Non-Profit And The Social Business Structure Of The 21st Century

 

Until the 1980s, the non-governmental organisation (NGO) was not truly recognised as a developmental actor by states. They were seen solely as charitable, humanitarian organisations and, due to the lack of pecuniary backing and incentive,  were not given a huge role to in defining societal development play in society. However, from the 1990s when the triadic partnership model between state-donors and- NGOs model was introduced along with the concept of aid or financial assistance, the autonomous and independent attributes of the NGO changed. It became a totally different ball game for organisations that were once seen as wholly autonomous. The relationship between the state and NGOs strengthened and it became nearly impossible to recognise NGOs as individual self-determining actors because of the socio-political context of the aid system. Between then and now, Over the course of history we have’ve seen the effects of the Paris Declaration on Aid Effectiveness and the Securitisation of Aid, but today, NGOs are beginning to shift into a different sphere of operation operate in a completely different sphere.

The word “aid” has developed a negative twang correlation due to the implications of utilising and subsequently becoming dependent upon finances granted by actors who may or may not have alternative political motives to the core principals of an NGO.to it and we look into how Muhammad Yunus’ concept of the Social Business has been taken up by several NGOs such as BRAC (Building Resources Across Communities) BRAC – the largest NGO in the world. But what has led to this change?

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On a video I came across on  YouTube, Yunus discusses how the concept of ‘business’ has been misread for years, majorly due mostly because of profit driven economics. “Global citizens were never knowledgeable about running a business solely for the wellbeing of a particular society and businesses were known to focus solely on creating revenue”. Well, this has changed over time and social businesses have sprung up all over the world because NGOs have begun to lay aside external aid and in favour of self reliance, started turning their backs to aid.

The concept of aid once was commendable and seemed like a great idea, but has become over encumbered by bureaucracy and it isn’t proving to achieve its purported developmental outcome goals  that it claims to. Transparency is a major issue, as many instances have shown that NGOs that focus on aid have been proven less transparent and we don’t always know where the money is really going to. This form of Aid has actually had more holds of an adverse affects on development due to lack of sustainability and many believe that taking aid out of the picture and focusing on social businesses is the key to sustainable human development. 

But what exactly is a social business?

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(Photo Credit: Borgen Project)

According to Grameen, “Unlike traditional business, a social business operates for the benefit of addressing social needs that enable societies to function more efficiently. Social business provides a necessary framework for tackling social issues by combining business know-how with the desire to improve quality of life.” and a great example of this would be the work of Fazle Abed and his NGO, BRAC. Abed founded BRAC in Bangladesh when the country was war-torn in the 1970s and the non-profit focused on generating its own profits rather than relying on donors. By setting up small businesses in communities of need, BRAC has been able to empower the less privileged, reduce unemployment rates, make goods and services available to those who cannot afford them at their usual industry price and contribute to the nations economic growth. As amazing as this sounds though, there have been shortfalls to this approach. Firstly, for the first 11 years, BRAC only generated 3% of its profits from social enterprises. It has taken 25 years for the organisation to reach a point where most of its income is self-generated and therefore becoming a social business is a long term process.  Also, running operating a social development program within a market system is challenging and the social business structure is not for everyone. One must have business knowledge and experience in order to understand opportunity costs, mitigate losses, while meeting the needs of the market. This is one of the core reasons why developmental aid has not been entirely superseded with healthy business practices today.

Is aid really all that bad?

Well, of course not. At the end of the day aid has certainly helped those in need to survive at the direst times, i.e. natural disasters, epidemics and civil conflicts in geo-politcal zones where the state is unable to provide the necessary parameters for basic survival. Although transparency and accountability for the aid received and utilized has not always been available,this is not always the case and several experts cannot vouch that it’s not even the case the majority of the time. The notion of giving without reservation and helping those in need lies at the centre of societal humanity. That being said, the positives of social businesses definitely outweigh the positives of developmental aid, and as social businesses tend to maximize the potential of the people, resources and the state, while fulfilling their role as actors of a global civil society, it seems more fit for  in the 21st century. 

 

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