Giving Compass' Take:
- Here are lessons learned from NGOs based in Indonesia on how to successfully and efficiently transition to social enterprises to secure more funding.
- How can donors support these successful transitions? What are the benefits of becoming a social enterprise?
- Read about the competitive advantage of social enterprises.
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International funding to Indonesian non-government organisations (NGOs) has been declining over the past two decades, presenting challenges for the NGO sector. To respond to this, programs such as the National NGO Study and Service Centre (NSSC) and MAMPU by DFAT Australia were established to provide support to NGOs so they can work towards achieving financial independence, as donor assistance becomes more scarce.
As part of the MAMPU program, Kopernik has been working with several NGOs supporting women empowerment to explore alternative funding sources. Partners involved in the project included the Trade Union Rights Centre (TURC), Bina Keterampilan Pedesaan (BITRA) Indonesia, Yayasan Annisa Swasti (Yasanti), Bursa Pengetahuan Kawasan Timur Indonesia (BaKTI), Forum Pengada Layanan (FPL), Perempuan Sumatra Mampu (PERMAMPU) Consortium, ‘Aisyiyah’, Migrant CARE, and Lingkaran Pendidikan Alternatif untuk Perempuan (KAPAL Perempuan) Institute. During our work with these partners, we observed that there was an increasing interest from NGOs to transform themselves into social enterprises in order to diversify their funding sources.
As such, we have identified key steps required to turn business ideas into concrete action. The first step of the transformation into a social enterprise will be to explore suitable business models, which vary based on the type of organization. After these NGOs had identified and discussed business models, potential products and markets they could potentially tap into, they often struggled turning these ideas into reality. We, therefore, play the role of a ‘supporting force’ to enable and empower some of these initiatives. Three factors come into play that we have found necessary for NGOs to embark on the path towards becoming a social enterprise:
- Strengthening Internal Management
- Establishing the Product and Identifying a Suitable Market
- Sharpening Business Acumen
These three factors are key for early-stage social enterprises to not only secure alternative funding sources, but also ensure that they can continue to operate and support the communities whom they work with.
Read the full article about turning NGOs into social enterprises by Aisha Marzuki at AVPN.