International Non-Profits…The Surge for Relevance

d7cnjoley4y-blair-fraser

How do international non-profit organisations continue to stay relevant and viable so  they can fulfil their humanitarian and development mandates?

There is increasing competition among international non-profits as well as the private sector for diminishing amounts of Overseas Development Assistance (ODA). The organisation for Economic Cooperation and Development (OECD) countries are channeling ODA through more tightly controlled and stringent conditions. As increasing numbers of countries continue to be categorised as ‘middle income’, irrespective of poverty or inequality gaps, bi-lateral and multi-lateral resources on which international non-profits depend on to provide assistance and manage their operations, are disappearing.

The Problem

It is becoming increasingly difficult for global organisations, especially international non-profits (International Non-Governmental Organisations – INGOs), to continue to operate based on ‘traditional’ business models. These are (or were) characterised by structures for outreach through global, regional and country specific infrastructure or ‘transaction points’. These ‘transaction points’ were often self-contained offices and staffed by paid employees, with ‘back office functions’ of their own. The purpose of this level of decentralisation was to ensure broad outreach to deliver goods, financial and non-financial services. In the case of international non-profits deliverables were humanitarian assistance in times of crisis, philanthropic or charity-driven activities, capability development and technical support to government institutions, local organisations and ‘beneficiaries’.

The closer the ‘transaction points’ were to the clients or recipients, the better. The result was a significant network of ‘transaction points’ de-centralised through regional, national, provincial/district and even at ward or community level.

For the purposes of this discussion I would like to focus on international non-profit organisations, more familiarly known as international non-governmental organisations or INGOs. It should be noted  for-profits or the private sector face the same constraints, challenges, and changes to the contextual and operating environment as non-profits do. The for-profits and the private sector organisations, being accountable to their boards, market, shareholders, and clients, can respond within tighter timeframes and through decisions that may not be consensus based, where accountabilities are clear.

For international non-profits management of these models depend on various ‘hierarchies’ of authority and responsibility (the ‘organogram’) usually being devolved from a central global ‘headquarters or head office’. Within this model functional areas are structured around the delivery of a global mandate which consists of specific objectives, strategies, and technical capabilities. Responsibilities and authority for decisions on processes and accountability for results depend on a significant volume of communication and discussion up and down the channels within this hierarchy.

This model, or variations of it, are difficult to manage and resource, and hamper or even prevent effective outcomes at the point of delivery. Transaction costs for travel and working from regional and country based ‘brick and mortar’ offices, managing the human resource burden and back offices have increasingly become liabilities. Effective decision making across such hierarchies are expensive (‘opportunity costs’) since highly paid staff need to spend time on face to face meetings There is an increasing need for timeliness and delivery which these structures cannot seem to manage with the agility and flexibility of decision making that is required. The ability to deliver mandated services to improve or change the lives of the ‘poor and marginalised’ within this model was becoming increasingly difficult.

The Drivers

  1. Competition: Less resources and more actors. The competitiveness within the humanitarian and development ‘industry’ in response to diminishing resources and tighter conditions on Overseas Development Assistance (ODA) is increasing. Nationalism, right wing politics, increased scrutiny by the media and public on how tax money was being spent on ODA, increasing unemployment in ‘donor countries’ and inequality puts pressure on ODA assistance to be more transparent and ‘fair’ within the market while delivering ‘value for money’ outcomes. This has resulted in a shift from ‘Requests for Proposals’ to ‘Public Tendering’ processes and more stringent and competitive conditions. ODA institutions are increasingly focusing on the delivery against results and measurement. An example is UKAID (formerly DfID) which has instituted mechanisms for ‘reimbursement upon delivery of results’.

