Renews contract to best performers NGO better fulfills its mission by helping more people 2007 Organization Futures 2007 18
Cooperation: Cities & NGOs The role of NGOs in the social services sector Providing services, education and protection Common agenda for helping people in target population Privatisation of social services sector Grants/Contracts to NGOs for service delivery Better services through focus, dedication, competition Lower costs through volunteers, contributions, innovation Municipal control through contract, supervision, evaluation Better services to populations in need Popular appreciation of NGOs and Government Contributions, volunteers and votes 2007 Organization Futures 2007 19
Békéscsaba, Hungary Filia Home for the Elderly 50 residents, 10 staff, many volunteers Family feeling, quality care, committed workers 50% state pensions 25% fees 25 % donations/contracts 25% volunteer self help Good relations with city Better care than city institutions 2007 Organization Futures 2007 20
Timisoara, Romania New law 34 support for social services Municipal support Buildings, repair services, free rent Grants, donations, data, coordinating council Alzheimer s Society support Better focus, expertise, caring, education Volunteers, matching funds, information Mayor, mayor s wife, councilman, NGO Inspector, hospital directors 2007 Organization Futures 2007 21
Providence, Rhode Island WBNA neighbourhood association Wide citizen participation in planning and implementing Mutual benefits to city, association, mayor and residents Graffiti patrol innovation, clean city Housing repairs restoration, sales Neighbourhood festival entertainment, tourism Campaign forum exposure, maybe votes Mayor gives money, endorsement, other support NGO gives involvement, new approaches, volunteers 2007 Organization Futures 2007 22
Comments by Officials We thought you came for money but now we see it s to collaborate, help, take over some of our problems. Administrator, Department of Social Services, Bucharest City It is much easier to work with the Alzheimer s Society than to create our own new departments here. Director General, Department for People with Handicaps, Government of Romania 2007 Organization Futures 2007 23
Contract Out to the Best It s time to put aside labels and admit the system has failed. We should shift power away from the bureaucracy to the people in the compassionate community who actually deal with these problems. We contract out with experts to build our highways. Why not contract out with the people who are doing the best job dealing with problems like foster care or education in communities where the current system isn t working? Jeb Bush, Governor, Florida 2007 Organization Futures 2007 24
NGOs and Civil Society By providing a venue for volunteers and trustees to contribute their time in service or governance, nonprofits contribute to a healthy civil society and democracy. William P.Ryan, Harvard Business Review 2007 Organization Futures 2007 25
Nonprofits May Provide Better Service More expertise and experience in delivering social services Effective and refined program strategies Employees with special values and commitment to the work Care more, spend more time and interact more humanely Reinvest their surplus revenues into more services Deliver not only on their contracts but also on their mission Use private donations to extend the depth and reach of services Opportunity for citizens to become engaged in community Educators, advocates and vigorous agents of social change William P.Ryan, Harvard Business Review 2007 Organization Futures 2007 26
Massachusetts Example $2.4 billion state-contracted human service provider sector (all sources) $91.7 million budget request for services State Purchase of Service system Legislative and executive mandates Blue Ribbon Task Force to study fair and rational system for contracting for service Testimony at State Budget Hearings I care. I vote. 2007 Organization Futures 2007 27
Government Funds for NGOs Will Develop Subcontracting services to NGOs Setting up governmental funding institutions such as the National Environmental Fund or the National Cultural Fund Development of local and county grant giving programs targeting NGOs Irina Stanescu, CSDF Romania 2007 Organization Futures 2007 28
Increased Openness from the Business Sector Direct support to NGOs Intermediary mechanism such as community foundations or other entities like United Way of Romania Corporate foundations Irina Stanescu, CSDF Romania 2007 Organization Futures 2007 29
From Foreign to National Strengthening internal capacity of NGOs to raise funds and other resources from local, county and national sources. Moving from fundraising is proposal writing for foreign donors to the next stage of organizational development and diversified fundraising local government contracts business sponsorship membership fees fundraising events public donation fees for service related business income. 2007 Organization Futures 2007 30
Benefits Diversified Funding 1. Your funding will be more secure over time 2. You can continue work even if one major donor goes away 3. With a portfolio of many donors, you have independence 4. You have more control over your mission 5. You have a public reputation and can influence opinion Drawbacks 1. It is harder to manage a portfolio of diversified funding 2. You still have to meet the needs of various donor segments 3. The costs of fundraising are much higher 4. You face new responsibilities in planning and fundraising 5. You need staff and board members with more diverse skills 2007 Organization Futures 2007 31
