Long-term solutions for the needyOnce associated with simple acts of charity, cooperate social responsibility (CSR) has evolved to embrace philanthropy. Although both notions involve voluntary contributions, in a CSR context, they are very different. Whereas charity is as an expression of altruism, philanthropy possesses organizational and strategic characteristics and aims at improving the welfare and development of society. Giving pocket change to a homeless person is charity. Building a school in a decaying neighborhood is philanthropy.
More and more nonprofit organizations (NPO) are recognizing the distinction between charity and philanthropy, and focusing on the latter. This adds a qualitative dimension to their giving. If the competitiveness theory of Michael Treacy, a former MIT management professor and leading expert on improving business performance, is applied, we can find successful cases of NPOs from process, service and clientele perspectives.
Aravind Eye Care System in India exemplifies a process innovation by an NPO. It is a new breed of medical care, using the money from those who can afford to pay to provide care for those who cannot. Dr. Govindappa Venkataswamy, the founder of Aravind Eye Care System, saw many impoverished people lose their eye sight while he was working at Madhuri Hospital in southern India.
After agonizing over how to provide free medical services to more people, the ophthalmologist found the answer at McDonald’s during a trip to the United States. Watching how the fast food chain mass produced hamburgers at a low cost with a standardized system inspired him to adopt the same approach to provide efficient eye care. For example, preparatory and surgical procedures were standardized, with surgeons only present when needed.
This allowed one team to conduct multiple operations simultaneously, reducing costs significantly. In 2011, Aravind Eye Care System provided free treatment to 1.2 million people, a staggering 48 percent of its patients. It is now the world’s largest eye care system with 10 hospitals, research institutes, educational institutes and eye banks.
The Bangladesh Rural Advancement Committee (Brac) is the largest non-government organization (NGO) in the world in terms of the number of employees and the number of people that it assists. In addition to working in all corners of Bangladesh, the organization operates in other Asia and Africa countries. It’s an example of service differentiation.
Hasan Abed, a former Shell Oil executive, returned to newly independent Bangladesh in 1972, and saw massive destruction from civil war and millions of displaced people. He founded Brac to restore living conditions with stress on the long-term welfare of women and children.
Believing that the most fundamental way to rebuild the country was through education, Abed started numerous educational programs. At the time, schools in rural areas of Bangladesh were few and far between. Moreover, many children did not attend classes during planting and harvesting seasons. In light of these unfortunate truths, Abed established “one-room schools” in rural villages and adjusted class schedules according to farming schedules, making education more accessible to children in the countryside.
Brac also has added health care and rural development to its concerns. The organization is largely self-funded with several enterprises. Brac’s job training for women in developing countries and distribution channels for the goods they later make receive particular praise.
Thanks to its management methods, which are based on the understanding of poverty and providing solutions that are in tune with the needs of a particular area, Brac became the most influential NGO of the world’s 100 largest NGOs in 2013. Now many NGOs around the world are using Brac as a role model.
Grameen Bank, a Nobel Peace Prize-winning institution founded in Bangladesh, is noted for its approach to client relationships. Those living in extreme poverty can improve their livelihood, housing, education opportunities for their children and other daily conditions by obtaining small, unsecured loans from the bank.
The micro-financing is extended to groups of five and the bank relies on peer pressure to ensure the borrowers use the funding appropriately and repay the loan. Furthermore, team members are asked to abide by the bank’s 16 clauses which are mostly unrelated to repaying the principal and interest such as prioritizing children’s education and building a bathroom to improve hygiene conditions. The bank also actively establishes client networks to resolve the problems of the poor from diverse fronts.
Bangladesh is a Muslim society, where gender equality is not the norm. Nevertheless, Grameen Bank extends its lending to women. These women thus have a way to secure economic independence and many have used the micro-loans to escape domestic violence.
As in the aforementioned cases, systematic efforts and corporate management techniques and know-how are vital for the successful realization of humanitarian ideals by NPOs.
However, when striving from greater efficiency, NPOs must be careful not to damage their mission or benevolent spirit. And, rather than looking for short-term or temporary solutions, continuous long-term investments in all sense of the term are needed to find fundamental solutions to resolve the challenges facing those in need.
* The author is research fellow at Samsung Economic Research Institute.
by Hong Hyun-min