The private sector has competitive as well as comparative advantages over International non-profits on responding to bidding and tendering and are now making inroads into ‘territory’ that was formerly dominated by International non-profits. The European Refugee Crisis, Brexit, the outcome of the 2016 U.S. Elections and the major humanitarian crises in the Middle East and sub Saharan Africa have impacted the amounts of ODA that is available. Large philanthropies such as The Bill and Melinda Gates Foundation, the Dell Foundation, and similar institutions and those who contributed to them are interested in data-backed, proven science, evidence-based approaches and technical solutions , simple but could be implemented at scale. Typical areas of focus are health, education, and financial inclusion of the ‘poor’.

Most International non-profits are not positioned to optimise on these opportunities since these large and adequately funded programmes often use country agreements with host governments, use existing government infrastructure which often involved policy reform.

  1. Context: Within countries and regions who are recipients of ODA assistance, changing demographics, negative trends in ‘xenophobic’ sentiment and nationalism have emerged as constraints. Increased restrictions on visas and work permits and regulatory measures aimed at local job creation are becoming challenges which result in expensive, complex, and difficult factors to address.

These have had adverse implications and consequences for global organisations in terms of presence, travel, relocation of their international staff, mobility across regions and countries, the ability to support on-the-ground operations and responsibilities for the delivery of entitlements, goods, and essential services rimplement core business.

  1. Conflict situations within fragile states and those subject to civil strife provide major security concerns for international staff and aid workers. International non-profits are often not provided the protections and conditions that UN organisations operate through. Incidents that result in fatalities, kidnappings and trauma faced by aid workers within these contexts are on the increase.

    1. Categorisation: The World Bank categorisation of an increasing number of countries as ‘middle income’ has also influenced resource mobilisation, irrespective of the ‘poverty gap’ and inequality in these countries. This categorisation relies on indicators related to GDP growth, in most cased fueled by new and restructured extractive industries. Most ODA to these countries are being de-prioritised and governments and the private sector are expected to take on increasing responsibilities to result in  in ‘wealth creation’. Some governments are repressive in that they do not acknowledge inequality, poverty or the realisation of rights and control the functions and decisions of independent media, judiciary, local government, and civil society organisations (‘shrinking space for Civil Society Organisations or CSOs’).

In March 2017, the Development Assistance Committee (DAC) decided on how to include what are known as private sector instruments in aid. The DAC is OECD’s body in charge of determining what can and cannot be counted as “aid” to poor countries, or official development assistance This could mean a dramatic increase in the use of aid to invest in or give loans to private companies, or to agree to bail out failed private sector projects through guarantees. This will put development assistance to the poor at risk.

  1. Mistrust: Added to all of this, there is a decrease in the trust and integrity of International non-profits, NGOs and UN organisations by tabloid media and the public which undermines organisational credibility, which is the main ‘unique selling point’ of these organisations. Violations of Codes of Conduct by staff of some International non-profits, their partners and even the UN has exacerbated this perception.

The Solutions

The reactions to this challenge are classified as a category of ‘organisational evolution’. The expectation is that successful adaptation to the context and operating environment is possible through deliberate and thoughtful actions that are undertaken by organisations in a timely and pro-active manner.

The conclusions from a recent article in Devex titled 6 organizations to watch among NGO Advisor’s top-ranked 500’ surprised me  since none of the big, well known  international non-profits were mentioned.

  1. The ‘Knee Jerk’: Improving Cost Efficiencies. A flurry of activity around ‘context based strategic planning’ informed by ‘contextual analysis’, ‘the operating environment’ ‘donor mapping’ and, internal ‘process flow analysis’ to determine how best the organisational mandate could be delivered more cost-efficiently than in the past.

This exercise was undertaken primarily at the country and regional level. The main outcome was primarily a ‘budget proposition’ and often resulted in ‘re-structuring’, cutting costs and ‘improved partnerships’, (which usually meant that services world be delivered through contractual arrangements with more local organisations).

