The Kiva lenders’ confidence in Inka Moss in 2015 made it possible for the enterprise to attain the funds necessary to strengthen its business. The Kiva loan increased the potential of Inka Moss so much so that the enterprise sought additional funding not because the Kiva loans were insufficient, but because there was a greater perspective of growth. As a result, NESsT supported Inka Moss in securing an additional $234,000+ in new funding.*
Specifically, the loan improved the product quality and doubled the income of families by making solar-powered technology accessible. By transitioning from drying the moss on tarps to drying beds, one-kilogram moss now sells for $1.70 as opposed to $0.80 paid for moss dried on the ground.
In addition to providing sustainable income, a portion of each bag sold supports community services. So far, these funds have been used for the construction of a new school and the repair of roads leading to the communities.
As more updates become available, we encourage you to learn about how Inka Moss came to be, the key aspects behind their success and the enterprise’s growth potential. Available in our new publication Beyond the Lab: Changing Lives through Hardware Technology.
* Inka Moss receives financial and capacity-building support from NESsT as a portfolio member.
Even though time passes by all the same, the start of a New Year always feels like an opportunity for fresh beginnings. If you’re at the start or in the process of your own social entrepreneurship journey, we want to motivate you. So get out there and find your allies (hi!), engage them and build healthy relationships.
To see how this plays out check out how Isabel, Co-Founder & CEO of X-Runner, engaged private & public partners to navigate the onerous process of entering the market as a hardware tech enterprise.
2: knowledge and respect for the communities with which one is working.
For a social enterprise to succeed, enterprise teams need to rely on their empathetic relationships with employees, end users, and customers. Entrepreneurs must be familiar with the social problem they are interested in solving as well as the customers that will ensure their financial sustainability. This means pinpointing the interests, motivations, logic, and needs of the end users, including cultural aspects.
NESsT Enterprises are selected because of their ability to create and scale dignified employment opportunities for marginalized communities. With respect and the inclusion of community members in key leadership positions, social enterprises are able to gain the trust and input necessary to really improve the lives of those who need it most.
Pictured is Cristobal who’s expertise gained as a coffee farmer has been valuable to the growth of Cafe Compadre.
3: Focus and ability to respond to changes at all levels.
Running a social enterprise is very similar torunning a regular business in that it requires a leadership team with all types of skills, including sales, marketing, product development, and management. Social enterprises have an uphill battle in securing early-stage financing for many reasons and must be prepared to respond and adapt quickly.
Beyond selecting the right people to take on this feat, our tip is to manage the mechanical tasks diligently, especially financials. We find that many enterprises have not been tracking their financials in a way that is helpful to making projections. By doing this, you provide yourself with the tools you need to make sound decisions in times of uncertainty or change.
Read more about YAQUA in Beyond the Lab and how they were able to achieve 1,500 points of sale for their product.
NESsT is partnering with TechSoup to improve the financial sustainability of the nonprofit sector. Profits for Nonprofits will be offered through a series of free and paid on-demand courses, as well as higher level scheduled courses. Through TechSoup’s online platform, we will be able to increase accessibility of these strategies to small and mid-size nonprofits around the world.
Over the past 20 years, NESsT has worked with 14,000 organizations in 55 countries to develop earned-income strategies. We have found that many organizations struggle with similar issues, in particular, how to get started and follow a structured approach to carefully weigh the benefits and drawbacks of self-financing. For example, we recently came across a large, California-based international NGO with an annual budget of $50 million, 99% of which is raised from U.S. government sources. The organization’s leadership team and board are extremely sophisticated in terms of management experience and even business skills (many individuals among the leadership team and board come from the private sector). Nevertheless, while the organization has been thinking about self-financing for a few years, the process gets stuck in endless discussions among board and staff about why engage in self-financing and how to move forward.
La Morada: Successful Self-financing in Chile
NESsT worked with La Morada, a nonprofit organization that operates in Santiago, Chile, to increase its financial sustainability through self-financing. La Morada, established in the mid-nineties, is a center for advancing women’s rights. An important program of La Morada is a psychological treatment clinic for low-income women, many of them victims of domestic violence. During its early years of operation, the Clinic became heavily reliant on donor funding. This funding began to dry up and the revenue and donor support the organization received was not enough to cover operating expenses.
With NESsT’s guidance and support, La Morada began the process of preparing and transforming the Clinic into a full-fledged self-financing venture. Within two years, La Morada was able to cover 91% of its operating expenses despite the fact that these expenses increased due to costs assumed by the Clinic from the parent organization.
NESsT worked with La Morada to integrate a fees-for-service model that extended their services from low-income women to higher income clients with fees calculated on a sliding scale based on income.
Prior to our intervention, some patients were charged for the service, most were not. Finding the right pricing strategy, that would be affordable to their clients, while meeting cost and revenue generation goals, posed difficult ethical dilemmas. For the nonprofit, it meant having to transform what was a social service program into a mission-driven business. NESsT provided support in developing policies that directly addressed staff concerns regarding mission or change in institutional practices.
By implementing strong controls and spending more time in the development of the staff, La Morada has ensured a more consistent service for its clients. Patients have increased 116% over two years, with the number of patients from low income levels remaining greater than those of middle income levels overall, which demonstrates that La Morada has been able to strengthen its social impact as a result of its social enterprise. The organization has never turned away a woman who was unable to pay even a small fee. In addition, the Clinic has developed a committed staff, improved financial systems, and enhanced financial self- sufficiency.
