The business of business is business

By Thulile Khanyile: Scientist, Global Speaker and Co-Founder of Nka’Thuto EduPropeller

Ours is not a unique story. We cut salaries, retrenched, closed operations for a while and came close to quitting, which would have been tough, because the core of our existence is a societal problem that continues to fester. We learnt quickly that passion alone is not enough to keep the fire burning but equally dividends are not enough to keep the lights on traditional profit-generating businesses.

For-profit generating companies are positioned to make a considerable impact in growing society, but their main aim is to increase revenue for the benefit of their owners and shareholders. The social corporate initiatives (CSI) don’t come naturally and by choice. It would be interesting to see how many would continue with CSI in the absence of B-BBEE. On the contrary, NPOs generate revenue to support a mandate that seeks to benefit society and to pay its employees. The business functions of both forms of companies are the same.

NPOs, although often treated as the annoying beggar on the street, contribute significantly to curbing unemployment and opening great opportunities for growth through internships and other forms of work readiness as well as skills transfer. Interestingly, in my engagements with corporates the number of youths my NPO employs has mattered less than the number of points that contribute to the B-BBEE scorecard, let alone the thousands of beneficiaries in townships and rural communities impacted by the intervention.

This brings up the issue of the scorecard potentially driving compliance more than it does actual social impact. And bring about the question of alternative ways to ensure the functions of B-BBEE are met for their intended purpose.

NPOs should also play ball by questioning their positioning within the business world as more of an equal player, rather than the underdog. Being in the non-profit sector I have been on the receiving end of a CSI lead whose job it is to tell you that you won’t get the funds because the points on the B-BBEE scorecard have been filled. This is usually followed by a gentle smile and speech about how important the work you do is to growing society.

In some rare cases, this is followed by a compelling childhood story about how a technology- based program like Nka’Thuto Edu Propeller would have led them to become scientists or engineers. The “aha!” moment arrived all the way from HARPO studios to our door at this very moment. More than 30-million in revenue, measurable social impact, business structures and layers of compliance; and there was still something that we needed to learn. Something that we needed to do differently.

The critical revelation that got the NPO out of the quagmire it landed in due to the pandemic, was to move away from thinking and behaving as NPO leaders to thinking and operating as business leaders. What this meant for us specifically was not merely in the inclusion of business functions or social impact driven strategies, but more the strategies around diversifying revenue streams. NPOs must generate profit and divert it back into its social impact outcomes.

Convincing clients (potential donors) of the importance of your cause as a NPO is simply not going to cut it.  

The deliberate practice of operating as a business and thinking as one lead to additional strategies towards diversifying revenue streams. Not-for-profit businesses believe themselves to offer a solution to its affected beneficiaries while a better practice is to realise the defining value from the social impact solution and becoming the best at it. This opens opportunities to offer traditional businesses an alternative to allocating hours and resources to what is not their core function.

The truth is that most traditional for-profit businesses seldom have the desire to source and manage NPOs. Let alone the effort of rallying the troops to participate every Saturday in teaching rowdy high school learners’ mathematics and science or to paint yet another school on Mandela day. 

When NPOs operate from a position of value exchange through contractual arrangements as suppliers beyond CSI, it affords businesses the best of both worlds. This while contributing to meaningful social impact, adhering to the B-BBEE scorecard without being directly involved in rallying the troops. By partnering with a non-profit with its own troops, monitoring and evaluation systems, data analytics, healthy networks of volunteers, public relations content at a continuous stream and more, this can be achieved. It always seems weird to NPOs with limited budgets to prioritise the initiation of partnerships where costs are shared. In addition to enabling scale and impact this strategy offers great positioning and negotiation potential and should be considered by more organisations.  

In the United States NPOs emerged as the third highest employer in 2020. With a steady increase in NPOs globally and in South Africa alike, perhaps “big” business should start behaving differently. While millennials have enjoyed their salaries from multi-billion, multinational corporations, it seems Generation-Z finds less joy in contributing to the “Man” getting richer and find more pleasure and fulfilment in impacting social change or developing creative ways to dictate their own time.

Overtime, potentially in the not-so-distant future, with civic movements that rally behind social justice on the rise, the B-BBEE scorecard in the absence of real and meaningful impact may face some backlash from society. While NPOs have a role to play in elevating its operations and thinking from that of non-profit to business leader, “big” business may want to prioritise their strategies to social impact beyond compliance.