While effective in the short term, streamlining, consolidating, and reducing the number of transactions and their costs helped to some extent in delivering against operational requirements. But this was not a viable or sustainable option. Restructuring meant that jobs would be cut, very often at the lower levels of the organisation while managerial positions were still in place, but with different titles and with the same people in place. Hierarchies were still maintained as were operational models and business practices. Very soon services of those who were laid off were outsourced, new hires under different titles to do the same jobs and it was soon ‘back to business as usual’ and the next ‘strategic plan’.

However, it should be noted that improving cost efficiencies is an approach that is relevant for organisations whose products are unique, have a track record and brand identity, and work within specific sets of circumstances in meeting very specific needs. Within industry the brand names Lego and  Victorinox come  to mind.

resstrucuring

  1. ‘The Shotgun Wedding’ – Symbiosis? While this is very common within the private sector, of late there have been noteworthy ‘mergers’ of large, international non-profits. Save the Children Fund merged its operations with Merlin, Grameen Foundation with Freedom From Hunger and currently GOAL is in talks with Oxfam in Ireland on combing their organisations into a new entity. These ‘mergers’ have the expectation that ‘brand heritage’ and the ‘unique skills and capabilities’ of each other will come together in a synergistic way to be more agile and responsive to emerging needs and humanitarian crises.

As to whether these mergers are successful or not is yet to be tested. The primary challenges are focusing and building on shared values and similarities than in trying to manage and get bogged down in attempting to reconcile differences within ‘organisational cultures’.

Since these mergers are often implemented due to one or both organisations undergoing financial difficulties, initially there will be some level of cross subsidisation till a level of viability is achieved. If this does not happen within anticipated timeframes the arrangement becomes fragile. There is some skepticism that these are not strategic and deliberately thought out organisational actions but rather those that ensure these organisations remain viable and afloat.

  1. ‘Reading the Tea Leaves’: Positioning for the Future. More organisations are (especially those that are confederated) undertaking ‘scenario’ based strategic planning’ which looks to the future, being informed by trends, patterns, and changes within global, regional and country contexts, especially the demographics of their service recipients. Various scenarios are identified and the main outcomes are characteristics of models or options, and how they would operate and function within these different scenarios.

The planning also as best able defines products and services that would be relevant and appropriate for each scenario. The primary outcome is a ‘strategic proposition’ as opposed to a ‘budget proposition’. The three areas of relevance are brand recognition, product definition and capabilities to deliver within each scenario.

This approach is having some degree of success in that organisations are better able to explain and mobilise resources around scenarios where they have a strong constituency, brand recognition, capabilities to deliver and known for their product. More challenging is communicating the future positioning and proving the ‘hypothesis’ of success of the options within the scenario through evidence.

This means that investments must be made in testing out and innovating solutions and surfacing evidence that is objective and has support of key stakeholders. This also means working more closely with governments in alignment with their policies, and with the private sector.

Some examples are the UN Strategic Development Goals (SDGs), the increase in the number of ‘social enterprises’, harnessing technologies to better deliver services (cash transfers through mobile phones, delivery of agricultural insurance) and innovation in delivering humanitarian assistance (access to Water and Sanitation, establishing core standards and principles, and being objectively able to measure results).

The nature of partnerships also change which become more mutually agreed upon strategic relationships. They move from sub-contracting and implementation mechanisms governed by compliance, financial monitoring and audit to relationships built on shared values, trust and mutual learning and capability development.

The challenges are that new capabilities are needed, leadership and management skills are more valued than technical expertise (which is often outsourced and expensive) and some level of serious restructuring takes place throughout the organisation. Relationship skills are important in interacting with other organisations and in promoting active participation within relevant networks.

On the people front there could be considerable resistance from the ‘old guard’ often in senior positions, the danger of patronage and cronyism in staffing of new structures and ineffective communication strategies that confuse and send mixed messaging to staff.

alice

  1. ‘Now You See Me…’: Transformation: This represents a complete ‘change in basic assumptions’ in how organisations transform themselves into different entities. While the brand is retained, the vision and purpose are more deliberately revisited, the anticipated impact of the work more thoroughly defined and characterised and the pathways leading from aspiration to impact are identified. Affiliated and confederated organisations are increasingly recognising this as the best-case option, if they can get it to work.

