Becoming a social enterprise — for NGOs

Transitioning from donations and grants, to a mixed revenue stream

So you’ve seen the number of grants and projects in your area of expertise diminish, be it due to emerging trends or a change of government. Donations are down as the economic crisis looms, or your service users aren’t deemed donation worthy.

You’d read about social enterprise a long time ago, and thought it’s about time you change your model to ensure the sustainability and longevity of your organisation. However you’re unsure what steps you need to take next.

Here are a few pointers that we found useful when working with NGOs before:

Get the board on board

No matter where you are based, the likelihood is that you have a board of some sort to help with the direction and strategy of your NGO. This board will stay in place as you become a social enterprise, however you need to ensure that it gives you support during the transition.

Having a board that is extremely risk averse, slow and unresponsive will not help. Selling a product or service needs a certain amount of quick decision-making and the ability to meet current market trends, if these decisions don’t need board approval then great, but if they do, you better have a board in place that will ensure the success and not death of your entrepreneurial exploits.

We’d suggest speaking to them individually about their views and gauging their support, then looking at what skills they could offer to the new ideas. Once you have this, you can see what else you need to bring on board to ensure a comprehensive, complementary board that will guide you onwards and upwards.

Make sure you’re legally able to trade

Depending on your country and the rules for NGOs or charities, there’s a chance you can’t trade. You may be able to add the trading activities to your organisation, and if so then make sure you do so in a cost efficient way. If there isn’t this option however, then maybe it’s time to open something new.

As a legal entity (NGO/charity), you can actually open another legal entity, ensuring decision making remains by the owner (in this case the NGO). This also gives you the ability to set up whichever legal entity would be best for your product or service (get advice on this if you’re not sure). In some places (EU countries) this also enables you to move the profit from one to another without paying tax.

Or you might decide to set up a completely separate entity, such as a CIC, benefit corporation or locally recognised social enterprise.

Whatever you do, make sure you have the ability and meet all minimum requirements to start trading exactly what you want to.

Get your business head on (or bring one in)

We often say that NGOs are all heart (impact), and traditional corporations are all head (financial return). Well it’s now time to combine the two powers to make one superpower. However if you’re lacking the business brain, then look at ways to bring it in.

You could develop the skills yourself if you have the time and nous through training and mentoring, you could hire a social enterprise development manager if the funds are available, or you could see whether you can partnership with a local university and offer an internship or partner with a corporate sponsor and get some pro bono work.

Whatever you decide, it’s a key step, and we’ve seen many social enterprise ideas fail to get off the ground because there isn’t somewhere with the time or brain to do such a thing.

Utilise your existing support to extend to new support

Where would NGOs be if it wasn’t for their network or supporters, donors, volunteers, trustees, staff, service users. The list goes on. We are as good as these stakeholders and they always want the best for us.

That’s why when you have a new product or service, and you’ve thought about your customer profile that you’re trying to reach, you should share it with them. Tell them who you think your customer is. They might know 5 or 10 or 100 of these very people, and can tell them to check out your new offer. The old adage is true ‘it’s easier to keep a customer, than to make a new one’, so you’ll need all the help you can get!

They’re our top tips, what else would you add in there?

If you’re thinking about shifting to being a social enterprise, get in touch and maybe we could be your business head! We offer personalised rates and flexible methods of payment (it doesn’t just have to be cold, hard cash!).