Mergers may help Arab nonprofits boost impact

Increased competition for funding dollars may see more organisations pool resources and shut poorly-performing ventures

 

Arab non-profits seeking to shift towards a more business-led model may need to consider mergers as a means to slash costs, expand their reach and increase effectiveness. With growing demand for donor dollars, organisations may also adopt sunset clauses to weed out poorly performing ventures and maximise the impact of their funding.

“We should see more mergers in the sector,” said Bathylle Missika, deputy head of the OECD’s development centre. “Philanthropic organisations should work together more, but ego and branding gets in the way. In an ideal world, we should also close bad [organisations]. Its incorrect to think that doing good is necessarily generating good. You can do harm.”

Non-profits are often reluctant to merge, for fear of alienating donors and employees. In Europe and the US, however, increased competition for a declining supply of funding has pushed a number of organisations to pool their resources. Efforts to foster more business-minded philanthropy have gone hand-in-hand with the adoption of corporate restructuring tools, such as acquisitions, cutbacks and closures.

“Charter schools in the US are a case in point,” said Hassan Al-Damluji, head of Middle East relations at the Bill & Melinda Gates Foundation. “These charities run independent schools. But if one of them fails, they can be shut down and handed to another charity.”

Tracking how funding is being used and its impact is critical to ensuring effective philanthropy, but is also a difficult and time-consuming process, he added.

“The essential problem is that the job is to lose money. How do you know if you’re losing too much? Or if you’re not being successful in losing money? We can’t continue forever losing money badly as opposed to losing money well.”

The comments came during the Emirates Foundation Philanthropy Summit 2013, a two-day event in Abu Dhabi, which examined a shift in the non-profit sector towards more business-based thinking, and the effective use of funds. Experts from leading philanthropic organisations took part in a panel discussion that debated the transition to so-called venture philanthropy, and the rise of social entrepreneurship in the Arab world.

"If foundations aren't delivering more than the public sector, we should let public sector get on with it," said Clare Woodcraft, CEO of the Abu Dhabi-based Emirates Foundation.