Lessons Learned Along the Way Article #3
Lessons Learned Along the Way #3
In article #1 we looked at some areas that you need to focus on in getting ready to execute your plan. While the metaphor is micro-credit, these suggestions apply to both not-for-profits and registered charities, i.e., Non Government Organizations working in the developing world.
Then in the Lesson #2 we dealt with Getting Ready.
In this Lesson #3 I will deal with the four areas where work needs to be done. Again, these concepts are prevalent in the corporate world, although some of them may need tweking before applying them to NGOs.
Be Open to All Possibilities
In this Lesson #3, I will deal with the four areas where work needs to be done. Again, these concepts are prevalent in the corporate world, although some of them may need tweking before applying them to NGOs.Open to Grow would not be where it is today had it not been for a telephone call to Steve Rickard. I neded an introduction to KIVA to determine what their criteria were for providing funding. Steve connected me with Matt Flannery who, with his former wife, had started KIVA in San Francisco.
At the end of the meeting with Matt, I asked if there was anyone in the Bay area that I should meet with while I was there. He suggested that I contact Bob Graham who was operating in Guatemala and was one of the first to introduce micro-credit in Central America. I called Bob and set up a meeting at his restaurant in Oakland. While we were intending to set up shop in Nicaragua at the time, the “no payment” movement that had started in 2009 had decimated the microcredit industry there and we were thus open to other country possibilities in Central America.
Prior to the meeting, I Googled “Bob Graham” and ordered and read his biography before our meeting. This was important as I learned we had a lot of things in common.
We had two meetings during which I learned that his charity, Namaste Direct, was delivering a program of micro-loans together with a unique mentoring and business development program. (Business training was on our list of areas to get into, but we had decided to focus on micro-credit for at least three years.) We both felt that there was an opportunity to work together, with O2G providing the funding for micro-loans and Bob providing the business development program.
Six months later, we entered into a collaboration agreement that lasted seven years and benefited many Guatemalan micro-entrepreneurs, all women.
Differentiate Your NGO from Others
The hotel business is a highly competitive one. When my wife and I started the Kensington Riverside Inn, one of our key objectives was to “differentiate” KRI from other hotels so that we would be noticed by travelers. We emphasized that we were a small boutique hotel, we formed an Advisory Board with several international small inn owners on it, we went after awards and designations (we won the Emerging Enterprise of the Year Award and in time a 4 Diamond Rating from AAA putting us up with the big boys – Sheraton, Fairmont, Hyatt, etc. These differentiators were important to our success.
The “charity business” is also a highly competitive one. There are over 170,000 charitable and non-for-profit organizations in Canada. About half of these are registered charities (i.e., recognized by the Canada Revenue Agency and able to issue donation receipts). “Charitable status” was our first “differentiator” as it gave us the ability to issue charitable donation receipts to donors. Having charitable status also acted as a “Good Housekeeping seal of approval” for Open to Grow in the eyes of potential donors.
Our second “differentiator” was to partner with Namaste Direct, based in San Francisco and founded by Bob Graham, the “Muhammad Yunus of Central America”. We were interested in business training and Namaste provided this through their unique business development program. Thus, by combining efforts with Nasmaste Direct, we differentiated ourselves from other MFIs. We also learned a lot.
Our third “differentiator” was to raise funds through low-interest medium term loans in addition to donations and grants. This approach really helped us expand our micro-lending capabilities, as it gave a potential donor the flexibility to lend to us and, after the term of the loan expired, either continue the loan for a second term (or increase it), convert the loan into a donation to us or another charity, or use the funds elsewhere.
Forecasting Revenues & Expenses
There is a high level of uncertainty in the charity world. It is pretty much impossible to predict with any kind of certainty what your donations and grants will be, especially when you are just getting started.
If you are going to work with an international partner and fund it, it is wise to “under promise and over deliver”. In our first year we didn’t follow this principle. Although we did meet out commitment, this was over-the-top stressful. After the first year, we have never committed more funds than what we have sitting in our bank account.
Fund-raising events, while taking an inordinate amount of time as well as front-end capital, are at least under your control. As such, they have a higher degree of predictability than what a donor may do or whether you will be successful with a grant application. They also have downside risk.
Realty in the Developing World
Last but not least, the Buddha said: “Wishing things to be what they are not leads to suffering.” Getting a grip on this one will save you a truckload of angst. It pays to go slowly and make small changes as you go along, rather than to “row, row, row your boat, gently up the stream”! (Wayne Dyer) Better to go with the flow.
Doing business in a developing country is not like doing business in Calgary. There are many moving parts. Many business practices and methodologies will be different. Time has a different meaning in many countries. So, learn about the culture you are working in and go with the flow.
It will take some time – in you face time (or at least Zoom time) – for you to really get to know your international partner. Meeting with your partner in person in the country you are working in is very important. It is hard to develop a level of trust over the Internet.
At the outset, it is important to have clear written goals that both you and your partner support. Have a really good written agreement with your in-country partner. This will give you some standing if things go a wee bit south. Note that in many cases, an agreement will deal with everything other than the issue that has to be dealt with; there are just too many issues to cover no matter how many pages are in the agreement.
As emphasized in the first article, be prepared for change. The charity world in a developing country can be much less stable or predictable than in Canada. Politics, especially in a country without democracy as we know it, can destroy all that you have built with literally a stroke of a pen. Right now, charities everywhere are dealing with COVID-19 and the damage it might cause to the people they serve.
While building a charity in a developing country is challenging work, helping people improve their lives is more than sufficient reward. So, as you build your NGO, remember to have fun along the way!
Open to Grow (O2G)
Bob Brown is Founder and CEO of Open to Grow (O2G) which funds micro-finance institutions (MFIs) that focus on women with “micro and small sized enterprises”. We provide loan capital to these MFIs who use our funds to make small loans to their clients in the poorest segment of micro-finance. The clients use these small loans to grow their businesses or, as my mentor Bob Graham says, to “make more money”. Over time, increased business income provides better health, education (e.g., payment of school fees) and housing for clients and their family members as well as contributing to their local economy.
During the past nine years, O2G has made over $2.2 million in small loans to 5,400 women micro-entrepreneurs in Guatemala and Nicaragua, positively impacting the lives of 27,000 people if we include family members.
Bob Brown, Founder & CEO Open to Grow
16 Windsor Crescent SW Calgary, Alberta Canada T2V 1V3 C.
403 804 1120