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Funding Your Social Impact Organisation Beyond Donations: 6 Steps To sustainable funding

Introduction

As an organisation, relying purely on donations can be a roadblock to growth and development, hindering the progress and impact you have.

This guide illustrates the steps involved in transitioning from a donation-based non-profit organisation to a social enterprise and service provider, using the Retrade project as a case study. They are a community-based recycling and social empowerment non-profit turned social enterprise, which strives to restore dignity to marginalised communities while imparting sustainable stewardship practices. Success has been demonstrated in the expansion of their services through strategic partnerships, effective communication and unwavering values.

Why transition from a non-profit to a social enterprise?

Transitioning from a non-profit organisation to a social enterprise can increase the possible benefit to beneficiaries. Services can be offered at less cost to the organisation itself as costs are funded as part of the model. For the Retrade Project, this has given freedom for expansion and growth. Beyond freedom, this transition adds value and pride behind what the organisation does, feeling as though they have gained a status level in being able to name themselves an NGO as well as a social enterprise.

The origins of the Retrade project as a non-profit

The Retrade project was born out of creating a charity space in the South African city of Port Elizabeth. Their origin stems from a church facility where Maria Grewar, co-founder and director of the Retrade project would organise handouts for those in the community who were in need. Church members would provide food donations, allowing some of the city’s most marginalised individuals to gain essential products. The issue with this model was that it led to dependency, as the same people were relying on these resources without being given an opportunity to escape their current financial positions and gain independence.

This led to a total transformation in the project’s arrangement, with the Retrade project’s co-founders identifying one commodity that everyone has at their disposal: waste. They saw a clear gap in the country’s environmental management scheme, with only 10% of waste being recycled and 90% of an estimated 59 million tonnes of South Africa’s general waste ending up in landfills. Despite the benefits and need for recycling, studies report that as little as 5.2% of households recycled waste in 2015. By replacing money with the concept of recycling and waste, community members could exchange waste for food, removing a key economic struggle for underprivileged community members.

Leveraging Corporate Social Responsibility

The focus on social responsibility was pivotal for this transition from giving hand-outs, to a point where communities can gain skills and truly take on the work ethic of a job. This is a core principle of the Retrade project, restoring dignity to people, who in South Africa’s job scarce environment may struggle to obtain entry-level jobs without qualifications. The organisation’s trading program is aimed at underprivileged communities and those who are unable to provide for their families. While the organisation initially relied heavily on church donations, need quickly translated to the rest of the city, so people would drop off their recycling in aid of the cause. For those who offered their waste but were not involved in the trading programme, the organisation could begin to make a profit. More recycling exchanged results in more income received, allowing more food to be put on the shelves.

While the Retrade project is very aware that they are not the only recycling service in Port Elizabeth, the niche they occupy is a twofold goal of social and environmental impact. Balancing these two missions has presented some challenges, however these two goals are synergetic, allowing them to engage children, students, middle-class working adults and older people. They believe their projects challenge societal barriers such as class, gender and education, beginning to target the core theme of injustice. Particularly in South Africa where historic inequalities are still very much a modern reality, the Retrade project has dignity and equality at their firmly fixed core.

Developing a model for impact

The model of the Retrade Project is designed around not just giving but also having a strength-based perspective of underprivileged communities, highlighting three key points, people, time and waste. This mindset shares similarities with the theoretical framework of asset-based community development, trying to reframe what you have in a community as valuable. One issue they have observed with the asset-based approach is that it doesn’t always recognise that politics are bigger than people. While the model can be useful from an organisation perspective, it can be difficult on an individual level as it doesn’t always consider the complex socio-economic backgrounds of individuals, particularly in South Africa where tensions over privilege must be acknowledged.

Their approach also aligns with systems theory, viewing each person functioning in their specific environment, recognising the interrelations and value of social systems on environmental impact. Reaching beyond theory and adapting models to suits their organisation has allowed the Retrade project to become a social enterprise that builds and invests in people regardless of their social economic background. This is where trial and error have been valuable in allowing the organisation to be relevant to their own specific context, learning how to communicate in their own city and within communities.

In developing an impact model, they continually return to their core value set of restoring dignity and pride, while promoting compassion and sustainable stewardship. While transitioning towards a social enterprise, at each step they constantly question:

“Why do we do what we do? How do we make it better? How can we strive for excellence in what we do?”

