Non-profit Organisational

Sustainability
Module 1
Introduction to Non-Profit
Organisation’s as Social
Enterprises
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 Contents
Introduction.............................................................................................................4
Purpose...................................................................................................................4
Learning outcomes...................................................................................................4

Section 1: Purpose and Principles of Non-Profit Organisations....................................6

1.1 Purpose of Non-Profit Organisations....................................................................6
1.2 Non-Profit Organisations Principles......................................................................7

Section 2: Types and Roles of Non-Profit Organisations in South Africa........................10

2.1 Types of Non-Profit Organisations........................................................................10
2.2 Non-Profit Organisations Roles in South Africa.....................................................12

Section 3: Advantages and Disadvantages of Non-Profit Organisations in South Africa.15

3.1 Advantages of Non-Profit Organisations...............................................................15
3.2 Disadvantages of Non-Profit Organisations in South Africa....................................16

Section 4: Non-Profit Organisations Case Studies and NPOs as Business Partners.......18

4.1 Case Studies of Non-Profit Organisations.............................................................18
4.2 Non-profit organisations as business partners......................................................20

Section 5: Non-Profit Organisations as Social Enterprises...........................................22

5.1 Social enterprises and non-profits........................................................................22
5.2 How do social enterprise’s function?....................................................................23
5.4 Social enterprise legislation and principles...........................................................24
5.5 NPO types and income considerations.................................................................24
5.6 Common social enterprise models.......................................................................27

Summary.................................................................................................................28
Glossary of terms.....................................................................................................29
References...............................................................................................................30

SERVICES SETA _ NPO : Module 1 _ v1 3

Introduction So, congratulations on your commitment to your learning and development
and we wish you a successful learning journey! Think about the quotes that
Welcome to the Introduction to Non-Profit Organisation’s as Social you read and see how they inspire you to start making a difference!
Enterprises module. You may have come across businesses that exist only
to make a profit. A profit is an amount of money that you gain when you
are paid more for something than it cost you to make or get a product or
do a service. In this module, you will be introduced to organisations whose
primary purpose is not to make a profit – the non-profit organisation but to
solve problems and make a positive difference in the world.

In basic terms, a non-profit organisation uses any income it receives from

the sale of goods, services, gifts, or sponsorships back into the organisation
to help it fulfil its objective. Non-profits are often organised around social
issues such as disease research, education funding, etc. or service
communities (clubs, churches, associations, etc).

Here is an example of a non-profit organisation. Source: quora.com

https://www.youtube.com/watch?v=MKqOTfSDawc (2.08)
Kids form non-profit to help other children
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in the
LMS due to student access restrictions.
Please note that you should not only refer to the content in the learner guide
when studying. There is much information about, and constant changes
happening in the NPO sector that would require you to make a habit of
staying connected to what is happening, challenges, promising practices
and lessons learnt. The interviews with the non-profit organisation’s experts
would help you here as well. Your learning journey is never ending.
You will get full benefit from these learning materials by applying it to
yourself, your organisation, or your situation. The objective of this course is
fourfold:
• to encourage you and support your journey as to be a changemaker –
someone who would make a huge difference by positively touching the
lives of others.
• To understand how change is affected to solve problems.
• To provide insights in understanding and operating a NPO, and
• Understanding the context of NPO’s.
Purpose
This module will introduce you to not-for-profits (NPO). There are countless
organisations and charities that work to help individuals or communities in
need and innovate solutions to socio-economic problems. These types of
organisations are typically considered not-for-profits. The purpose of this
module is to introduce you to the exciting and satisfying world of non-profit
organisations in South Africa.
Learning outcomes
At the end of this module you will be able to:
1. Understand the purpose and principles of non-profit organisations
2. Analyse the types and roles of non-profit organisations in South Africa
3. Understand the advantages and challenges of non-profit organisations
4. Apply non-profit organisation case study successes and understand
non-profit organisations as a partner to business
5. Understand how non-profit organisations can function as social
enterprises

SERVICES SETA _ NPO : Module 1 _ v1 4

 Be on the lookout for these icons in
this training material.

