Many organizations do not seek to generate revenue to enhance sustainability, often because they do not innovate any new ways to generate profit to secure sustainability. Lessons may be drawn from the experience of grant institutions with microloans that can be applied to the current trend. If social projects are the latest tool in poverty reduction programs, a fundamental concern arises regarding the role of the public sector and its direct impact on combating poverty through the promotion of sustainable entrepreneurship.
This leads us to question the ability of the public sector, which may participate as a grant-giving institution, to advise and master ways to invest in a social project if it operates within a different model, at a time when social projects represent a newer set of institutions that do not fall within the framework of the traditional public or private sectors, nor do they primarily rely on fundraising, as they provide a good or service that transforms the social value of that good or service into monetary value.
Social projects embody both economic and social standards. By definition, fundraising cannot be the primary engine for the social project because the good or service it offers is costly, and its concept of success is linked to sustainability. For example, some non-profit organizations address a gap in health services by collecting a database supporting some efforts to enhance health activities, such as blood donor data, and these organizations revive activities and sell tickets to raise funds, but they are not fully profit-making organizations; they seek to receive financial donations. Thus, the pursuit of financial independence continues, which imposes limits on how these organizations can expand; this is a fundamental aspect of entrepreneurship.
Some of these organizations have developed strategies to help startups generate their own revenue. One suggestion in this area is to utilize the hidden talent base within informal economies and leverage the candidate who wins funding to achieve that, as the workforce in the informal economy could be a potential partner for social entrepreneurs in selling goods and services through creative collaboration.
The strengths of these organizations lie in their ability to secure financial resources and access to excellent technical expertise, relying more on institutional expertise than on local non-profit organizations leading the effort in their countries, which is a primary point of criticism of governance improvement-oriented approaches. The poorly constructed international community approach to the concept of social projects reminds us of the previous pitfalls witnessed during the microloan wave in the late nineties, when donors and governments invested huge amounts of money into microloan institutions expecting high returns.
Thus, based on lessons learned from the microloan experience, organizations must consider local labor and talents that underpin the informal economy in their poverty combat strategies. If there is no synergy between the local informal economy and the local non-profit structures, social entrepreneurship remains far from applying innovative solutions stimulated by the market to solve social problems.
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