An NGO’s business model

In June 2005, I went for a month long internship at an NGO called Pradan. Pradan works towards enabling livelihoods of rural people and are active in several states such as Chattisgarh and Jharkhand. I happened to be in Jharkhand, shuttling between the towns of Chaibasa and Hatgamharia (yes, they exist, and you get awesome Papri Chaat in the former).

My intentions of undertaking this exercise was to see first hand what village life was like (and as per my friends – they were seeing first hand what resume building was like – though agree that there is some truth to the latter). Anyway, while my misadventures in that place were many, this post isn’t about those. This post is about what I felt is a dichotomy between what NGOs are trying to achieve and how they are being enabled thus.

An NGO, especially one like Pradan, not considering the ones involving themselves in unethical practices, largely operate this way: They get funds from external bodies both national and international (such as AID, Red Cross etc) which they in turn use to carry out development work. Thus typically, you would have a ‘sales force’ for an NGO who is selling all these bodies the idea that they can put their money to better use.

As a result, they are inevitably dependent on such organisations for all their needs. My question is – why ? NGOs create immense value. I remember I was shocked to see the sheer amount of work that professionals at Pradan do. They wake up at 6:30 in the morning are off to faraway tribal areas accessible through the worst possible roads and are at work till as late as 8:00 in the evening. And this is done on rickety bikes with insufficient nutrition notwithstanding a scorching sun or pouring rain. A man such as myself who never woke up before 10:30 when at IIT (and that was early by the way) had to wake up at 7:00 and do the same (but I think it was the food bit I rued the most). Yet what do they earn? A measly 5000 bucks a month – and this is for the NGOs which pay well.

Obviously, working for a NGO does not figure in the key career choices for most of our qualified youth.

What NGO’s need is to reinvent their business model. One example could obviously be that they could operate on a profit sharing model, however, villagers earn too little to start with, so sharing that with an NGO is a faraway and impractical dream. Yet that could not be the only solution. Someone needs to come up with a better business model, which rewards NGOs for the value that they are creating.

I had thought about this long ago, but could not come up with any potential answer. I recently came across a for profit company who has developed their business model around the needs of the rural Indian population called Drishtee (featured here). It was founded in 2000, and they operate this way: They set up Internet kiosks in rural areas operated by some villagers themselves. The kiosks cater to the rest of the village population which pays a small fee to use the services of the kiosks. Drishtee takes a small percentage of that fee.

While Drishtee is not involved in development the way NGOs are, they have a sustainable business model, and their activities will affect the rural areas they are working with in a positive manner.

Thus ends this post with me sitting here thinking about, and hoping for innovation in the NGO sector.

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14 thoughts on “An NGO’s business model

  1. Rana says:

    dude, as for as i know, any privately held concern is a Non Government Organization
    They are profitable, and they pay well.

    I’d rather join a “lets rub sun-tan on the backs of those poor biyatches backs and save them from skin cancer on Miami beach” kind of an NGO

    I suggest the NGOs like pradhan start encouraging opium farming to generate revenues (or get cheap labor in form of addicts).

    On a serious note, some NGOs do pay well. I have a friend who;s mom is the director of one such NGO, and has an official car too

  2. Ashwani says:

    Humpph.. I guess the fact remains that all NGOs work on philanthropic endorwments. BUT according to me this is not sustainable at all. Just what development has happened in the villages with the NGO effort in lets say the last 50 years? The feedback that I gave to these people (to NFI, i mean) was that even 500 years of NGO work is not enough to address these issues.
    There is another aspect to it – the attitude of the villagers. They live in the mindset that whatever effort for our upliftment has to be done, has to be done by someone else (NGOs/Govt etc.) I think more then spending money on these villages the NGOs should work with a mindset to prepare these people to be responsible for their own development.

  3. Hi there!

    I am an ex-PRADANite from PRADAN Block Sironj, District Vidisha (MP). Nice to see another blog reporting about PRADAN and its work.

    Well, you are right in your observations about the work conditions prevailing at the grassroots. The two years that I spent working in PRADAN were challenging and sometimes rough to withstand. I used to earn 2.5 times less than what I earn today in another international NGO in Delhi.

    But I can tell you one thing with 100% confidence, that the satisfaction of doing something worth living that I used to get in PRADAN is not there in any other job. But for my deterioating health and some pressing family and personal reasons, I would have worked there for another couple of years.

    Even after working for a considerably short time (2 years) I am proud of working for PRADAN as when I retrospect about my life so far, that is the only phase in which I recall myself doing something worth appreciation. In my opinion, every young Indian should work at least for 1-2 years in a sincere, sensitive and honest NGO like PRADAN that gives you a chance to work for the poorest compatriots and changes your attitude forever about the country and its problems. It is same as working in the armed forces for a short service commission.

    About the business plan of an NGO, in my opinion, the NGOs in India in their current form can perform the role of devising models of development and demonstrate their effectiveness. Beyond this their resources are not enough to scale a successful model on the national sclae, so they should be (ideally) taken up by either the goverment, or the market forces in form of a business model. However, government has its own shortcomings and the companies are busy milking the urban markets right now. However, in some years when the urban markets would saturate, such a scenario where the corporates would turn their attention to the rural business models is not far. In fact some of the companies like ITC, ICICI, ABN AMRO and Reliance have already embarked on such initiatives. How it would make or break the rural development in next few years is something that would be interesting to see !

    With best regards

    Prashant

    • vinod shinde says:

      Respected sir

      I am student of mumbai university. currantly i am doing a study on what is NGO, what work he is doing for people and how it is helpful to us. shall i discuss more with to you sir. because you are already work in one of best NGO in india.

      Thanking you sir

      Not compulsory
      if you are interested to give information on how it is actually work for people it is helpful to me and my friends.

  4. Ashish says:

    Hi Prashant, great to meet another PRADANite. I qualify too, considering I was one for 5 weeks – and it was great. I think the possibility of finding synergies between NGO’s and corporates is a good suggestion.

  5. Hiya, Fantastic post. One of my clients is aiming to become involved in schemes to improve the lives of people around the world. I think I’ll show this to her.

  6. Ashish says:

    Hi Bridget. Thanks. Let me know if I can help in anyway.

  7. Sanjeev Kumar says:

    I think what NGO’s like Pradhan are doing is great and appreciable. However I am also concerned about the fact that many of us think that even many years of their work will not result in rural development.

    I am of the opinion that NGOs should not play a supporting or helping hand role, they must change the perception of their role to bring about a major change. They must look at themselves as someone who generate and deliver ideas to help our people to generate revenue on their own to make these models sustainable.

    I would be willing to work for an organization like Pradhan towards this endeavor and would need help to know whom should I approach.

    Regards

    Sanjeev Kumar

  8. Ashish says:

    Hi Sanjeev,

    I think you will find the relevant info on http://www.pradan.net/

  9. hey came across your article. its indeed highly appreciable. can you send me a proper business structure for an Ngo that works for Anti trafficking.Or a business plan related to organic food business?? thanx for noticing my message else its ok.

  10. B.L. Sukhwal says:

    I am searching for pioneer NGOs working on sustainable agriculture development in western Rajasthan like Udaipur, Chittorgarh, Rajsamand and Bhilwar district. fund will be provided by Hindustan zinc ltd. If you have any information please let us know the name and addressess.

  11. Ashish says:

    Mr. Sukhwal, if I come across any – I will definitely pass on the details to you.

  12. Gauri says:

    Hi Ashish ,

    I am trying to get involved in a similar venture and would love your views on the same. Is there an email address I can contact you on .
    Thanks

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