Take Note Resource

Example Activity

SERVICES SETA _ NPO : Module 1 _ v1 5

Section 1: Purpose and Principles 1.1 Purpose of Non-Profit Organisations
There are a variety of reasons why non-profit organisations exist. They all
of Non-Profit Organisations have one thing in common: they exist to make a difference. Non-profits
raise funds, but they use it to implement their mission rather than to reward
Introduction contributors or founders (people who start an organisation). Feeding the
homeless, supporting youth development, and preaching the gospel are just
Non-profit organisations or non-profits, commonly referred to as NPO’s are a few examples of non-profit purposes.
organisations whose primary goal is to raise funds for a socio-economic
cause or to provide a service that people require, rather than to make a Non-profit organisations (NPOs) do not exist to profit from the organisation’s
profit. work for the benefit of its owners or members. Rather than serving the
personal interests of the owners or members of the organisation, they
exist to serve the public good. They exist for the overall publics or certain
portions of the public’s benefit. If members are paid or receive benefits, it
is only in the form of a reasonable compensation and benefits in exchange
for their work as an organisation’s employee. Any profit generated by the
organisation is used to increase the organisation’s effect in terms of its
public mission.

An NPO is defined as any organisation that does not exist to make money
for its officers or members. It does not include private businesses, co-
operatives, and income-generating organisations that exist only to benefit
Source: nobullmarketing.com.au
their members. These are classified as for-profit organisations under the
This section will introduce you to the purpose and principles of non-profit law. Remember that the main purpose of for-profit organisations is to
organisations. make money for members or owners. However, NPO’s can exist to help
communities develop income-generating projects. NPO’s receive funds and
can generate revenue, it is used in the implementation of their mission for
First, let use watch how NPO’s differ from the private and public the public good.
sectors.
https://www.youtube.com/watch?v=4naJN7au1lE (4.37) Because most NPOs serve portions of the community who cannot afford
What is a Non-profit? to pay the full cost of the service, they usually rely on grants and donations
from fundraisers. NPOs typically determine their beneficiaries based on who
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in the
needs the service the most, rather than who can pay for it. The beneficiaries
LMS due to student access restrictions. are also dependent on the organisations mission and vision.

