While ‘competition’ may be the central relationship in an economic system when it comes to financial capital, that really shouldn’t be the case when it comes to the social space. In the TC-P guest post below, Nabeel, the head of the Association for the Development of Pakistan’s (ADP) media team points towards the recent successful collaboration between ADP and EcoEnergy Finance as the perfect example of how collaboration in the social sector can pave the way for greater access to both financial and social capital.
One of the most common problems faced by any organization around the world, regardless of sector, is a lack of funding – a lack of capital. In turn, the most widely talked-about relationship in the economic system that centers around capital is competition. Competition is meant to spur innovation, yet the race for financial capital is frequently unimaginative, taking place within a zero-sum framework that assumes scarcity and that one’s gain is at the expense of the other.
However, the above holds true only when referring to financial capital. By shifting their focus on social capital, organizations can explore collaboration and work towards a win-win outcome, breaking out of the restrictions conferred by scarcity. This, however, necessitates a lens that sees the need for both financial and social capital, and embracing partnerships as a way to access capital.
This might seem obvious in retrospect, but it’s surprising how rare effective partnerships are in the nonprofit sector. There are thousands of NGOs working in Pakistan, often with overlapping missions and mandates (and sometimes even serving the same areas and communities), yet there is an almost criminal lack of collaboration in the nonprofit sector (Cahill 2011). By contrast, the organizations for whom such collaboration can indeed be a crime usually engage in it quite openly – some may call them cartels, but the more politically correct (and euphemistic) term is industry association.
First, some background. EcoEnergyFinance (EEF) is a recently established social enterprise that aims to provide rural villages with solar-powered lanterns, a cheap and sustainable source of renewable energy. EEF’s goals are to foster income generation for rural low-income communities (40% of villages do not have access to electricity, according to International Energy Agency), displace kerosene as an energy source, and combat climate change by providing a local renewable energy solution. They do this by recruiting and training entrepreneurs within the village to invest into solar lanterns.
The Association for the Development of Pakistan (ADP) is an engaged philanthropy organization that funds carefully selected small development initiatives in the country. In the nine years since it was formed, ADP has funded dozens of projects and disbursed around $750,000. Projects are screened using predetermined investment criteria and undergo rigorous due diligence before being granted funding, followed by monitoring and evaluation to ensure that outcomes are being met. ADP is distinguished by being run almost entirely by a dedicated and highly skilled group of volunteers around the globe.
Given these introductions, one might expect a project proposal submitted to ADP to be a request for funding – as every request invariably had been until now. But in the fall of 2011, Shazia Khan, executive director of EEF, approached Mubarik Imam, president of ADP, with an unusual request.
EEF needed ADP volunteers to provide management expertise and to accompany Jeremy Higgs, EEF’s Australian operations director in Pakistan, to field visits in rural Sindh. They had already received funding for their pilot, and needed to conduct two visits before December. Saad Halim and Hasan Saeed, both based in Karachi, duly stepped up.
“We learnt a lot from the first visit – a lot of our assumptions turned out to be wrong,” said Saad. He had developed a framework of needs to help calculate the demand for the lanterns in the villages. It turned out that while demand existed, there was no one in the village who could invest in the lanterns as an entrepreneur. The cost was Rs. 2,500, and the villagers could buy the lanterns in installments, but it had to be a group decision; no one took a loan until everyone pitched in.
Moreover, “the economic benefit was not clear…the expectations had been ruined.”
In each village, the residents were aware of solar power, but were not willing to pay for it – an NGO had distributed solar lanterns, of varying quality, for free after the 2010 floods. While EEF offered standard 9-LED lanterns, one of the donated lanterns shined with no less than 40 LEDs, and others were Chinese rechargeable models.
Another organization had electrified an entire village. With ‘free’ as the competing price, a traditional charity was finding more traction vis a vis the social enterprise. It was a sobering experience for the social entrepreneurs.
Nevertheless, Jeremy was full of praise for Saad: “He took a lot of initiative in getting to the villages and performing demonstrations – after our first discussion, he understood his job immediately and ran with it.”
Hasan Saeed was involved in a different capacity, helping to develop a training program for the entrepreneurs in the villages that were to be visited. He also helped with the procurement and designed the monitoring and evaluation with a baseline survey.
“We were learning a lot during the visits, and having volunteers who had been screened and had a sense of responsibility was really helpful,” said Jeremy.
There was indeed a lot going on during the visits. It was quickly apparent that the sales pitch needed to be refined, and identifying an entrepreneur turned out to be a huge challenge. EEF is now looking at developing partnerships before going into villages, harnessing the ability of grassroots organizations to mobilize communities and scale operations. Leveraging existing microfinance/livelihood programs wasn’t always the plan, and EEF has had to adapt their model through a number of internal discussions and meetings with organizations, trying to identify the value proposition.
In his blog post on the visit to Sujawal, Jeremy concluded, “If we’re to work in this area, we need a local partner.” While ADP is not quite that local partner, it has operated on the basis of such partnerships for years, which came in handy here.
Given that EEF has not launched a successful pilot yet, it might be tempting to conclude that working with ADP didn’t yield any particularly positive results. However, that misses the fact that working independently, it would have taken these organizations twice the time and energy to reach the current stage. More importantly, both organizations gained a lot of intangible knowledge about implementing renewable projects in a rural context.
So not only did this EcoEnergyFinance and Association for the Development of Pakistan partnership improve efficiency – it also enriched the human capital of both organizations and reinforced the social capital that is so critical to success.
Nabeel is the head of ADP’s Media team and the managing editor of SocialFinance.ca at the MaRS Centre for Impact Investing, and a project coordinator for the Tessellate Institute. He graduated from the Institute of Business Administration, Karachi and has studied public administration and leadership at Ryerson University, Toronto. He enjoys sports, photography, and staying busy.