Penetration Development 1. Market Penetration Satisfy donor demand Share the pie (0 sum game) Competitors: Other NGOs Get the money instead of other NGOs 2. Market Development Create donor demand Increase the pie (++ sum game) Competitors: other uses of disposable income Get the money instead of other uses customer profile 80/20 rule competitor marketing 2007 Organization Futures 2007 32
Why Are Organizations Not Raising More Money? 1. Unproven Results to Participants 2. Questions of Trust and Reliability 3. Weak Value to Donors 4. Lack of Total Organizational Fundraising 2007 Organization Futures 2007 33
Lessons about Fundraising 1. Giving is based on trust, confidence and respect. 2. Fundraisers represent the totality of the nonprofit. 3. Giving occurs because of the value the donor receives and her total experience. 4. Donors want to know the difference that their individual gifts actually make. 5. Donors, as well as participants, want to be involved in planning and evaluation. 2007 Organization Futures 2007 34
Value to Donors Nonprofits like business are completive Basic successful strategies to compete Better quality Lower cost New and unique Donors and clients want to see value added from your use of their funds Especially now in hard times 2007 Organization Futures 2007 35
Desired Long Term Results What are your Long Term Results? Think broadly from society s perspectives from your participants perspectives from your corporations perspectives from your local authorities perspectives from your communities perspectives from your potential donors perspectives The results have to be measurable. 2007 Organization Futures 2007 36
Results Donors Organization Beneficiaries Money Value added Life Changes Activities Inputs Processes Outputs Outcomes Results Source: USAID indicators 2007 Organization Futures 2007 37
Identifying Stakeholders (Whom We Serve) Organ isations that do not pay attention to stakeholders needs are soon in trouble! Who our stakeholders are? What we get from them? What demands they make? How they influence us? How they are satisfied? 2007 Organization Futures 2007 38
Donor Assessment Who What we want from them What they want from us How we satisfy them How to know we do 2007 Organization Futures 2007 39
Peter Drucker 1. What is your business? 2. Who is your customer? 3. What does your customer consider value? 4. Non-customers are as important as customers. 5. The customer never buys what the supplier sells. 6. Management that does not innovate will not last. 2007 Organization Futures 2007 40
Iron Rules of Fundraising (1-5) 1. Fundraising is not about money 2. There are only internal barriers to fundraising 3. Determine and promote your uniqueness 4. Compete through innovation, price and quality 5. Assure basic systems are in place 2007 Organization Futures 2007 41
Iron Rules of Fundraising (6-10) 6. Donors give because of value they receive 7. Meet the needs and expectations of donors 8. Develop relationships with donors 9. Solve their problems not yours 10. Learn to love the word No 2007 Organization Futures 2007 42
Total Organizational Fundraising Six step approach to the core capabilities of an organization for effective fundraising Fundamental Principles of Fundraising Internal Culture of Fundraising Strategic Planning, Positioning and Fundraising Organizational Ethics and Standards Strategic Evaluation for Learning Involvement and Accountability for Donors 2007 Organization Futures 2007 43
Assessing If Donors Feel They Are Given Value 1) How often to you meet /talk with them? 2) Are they acknowledged for their support? 3) Do they feel valued in the relationship? 4) Are they involved in any way? 5) Do they have influence in the organization? 6) Is individualized marketing used with them? 7) Are customized programs provided? 2007 Organization Futures 2007 44
How to Take Control of the Environment Get out of your self and your own limitations Put yourself in other people s position Keep your eyes open to observe See the body language Listen to learn Hear what is not being said Develop your antenna Understand the intangibles 2007 Organization Futures 2007 45
Steps in OD 1. The business model 2. Legal and structure 3. Policy framework 4. Assessment, strategic planning and operational planning 5. Indicators of progress and impact 6. Management, monitoring and adapting 7. Finance management and resource development 8. Leadership, board and management development 9. Program development 10. HR and staff development 11. Organization culture 12. Knowledge development, evaluation and learning 2007 Organization Futures 2007 46
Vision Mission Strategic Management Strategic Thinking S W O T Strategies DONORS Credibility Goals Objectives Activities Indicators RESULTS Culture Positioning Strategic Planning Strategic Implementation Strategic Evaluation Long-term Results for Society, Participants and Donors 2007 Organization Futures 2007 47
Organization Futures LLC Consultancy to help nonprofits assure their futures: Strategic Planning Fundraising Sustainability Organization Development Management and Board Development Contact Ken Phillips, Founding Partner Organization Futures LLC 50 St. Marks Road, Dorchester, MA 02124 Tel +1 617 288 5610 NgoFutures@aol.com Founded in 1994 as NGO Futures in Switzerland 2007 Organization Futures 2007 48