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Should an NGO be run like a business?

I strongly believe that an NGO should be run like a business and when I address this topic in a conversation, people nod their heads enthusiastically in agreement. But do you really agree with this statement?

What is the biggest expense of any business? Salaries! Not surprisingly, this is also the case with a welfare organisation but both companies and individuals are reluctant to contribute to the salaries of people working at a welfare organisation. Deep down in our core we still believe that if you work at a charity organisation, you should do it for free.

There are thousands of volunteers working at welfare organisations and we cherish each one of them, but just as your business cannot survive on volunteers, neither can a welfare organisation. How can you expect a qualified social worker who studied for four years to work free of charge? The same goes for the teachers, physiotherapists, occupational therapists and nurses who serve in these organisations.

Do you pay your domestic worker, office admin staff and cleaners? Just like they need a decent salary to make a living, so do the cleaners, caregivers and admin staff working at a welfare organisation.

The biggest expense in the budget of a welfare organisation is salaries. Staff members work under difficult circumstances to serve others, like caring for people with disabilities, the elderly or saving abused animals. If they are not paid a decent salary, they will have no choice but to leave the charity sector for the corporate sector. Not because they want to, but because we all need to make a living.

As I am writing this, I know of 4 organisations that could not pay their staff for the past 3 months. This is due to a drop in regular donations, unsuccessful fundraising campaigns and, most often, government subsidies that weren’t paid on time. Unless you have been personally involved in working at a welfare organisation, you will never understand the level of insecurity that creeps in when you do not know whether or not you are going to receive a salary. . .

If you truly believe that a welfare organisation should be run like a business, you would have no problem contributing to the salary bill of an accountable, trustworthy welfare organisation. In fact, you would give a little bit extra as you would think of your own business and know that if you pay peanuts, you get monkeys.

Can a successful business constantly operate on the brink of financial disaster? Will it be okay for your business to operate with a month to month "hope we have enough money for salaries" culture? Surely any successful business should also look at sustainability, saving money for the future and ultimately be in a position where your money can work for you in terms of interest received?

The same principle applies to running a welfare organisation. Income via fundraising projects is unreliable and sudden expenses can cripple a NGO financially. Welfare organisations are a soft target for crime so often break-ins and stolen vehicles are part of their daily challenges.

So what is the answer? Surely a welfare organisation needs to be putting away some money for a rainy day? Do you agree that they should invest and receive interest to ensure a sustainable income? They need to secure themselves financially to ensure that they can fulfil the commitments they made in rendering a service to vulnerable children, abused animals and people with disabilities.

But would you support a welfare organisation if you knew they had big investments? If you have to choose between supporting two organisations, both of them in existence for 50 years already, which one would you choose: the one who is on the brink of a financial disaster or the one who has got investments in the bank? Probably the 'poor' one as you would think the other one has enough money. . .or not?

This way of thinking forces welfare organisations to stay in the circle of starvation. Maybe we want to keep them there so that we can feel 'worthy' when we 'save' them with our donations.

If you truly believe that a welfare organisation should be run like a business you would support them having healthy financial principles so that they can ensure a sustainable service to the people they serve.

Annelise de Jager
Founder of National Tekkie Tax Day as well as Charity Support Services and owner of the NGO Empowerment Program – a 12-month coaching and mentoring program to create NGOs of excellence.

© 2020 Annelise De Jager. All Rights Reserved.