This article first appeared in the Pretoria News on 24 May, 2018.
When Sandton looks at Diepsloot and Waterkloof at Mamelodi, it is quite clear that there is a need for investment into, and development of, the informal entrepreneur, the black business, the micro-enterprise. It is clear that we need enterprise development.
For many corporate managers, the reason to invest in enterprise development is that there are incentives from the government to do so. Corporate social investment is not an option — it is an obligation if they wish to improve their B-BBEE scorecard.
Unfortunately, the motivation behind entrusting nonprofit organisations (NPOs) with the enterprise development funding often lacks insight into the true impact it can make. While many NPOs are entrusted with the enterprise development budgets of companies and corporations each year, there is room for understanding why NPOs make good facilitation partners and how to optimise this partnership.
When the decision-makers in companies and corporations grasp that they have the opportunity to be instrumental in real transformation — the opportunity to make a difference in the lives of desperately underprivileged South Africans — a better partnership will develop.
NPOs work at grass-roots level. They usually have access to actual beneficiaries and they have made it their (non-profit) business to help, to lift up and to change the world. They usually do this at a very low cost to the funding budget. Considering that a funding grant to a non-profit organisation is not income, but a liability, it becomes clear that there is also a great potential for pitfalls.
The NPO that places itself between a benefactor and a beneficiary, promising to provide a service that the benefactor would like to see performed on its own behalf, becomes liable to that benefactor and remains such, until the service is performed, the report is submitted and signed off, the photos are published and the beneficiary is seen to have truly benefited.
However, with all the best intentions, the challenges are legion. Developing an informal trader into a self-sufficient entrepreneur can be a messy business. Most successful entrepreneurs have a few disasters in their portfolio.
Even healthy enterprises fail. Even more so a novice entrepreneur. It takes years for an enterprise to begin to flourish, and not every enterprise wil flourish.
NPOs are often left with the liability of a large grant to manage, paired witt inexperienced, potential entrepreneur with unreasonable expectations. At th end of each funding cycle, or sometime even at the onset, the funder wishes to have a portfolio of evidence that everything will go well.
Corporations should look at their funding habits and ask NPOs how they could be more responsible or more help ful giving partners.
Without this commitment, enterprise development will remain a vague hope.