Transitioning towards a social enterprise

The Retrade project present themselves as the story of a start-up that began as a charity and found their worth along the way. In the last 2 to 3 years they have transitioned into the position of being a social enterprise, beyond purely a non-profit charity.

1. Registering as a non-profit company

Starting out from a small pantry sized room, they have strived over the last 6 years to ensure quality, initially not wanting to grow so large that they would be overwhelmed. This allowed them to benefit around 30 families a week, not just targeting individuals, but also assisting whole families.

An early strategic decision was to register as a non-profit company instead of a non-profit organisation, which in South Africa allowed them to run the non-profit as a business as opposed to declaring it as a non-profit organisation for the purposes of community. This allowed them to make decisions more freely in a similar way to a business, compared to the relative restrictions of a non-profit charity. Their core missions and constitutions were still based on the accountability structure of a non-profit, but they could simultaneously develop a model for business. This has been a crucial choice for which they started to take action in the last two years.

2. Spreading the word

The core values of worth and dignity, align with accountability, allowing the Retrade project to clearly communicate the benefit they offer to communities and other companies. This led them to place emphasis and effort into social media and marketing, at which point they noticed a mind-shift, as people identified their services as excellent. Developing a professional and comprehensive website also later became key in entering the competition global competition of social enterprise. They saw the value of communicating their actions, and it was then that people really started to take notice of their work.

This allowed them to expand their reach to banks and organisations that couldn’t always offer help but wanted to become involved, running employee days, beach clean ups and food drives. The Retrade project was beginning to offer dynamic services as well as their initial activities in waste collection, education and food provisions. As their vision grew over time, a volunteer program was also created where anyone in the community can come and volunteer their time to work with the traders, assisting in sorting recycling and involving an educational and physical exchange.

4. Finding donors

Stakeholders have always been important to the Retrade project as they rely on the community in donations for the store and also donations for waste. However, they started to realise the importance of larger donors that believed in the value of their project and would allow them to build the organisation. They took note of other organisations that they admired, considering different marketing principles and funding routes. Suddenly, reporting, monitoring and evaluation became incredibly important, even though at this point there were no large corporate donors. This allowed them to move forward with a trial and error experience in a safe environment.

Fundraising was then more focused towards development as opposed to fundraising for direct food donations. This was valuable in developing self-confidence in the impact that they were making. By strategically investing the money into development, this would allow them to expand their services beyond what the money would have done if it were purely used for food provisioning.

3. Making a profit

The Retrade project undertook a mind-set change and expansion of their vision as companies started to invest in the organisation. They set their attention upon acting as a social enterprise and understanding how they could make a profit.

There came a point in 2018 where they knew they were reaching capacity and needed to grow, beginning to fundraise for a new building. This growth would involve building a green community centre which allows them to take more waste, provide more training opportunities and expand their services. 

Throughout this process they began to create building plans and calculate costs, whilst continually investing in their marketing strategy and the ways in which they communicated their actions. Finding funders that gave them space to learn and grow was key, as being an organisation with a small team provides less access to the resources of large corporations. Having a small, all-female team is rare in the African non-profit world, and this has been part of their journey. As a young team they feel as though they have not always been taken seriously in the business world, however, their age allows them to bring energy and new perspectives, benefiting the organisation. They now realise there is a constant need to trial, fail and start again, documenting their journey along the way. Reflecting on their actions has also been valuable, appreciating how important it is for mentors to invest in their process, thus increasing the impact space they can occupy.

5. Attracting Corporate Partners

The team began developing a logic model of how they could strategically progress whilst maintaining their core focus of providing skills and essential products for less privileged community members. The need to continuously measure impact and the funding they have available, has been critical in allowing them to utilise their resources and communicate with donors. 

A mindset shift continued as they began to view the services they could offer as being valuable, in the same way they view waste as being valuable. They could offer their services in exchange for funds. This began the process of redefining the Retrade project as a social enterprise and business, including being able to start paying the team for their work. Generosity is still the focal point throughout the project, but they can now view funding and financial investment differently.