The financial viability of the Clinic is stronger due to increases in the average number of sessions per month, the average price paid per session, and space usage. Additionally, expenses are tracked more closely and several new contracts were signed with institutional partners, boosting the number of sessions provided at a higher price. The organization is now monitoring patient referrals as well as successful treatment completion, both of which are increasing. This data measures mission impact and has shown a successful track record which in turn has enhanced the efficiency of marketing efforts.
Profits for Nonprofits: Courses to increase financial sustainability
To scale up the support we provide to nonprofits around the world to develop self-financing ventures, we are launching Profits for Nonprofits, a series of online education courses for nonprofit executives on topics of financial sustainability and self-financing. In this very practical course, nonprofit leaders assess their organizational culture for developing earned revenues, set long-term goals, identify earned revenue ideas, and build their own business plans. Through the process, they access online content, receive hands-on individual coaching, and collaborate with a global cohort of nonprofit executives seeking to diversify their income streams.
We have received an enthusiastic response from nonprofit leaders and grant-makers about the value of the course to organizations of all sizes. We strongly believe that such resource is necessary to build the internal capacity of organizations to develop and manage a self-financing venture and that it greatly increases the likelihood of success.
There is indeed an uphill cultural battle in establishing earned-income revenues in a previously fully donor-supported nonprofit. Despite the difficult process, the end result will no doubt be worthwhile.
On Thursday, January 18, 2017 Nicole Etchart and Monica Vasquez del Solar spoke about NESsT’s new publication, Beyond the Laboratory: Changing Lives through Hardware Technology Enterprises on the Aspen Network of Development Entrepreneurs (ANDE)’s sector call.
Market-driven hardware technology enterprises must be competitive to thrive, which means they must meet the needs of real users. This ultimately provides opportunities for long-lasting and sustainable impact.
During the sector call, Nicole presented NESsT’s methodology on launching and scaling these invention-based enterprises in order to maximize their social impact. The four pillars upon which hardware tech enterprises rely are scientific knowledge; entrepreneurship; focus on solving problems; and social engagement.
The sector is becoming more sophisticated and as it evolves and grows it will require access to appropriate type and level of financing, among four other key factors.
NESsT’s process for supporting invention-based enterprises begins with extensive due diligence of the social enterprises that will eventually enter our portfolio. After, a range of financial and capacity-building resources are directed towards maximizing social and financial success.
The first stage for ensuring the success of hardware technology enterprises is technology and business model validation using lean innovation methods. This process will unfold differently for each enterprise and may reveal important information, such as the need for a transfer of technology. Not all inventors are meant to be entrepreneurs, so very early on we evaluate and build a balanced team using our talent tool.
While assessing competencies of the entrepreneurial team, it’s important to include community leaders in key positions like Inka Moss has done. Overall, the team must be dynamic, flexible and committed because bottlenecks and barriers will always arise. In one case, the development of an invention-based enterprise was stalled due to a lack of biomedical legislation needed for the distribution of the enterprise’s technology. This was a yearlong process that required extensive work from NESsT and the inventor-entrepreneurs. More information can be found in Beyond the Lab.
The next factor is access to financing – it’s very important to work with co-investors and create appropriate packages of capital. For Inka Moss, an initial grant by NESsT was key to covering working capital needs and breaking-even. The enterprise is now preparing to scale, which is a stage that will require different type of support and financing.
In summary, the invention itself will not lead to change if it is not made accessible to the people who need it most. Beyond the Lab presents five different examples highlighting how technology and business models must be developed side-by-side to achieve maximum social impact.Download Beyond the Lab
Through the NESsT-Kiva partnership, Suritex has obtained a total of $50,000 of financing as credit that will allow the company to expand its operations and include more smallholders who can sell their alpaca fiber at a fair price. This was achieved over the course of two Kiva campaigns in September and December.
Alpaca fiber is considered one of the world’s finest luxury fibers, yet the Peruvian communities producing it live in extreme poverty. Currently, the industry is estimated between US$150 and US$180 million (final product) with two main companies concentrating all of the processing of the raw alpaca fiber. This provides them with a very strong negotiation power against the alpaqueros (who earn very low prices per kg of fiber) and the accessories manufacturers (who pay high prices for the processed fiber).
Improving IncomesThe two manufacturers dominating the industry paid USD$4 per kg to alpaqueros for unclassified raw fiber in 2015. Alpaqueros end up receiving a very low “bulk” price because they do not have many options to sell the raw fiber to and therefore, do not worry about improving quality.
Suritex pays ~USD$6 for the same unclassified raw fiber and, by providing a classification service, Suritex allows the alpaqueros to earn even more as they are paid for the quality of their material. This enables a virtuous circle where alpaqueros can now focus on improving quality instead of quantity, allowing them to earn higher and more dignified incomes for their effort.
Women in Junin don’t have access to jobs that take into account all of their needs, such as childcare, skills training, and income requirements for a single parent household. The only jobs available are mining and agriculture, which are seasonal, require separating from children, and favor men. The skills training provided by Suritex makes employment opportunities more inclusive. Additionally, Suritex’s salaries in Junin are 20% above minimum wage in Peru on average. NESsT works with Suritex on relationship and impact management with local communities, as well as marketing and sales planning, product design, hardware technology development, and alpaca care improvements.
We are grateful for the hundreds of lenders that have become part of Suritex & NESsT history and will be part of our journey.
Thank you for believing in Suritex and their work to expand employment opportunities for women in Peru!
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