By Suarav Basnet, Sutima Detsakulrat, and Rebecca Walker
On November 27th, Nicola Costa, CEO and Founder of Impact46, an impact accelerator, shared his experience and insights into what makes an effective and successful non-profit at a public event being run as part of the School of Global Studies Masters in Social Innovation and Sustainability, with Thammasat University. As part of Impact46, Nicola works with non-profits and social enterprises to share tools and resources to strengthen their approach, to maximize the impact they can have in the world.
During his time with us he talked about the role of Non-Governmental Organizations in society, some common weaknesses found across NGOs, and the key ingredients which NGOs should embrace in order to be successful.
NGOs are a critical force in driving innovation and social impact around the globe; be it providing youth leadership education, creating opportunities for refugees, or addressing mental health at scale. It is an interesting time in the space of NGO funding; as impact investment is rising, and Corporate Social Responsibility programs are starting to focus on longer term partnerships rather than one-off projects, there is a sizeable opportunity for NGOs to capitalize on this new wave of avenues for support and investment.
However, many organizations lack the resources, professionalism and direction needed to access this funding and to be able to use it in a way that enables sustainable growth and scaling in order to reach their full potential. Around 80 percent of NGOs believe that the need for more unrestricted funding is a barrier to growth and scaling, however surprisingly, 41 percent of NGOs do not have impact monitoring systems in place. A lack of a solid impact assessment or impact monitoring system can be a challenge for them to assess their achievements and to present evidence of this impact to their donors. At the same time, the allocation of funding by donors isn’t always directed towards the most high-impact organizations.
There are other critical factors which require NGOs to be eligible for funding, and which can entice donors. Among other things, these include financial transparency, having key policies in place or having relevant governance structures. Another challenge is that many organizations are extremely small, with ten or fewer staff, meaning that organizations lack the knowledge, skillset, time and resources to get some of these key factors in place. Most surprisingly, a lot of NGOs also lack a formalized vision and strategy for the impact they are looking to achieve. All of these limit organizations’ ability to secure funding which could elevate their impact further.
Nicola talked about the needed shift from ‘impulse’ investing to ‘impact’ investing; moving from investment based on superficial recognition, to investment based on evidence and longer term impact.
In sharing where NGOs can improve, Nicola identified three key areas; Impact, Operations and Governance. In terms of impact, having a clear vision and strategy, a robust theory of change, and ambitious pursuit of growth and scalability. Throughout his research, he found that 31% could not articulate impact they aim to achieve. However, he gave a suggestion to those who have an unclear direction or feel that their plans cannot fall into place to focus on the impact they want to achieve and create the directions based on the impact they set. NGOs are often doing great, impactful work, and having these items in place enables this impact to be articulated to stakeholders.
In terms of operations, Nicola identified the need for professionalism and transparency, enabling donors and stakeholders to understand the sustainability of the organization. Some SEs can enhance their marketing strategies to be more attractive and presentable in a way that is comparable to other private organizations. Moreover, social workers who are really working with locals and driving change should be more supported and given credits. Their achievement should be recognized more equally as others in executive positions. And finally in terms of governance, Nicola talked about the importance of professionalism and collaborative strategic partners, as well as strong HR resources.
This was an inspiring evening for us as a school and cohort, as it encouraged us to think about the roles that we can play in the space of social impact; be it in supporting NGOs to be better structured and governed to increase chances of funding, or from a donor perspective, challenging us to drive change in the space of influencing investment choices and decisions.
We are extremely grateful for Nicola spending his evening with us to share his experience, knowledge and expertise, and we encourage you to visit impact46.co to learn more about the impactful work that Nicola is doing through this venture.