Comparative advantages ofng os in delivering services

2007 © Organization Futures 2007 1
Comparative Advantages of
NGOs in Delivering Services
 Ken Phillips, Organization Futures LLC
 OSI/ISSA Conference
 Belgrade, December 8, 2007
Institution-
alizing
Cooperative
Vision &
Mission
Competitive Innovative
Main-
streaming

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

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

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

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

Steps in NGO Development
Step 4 - NGO Scales Up (+Step 3)
National Coverage/Branches/Services
National and International Advocacy
Regional and International Support
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
TH
E
O
D
C
H
ALLEN
G
E

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

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

Progress from Stage 2 to 3
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.
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.
Stage
2
Stage
3

The How Is Different
Management
Planning/budgeting
Setting targets/goals
Establishing
detailed steps
Allocating resources
Creating structures
Organizing/staffing
Informing
Delegating
Monitoring
Controlling
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

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

Civil Society’s Three
Sectors
Three indispensable roles -- working
together better
 Government
 Business
 Organisations

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

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?

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

NGO Revenues
50% government
25% fees for service
25% contributions and grants
25% volunteer time
125% total
 This is the

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.

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

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

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

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

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

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

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

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

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

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.”

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

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

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.

Diversified Funding
Benefits
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

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

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

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.

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’

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.

Results
Donors Organization Beneficiaries
Money Value added Life Changes
Activities
Inputs Processes
Outputs
Outcomes
Results
indicators
Source: USAID

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?

Donor Assessment
How to
know we do
How we
satisfy them
What they
want from us
What we
want from
them
Who

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.

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

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”

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

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?

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

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

Strategic Management
Vision
Mission
DONORS Credibility Goals Objectives Activities Indicators RESULTS
S W O T
Positioning
Strategies
Culture
Long-term
Results for
Society,
Participants
and Donors
Strategic
Thinking Strategic
Planning Strategic
Implementation Strategic
Evaluation

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

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