The architecture of the organisation is then structured to support these pathways, often working backward. More thorough ‘risk analysis’ is undertaken and risks are sometimes deliberately built in and mitigating factors are integrated (e.g. organisational reserves, capability rosters, agreements with governments, MoUs with strategic partners). Conventional wisdom is often deferred to ‘out of the box’ thinking. At each stage of decision making effective communications keep the staff and the organisation informed. Key words become ‘doing more with less’, leverage, influencing change and relevance.

The danger of this process is that it’s comparable to nuclear fission. Once a critical mass is reached there are no control rods to manage the chain reaction. Similarly, with the transformation process, beyond a certain point there is no turning back. It is very important for the decision makers to agree on what this point is and what characteristics define it. This will help in knowing and recognising this benchmark when they reach it; the point of no return.

The other risk is that while you are involved in a transformative process you also tend to dabble in and bring in elements of Solution 1 and 3 to address certain issues which makes this process very frustrating. It becomes drawn out, the focus is more on process management than the aspiration and essentially delivery against the core business almost grinds to a halt. The critical alignments of aspiration, capabilities and resources that are so important for this model to work are ‘thrown out of whack’.

Physical offices as a workplace are on their way out. These are increasingly being replaced by cross-functional and diverse teams working together virtually from geographically dispersed locations. Tasks and outcomes are completed and delivered through thoughtful and negotiated discussion, assertive and informed risk-taking and innovation.

Individual team members are encouraged to proactively take on work that promote efficiencies, co-create solutions and evolve delivery against ‘core business’ ambitions more effectively and for the better. Results based management practices are replacing process supervision and oversight. Cross-functional team members rarely meet with each other for physical interaction unless through planned regional or global events once or twice a year. ‘Working from home’ is becoming a norm rather than an exception

Conclusions

There are many more arrangements and adaptive changes that take place at all these levels. I have highlighted the most common. Almost all the above solutions have capitalised on the exponential growth of affordable information and communication technologies, customisation and adapting platforms for virtual and matrixed ways of working to address some of these challenges.

The ability to access cost effective outsourced technical support, outsource services and maintain localised back office functions has helped overcome most obstacles. Virtual recruitment has been made easier through social media platforms, and recruitment and talent spotting agencies, where a recruiting manager has little or no physical interaction with applicants.

Whichever solutions that International non-profits opt for, a recent Korn/Ferry Report Highlights some of the Key Factors of utmost importance for organisations that make strategic decisions in their search for relevance and positioning.

Commitment to ‘Organisation Enablers’

  1. Purpose and vision: the organisation’s raison d’être – what it exists to do.
  2. Choice and focus: the strategy, operating model, and structure to achieve the purpose and vision.
  3. Accountability and fairness: a high-performance work environment, where people own their responsibilities and are fairly rewarded for carrying them out.

People Drivers

  1. Clarity: Employees’ understanding of their role, and of their part in achieving the organisation’s strategy.
  2. Capability: Talent with the right knowledge, competencies, and attributes, in the right places, at the right time.
  3. Commitment: People who are motivated and enabled to play their part in the organisation’s success.

Note: This article originally started as a post through which I wanted to share experiences on how cross-functional teams can be extremely successful and productive. However, in writing the background this post took on a life of its own and practically wrote itself. In the end, I had more than 2500 words on the background which when tweaked stood on its own as an article which I decided to post on LinkedIn.

Daniel Sinnathamby

Colombo, Sri Lanka

February 18, 2017

Title Photo Credit: Blair Fraser – www.unsplash.com

Illustration and text from Lewis Carroll’s “Alice’s Adventures in Wonderland”, illustrated by John Tenniel.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s