Think like a business, nonprofits told

Nonprofits can boost trust from donors and the public by measuring impact and sharing results

Better governance is key to improving effectiveness in the philanthropic sector, but also to boosting regular, predictable and long-term funding, an industry summit was told on Tuesday.

Nonprofit organisations can foster trust from donors and the wider public by applying business principles, such as measuring impact and sharing results, said Badr Jafar, CEO of UAE-based Crescent Enterprises.

“Blind faith should not govern giving,” said Jafar, adding that it is better to tell money where to go, rather than ask where it went. Good governance can “give you, employees and investors greater confidence that every dollar invested, every hour spent, is generating the right kind of impact”, he said.

The founder of the Pearl Initiative, a business network that aims to promote transparency and accountability in firms in the Gulf, was speaking at the third annual Emirates Foundation Youth Philanthropy Summit 2015 in the UAE.

His comments come as public trust in the charitable sector is under pressure. Global trust in NGOs fell from 66 per cent to 60 per cent in the last year, according to an Edelman Trust Barometer.

Sound business metrics can benefit foundations and charities, but talk about doing this is often greater than putting it into practice. According to a Stanford University study, some 42 per cent of surveyed nonprofit directors said their organisations don’t have an audit committee and two-thirds admitted that the nonprofit doesn’t evaluate its performance, said Jafar.

“The truth is better governance can maximise the impact of your investments and make any organisation, from multinational to local foundations, more successfully, sustainable and scalable over time,” said Jafar.

One approach to improving the way NGOs and nonprofits work is through recruiting talented individuals. But bright recruits can be deterred by the low salaries on offer when compared to the corporate world, fewer development opportunities, the lack of prestige and lack of mobility between the private and nonprofit sectors, said Hassan Al-Damluji, head of Middle East relations for the Bill and Melinda Gates Foundation. The philanthropic sector needs to “lift its reputation”, he said, to compete with blue-chip firms for top employees.

In the Gulf region, state largesse and the dominance of well-paid public sector jobs is also a factor in the difficulty of getting well-qualified people to pursue a career in the third space. Young people in Saudi Arabia are “not desperate enough to take the job”, said Princess Banderi director general of the Saudi-based King Khalid Foundation, despite the kingdom’s high youth unemployment rate.

“It’s been challenging to find and recruit talent,” she said. “We have high turnover especially when it comes to programme management [positions].”

Still, businesses have not always covered themselves in glory and philanthropy must also learn to avoid businesses’ flaws such as corruption and bribery, warned Jafar.

The Pearl Initiative will launch a new programme to promote better standards of governance in the nonprofit sector early next year, he announced. The platform will also seek to improve cross-industry cooperation between business and philanthropy.

Photo credit: Emirates Foundation