The last two years have marked a transition towards more corporate social investment opportunities. They are now moving into the space of packaging their services to be able to present and partner with organisations. Having a sustainable income has allowed them to continue operations and management on the ground, whilst also providing the opportunity to scale and grow. This would not be possible without financial backing. With the funding they have gained, they have been able to trial a number of initiatives whilst still achieving their core mission of providing food for communities. They have benefited most from funders who haven’t been strict or rigid, giving room for growth and learning opportunities.

Starting to make a profit allowed them to maintain sustainable business and progress, avoiding falling prey to the conclusion of many charitable organisations that rely purely on giving, resulting in a larger output than input. Sustainability has always been a key aspect of the organisation; however, its focus has developed with the growth of the Retrade project. Not only are their environmental goals sustainable, but also the operational management and business model which allow the organisation to act independently and respond to changes.

6. Planning strategically: Future partnerships and post-Covid development

The current funding scheme is relatively equally balanced between donations and corporate partnerships. Consistent food donations from individuals allow them to restock their shelves, while the operational costs which are kept as low as possible, are largely funded from corporate investments.

The corporate social responsibility aspect of the organisation has allowed them to host various events, however, these have tended to be one-off collaborations. This is the point at which they began to rethink the way that they offered their services, being driven to develop long lasting corporate partnerships. Navigating sustainable partnerships in a post-Covid environment is one of their next steps as they view this as an increasingly important aspect of their organisation. Durable partnerships would place them in a better position to continually offer their services, whilst corporations can meet social responsibility targets and feel that they are getting value from that investment.

During the Covid-19 crisis, they haven’t been able to trade recycling for almost two months, meaning no income from waste. Corporate investment will now become critical, making the service provisioning aspect of their enterprise key to maintaining operations. They are currently looking to packaging their services for local businesses and organisations that want to be a part of the community they are rebuilding, whilst also offering services back to them. This could include hosting webinars and podcasts, or assistance in streamlining their waste management, By incorporating technology, as with their latest pitch of running a podcast about environmental issues, they hope to grow into new areas of need.

Success stories from the Retrade project

By telling the stories of individuals, the Retrade project spreads it’s message further, showing the true impact of their work. From a business perspective, they have coordinated with a wide range of unlikely partners, from automobile businesses and large banks, to dentist practices donating their recycling. This demonstrates the importance of effective communication during all steps of their development, allowing them to expand their potential for collaboration.

In contrast, around 90% of their traders hear about the organisation from other beneficiaries through word of mouth. The Retrade project does little marketing in the underprivileged communities as word about the project spreads quickly, revealing the impact it is making on individuals and at a community level.

Throughout the programme, traders can become inventive and innovative with the way they collect waste, with some building their own carts to carry more waste, thus accumulating more points for food. Some traders have even started saving their points, showing financial literacy and allowing individuals to take ownership over what they do. In one case, saving 1500 points for a bike presented friendly competition and illustrated how this bartering system truly can work, as traders learn important skills throughout the process. While the Retrade project hope to expand and reach more communities, they are set on maintaining their core values and principles which focus on the impact they have on each individual.

Key takeaways

The Retrade project has succeeded by developing a model that fits their growth, with trial and error being key to opening possibilities for business development. When considering how to fund a start-up or new enterprise, a business model that is not carefully considered is not a sustainable business, it’s a one-off project. So, finding donors who believe in their organisation has allowed the Retrade project to grow and expand its reaches.

Co-founder and project manager Jessica Ronaasen states

“If you have an idea, there is no shame in trying, nor is there shame in failing and trying again”. 

Learning from others in the social impact space is critical. Cultivating a learning environment, where leaders are willing to share their experiences, whilst being prepared to ask for help. Finding people who are making movement in your sector and networking with other businesses is key to growth for non-profits, building financial and non-financial partnerships. Coaching and mentorship can also be crucial for transitions and mind shifts. For the Retrade project, they have gained most when partners have allowed them to trial new approaches and strategically utilize the strengths within their team, whilst also offering advice and guidance.

Further resources

Advice for non-profits in South Africa by the African Institute for Advancement

Step by step guide to successful impact partnerships

A historical review of waste management and recycling in South Africa

South Africa’s National Recycling Forum

For information on the plastics industry in South Africa: Plastics South Africa

Eastern Cape (South Africa) Department of Economic Development and Environmental Affairs and Tourism

The Retrade project podcast