Source: Saudi Nonprofit Trends Report.

GROWTH MARKET

Among the report’s findings is the discovery that the nonprofit sector has outstripped both government and non-oil private sectors to become Saudi Arabia’s fastest-growing contributor to GDP – though authors acknowledge this is from a low base. The sector has also outperformed the economy as a whole over the past five years, achieving an annual growth rate of 10.4 per cent. 

There are other bright spots, too. As the wider GCC has grappled with tightened economic growth and low oil prices, nonprofits have showed resilience by adding jobs at a faster pace than the private sector. Charities in the kingdom spend around SR253.2m ($67.5m) a year on wages, according to the report, spread across a 47,038-strong workforce. 

The field also brings a harder-to-measure value to Saudi’s social safety net. Through grassroots interventions – for example, tackling youth unemployment, skilling at-home workers, or promoting financial literacy – nonprofits can have ripple effects on the economy. Beyond direct employment, this contribution to the lives of ordinary citizens powers the country in indirect but important ways. 

Growth is a critical concern in the context of Saudi Arabia’s Vision 2030 plan, which requires the nonprofit sector to rack up an annual growth rate of between 31 and 39 per cent – up from a current 10.4 per cent – to meet its goal of generating 5 per cent of GDP. In the US,  where the field is professionalised, it represents 5.5 per cent. These targets are bold but galvanizing, says Princess Banderi.

“I would go as far as to say the targets have revolutionised the way the government views the sector,” she explains. “Nonprofits were previously seen as having limited potential but this confirms the sector as a viable conduit for change.” 

Source: Saudi Nonprofit Trends Report.

RETHINKING GIVING

The broader public has been slower to catch on. While the kingdom has a deep and well-established history of giving – the origins of the nonprofit sector can be traced back to the establishment of the National Emergency Medical Association in Makkah in 1935 – it traditionally operated largely on a model of charity. Much of the work consisted of providing handouts to those caught on the margins of Saudi society.

Over the past decade, KKF has led efforts to disrupt the nonprofit space: building capacity, focusing on results, and modelling evidence-based giving. But while nonprofits are now thinking beyond traditional charity, much of the population still isn’t. Many Saudis prefer to give directly to beneficiaries, believing that nonprofits fritter away funding on overheads. The report showed that respondents who donate give an average of $3,862 a year; however, only around a fifth is funnelled through nonprofit organisations. Sharing data is one way to tackle this image problem, says Princess Banderi, and to telegraph how nonprofits fuel social change.

“If we can quantify the impact nonprofit organisations have – if we can prove what the sector is doing on the ground in numbers – then we can make the argument that in order to deliver this, it requires infrastructure and qualified staff,” she explains. “As a sector, we need to pitch to the public as to the value we have. Why should they work with us? That’s a responsibility of every foundation and every nonprofit.”

The report found Saudi charities spend on average almost three-quarters of their income on aid and activities. Overheads account for 22 per cent of expenditures. Charities are funded mainly by benefactors – at 30 per cent, donations represent the lion’s share of income – and government support, which comes in at 27 per cent. This is broadly in line with the US, where a third of charitable funding comes from the goverment. In the UK, it is 34 per cent.
Among foundations, 64 per cent of their income goes to fund programmes and grants, with operational costs at 36 per cent. The average annual budget stands at $11.9m, but some 40 per cent of foundations polled warned they expected this to fall sharply in the future.

Source: Saudi Nonprofit Trends Report.

shaping society

The field is ahead of the social curve in other ways too. As the government redoubles efforts to draw women into the workforce, nonprofits have led from the front on equal opportunities. Women hold almost 43 per cent of jobs in the nonprofit workforce, higher than any other sector. In the corporate sphere, their share is less than 15 per cent.

Perhaps more surprising, however, is the finding that nonprofit jobs typically pay higher salaries, and offer shorter working hours than those in the private sector. The third space is rarely seen as a viable career option for Saudi youth, who favour public, and then private sector jobs. Leveraging this advantage could help nonprofits step up their game in recruiting bright young employees.

“We need to lay out the value proposition for joining the sector. That means talking about wages and talking about working hours,” says Princess Banderi. “Now that we have this information – because it’s previously been a challenge to source it – we can help young talent to see this as a viable sector.” A further boost would be the launch of courses at universities in nonprofit management and philanthropic studies, to cultivate a new generation of strategy-orientated sector experts.

Another priority is to shift the dial on volunteering. An estimated 11,000 Saudis donate 100 hours of their time each year to doing good, and by 2030, the government hopes to swell their ranks to 1 million. Meeting this target would spark a wholesale shift in the kingdom’s giving culture, believes Princess Banderi, by encouraging widespread community involvement in social welfare. And perhaps the fastest way to achieve it is by placing social action at the heart of the education system.

“When you have that culture of volunteering your time it has this ripple effect of encouraging people to actually physically participate, rather than just giving money,” she says. “The 1 million volunteers is a huge number to meet, but it’s doable if we create proper volunteering systems within schools and universities.”

Philanthropy is already woven into the social fabric of the country, she notes. “The inclination to give is there – it’s just a question of motivating it correctly.”

The road ahead

Unlocking the full potential of the nonprofit space – and opening up new avenues for innovation – demands cross-sector support. The report recommends the structuring of an independent commission able to sharpen governance, organisation and reporting among nonprofits – and to corral support from businesses and state entities to advance their cause. (The sector is currently overseen by the Ministry of Labour and Social Development.) Better tracking of the sector’s economic clout – in job creation, social spending, and in advancing Saudi Arabia’s national goals – would also help position nonprofits as key partners in social change.

“It would help with the argument that the government doesn’t need to be the only implementing body,” says Princess Banderi. “It would show nonprofits can and do have impact.” A change in corporations’ CSR and funding policies could also, she believes, give the sector impetus to professionalise. As donors, businesses could play a leading role in encouraging better impact reporting and transparency from nonprofit organisations.

“Nonprofits follow the money,” she notes. “If the corporate sector was more responsible in its giving, I think that would very quickly affect the behaviour of nonprofits in a positive way.”

Most of all, however, it is down to nonprofit organisations themselves to get their houses in order. According to the report, this includes revamping their goals, programmes and activities to align with Saudi’s Vision 2030 roadmap and focusing on outcomes over outputs. Above all, it means delivering results that will both meet urgent needs, and be sustainable for the long term. “We need to challenge ourselves to step forward, make a difference and hold ourselves accountable to the impact that we’re having,” argues Princess Banderi. “Organisations also need to think more about how they invest, or how they achieve sustainability. Any organisation that depends on fundraising is at the mercy of the economy, the mood and donor trends.”

In Saudi Arabia’s rapidly changing landscape, the nonprofit sector has a prime opportunity to raise its profile, expand its reach and to be recognised as a pivotal cog in the diversifying economy. This represents a new chapter for the sector: and one that will have benefits for Saudi society for generations to come.

“This is what is exciting: we’re in a period of change, and I feel the future is bright,” says Princess Banderi. “We have a lot of catching up to do. For years, government and the private sector have received a lot of attention, and nonprofits have only really been on the radar for the past two years. So we may be starting from behind, but we’re running as fast as we can.” — PA