SERVICES SETA _ NPO : Module 1 _ v1 6

` `
Non-profit organisations serve a wide range of functions, from
delivering essential services to giving voice to the voiceless.
They improve and change people’s lives; they activate
communities, build them, and give us hope. Read about the
reasons why we should be thankful for non-profits.
https://www.classy.org/blog/16-reasons-why-everyone-should-
be-thankful-for-non-profits/
Blog: 16 Reasons Why Everyone Should be Thankful for Non-
profits
It is easy to come up with reasons to be grateful for non-governmental
organisations NGO’s. NGO is a broad international term which is
interchangeably used with NPO. Please note that both these terms
(NPO and NGO) are used interchangeably in this course as well. A non-
governmental organisation (NGO) is a non-profit organisation that operates
outside the government. NGOs, sometimes known as civil societies, are
non-governmental organisations (NGOs) that are organised on a local,
national, and international level to serve a social or political aim such as
humanitarian issues or the environment.
` stakeholders and staff are treated fairly and equally. A stakeholder is a
Gift of the Givers Foundation
The African continent’s largest disaster response non-
governmental organisation of African origin is the Gift of the
Givers Foundation.
Its mission is to bring individuals together around a common
vision in order to create a genuine and lasting difference by
serving humanity for the ‘Greater Good.’ Regardless of human
or animal, race, religion, colour, class, political affiliation, or
geographic location, assistance is supplied unconditionally to
anyone in need.
Since its founding in 1992, the organisation has been
responsible for the delivery of life-saving items and on-the-
ground assistance to numerous people in over 43 countries
across the globe, including South Africa, with a total value of
R3.2 billion.
SERVICES SETA _ NPO : Module 1 _ v1
Gift of the Givers gives hope and dignity to the world’s most
vulnerable people in their time of need, rebuilding successful
communities and empowering tomorrow’s leaders.
Source: https://giftofthegivers.org/about-us/
The ultimate purpose of non-profit organisations is to improve the quality
of life for others at a community, local, provincial, national, or even global
level. Next, we look at the basic principles of NGO’s.
1.2 Non-Profit Organisations Principles
As NPO’s work with stakeholders and in communities, their trustworthiness
and legitimacy are important. Non-profit governance is based on a set of
important principles that are part of the structure and mission of non-profit
organisations. This means that an NGO’s principles are dependent on the
nature of the NGO but may include these common principles:
• Independence and commitment: Non-profit boards of directors should
be dedicated and independent in their thinking and decision-making.
• Stakeholder fairness and equity: Boards of directors must ensure that all
party that has an interest in an organisation and can either affect or be
affected by the organisation and its work.
• Public accountability: Non-profit organisations receive funds from
outside parties to conduct their work. This funding could come from the
government, big companies, private individuals, Foundations, or other
sources. This means that they must be accountable to those funders
for the money spent. They are accountable to both internal (members,
beneficiaries, staff, and volunteers) and external stakeholders (donors,
local communities, suppliers, creditors, policy makers, regulating
agencies).
• Transparency: Non-profit organisations are required to provide
information on the roles of stakeholders in their operations, the
outcomes of those operations, and financial accounts that explain how
public funds were used (e.g., donations, grants, etc). You will learn more
about transparency and accountability throughout this course.
7
• Ethical behaviour: Simply put, “ethical behaviour” is knowing “right”
from “wrong,” whether in the workplace or in personal life, and acting
accordingly. Non-profit board members should be community members
and citizens with strong ethical standards. A non-profit organisation
must also adopt and implement an ethical code of conduct (a code of
ethics is a guide of principles designed to help professionals conduct
business honestly and with integrity), particularly in regard to financial
management, service delivery, and all operations and activities carried
out by board members, managers, staff, or volunteers.
` impact on people’s well-being, situations, or chances in society as a whole.
Read about the core principles and values of NPO’s in this
article:
https://www.macfound.org/press/commentary/g-r-e-a-t-
principles-toward-more-effective-organisation
G-R-E-A-T Principles Toward a More Effective Organisation
The primary distinguishing qualities can be used as a checklist and guide to
determine which organisations are non-profits.
Non-profit organisations are voluntary organisations. They are self-
organised. There is nothing in any country’s legislation that states they must
be formed or that prevents them from doing so. In the organisation, there
will be some optional participation. This could be accomplished by a small
number of board members or a big number of members or beneficiaries
who volunteer their time.
Non-profit organisations are independently managed by the persons who
founded them, or by management boards who have been delegated by
law or by members of the organisation to take on the task of controlling
and administering them, as long as they follow the law. NPOs, like other
businesses, may have workers who are compensated for their efforts.
Employers – boards of management – in non-profits, on the other hand, are
not compensated for the job they do on boards, with the exception of being
paid for expenses incurred while doing their board obligations.
Non-profits can engage in income-generating activities. They do not,
however, distribute profits or surpluses to shareholders or members. They
use this money to further the aims of their organisations.
Non-profit organisations should be credible (trusted) and legitimate (obeys
the law and rules): NPO’s must have a process of setting up a mandate
(authority to act in a particular way given to a person in an organisation) and
accountability to all the NPO stakeholders. We would look at this in more
detail in module three and throughout this course.
In terms of goals and principles, non-profit organisations are not self-serving
as they enhance the lives and prospects of disadvantaged persons who are
unable to develop their full potential or exercise all of their rights in society.
Non-profit organisations address concerns and issues that have a negative
`
Meals on Wheels
OUR VISION
No senior will go hungry or experience social isolation.
OUR MISSION
We enrich the lives of seniors, and assist them in maintaining
independence, by providing nutritious food, human connections,
and social support. We also use our expertise and capacity to
serve other nutritionally at-risk populations.
OUR VALUES
Integrity – We work in a trustworthy, compassionate, and ethical
manner.
Respect – We value the self-worth of our staff, volunteers, and
populations we serve.
Inclusion – We are strengthened by diversity.
Creativity – We are innovative and willing to try new approaches.
Commitment – We demonstrate quality performance and
dedication.
Teamwork – Together we accomplish more.
Source: https://www.mowp.org/our-story/
 In your workbook complete activity 1.1 where you are required
to research the different purposes and principles of NPO’s in
South Africa. Indicate the purpose/s and principles that you
would consider supporting because it appeals to you.

SERVICES SETA _ NPO : Module 1 _ v1 9

Section 2: Types and Roles of 2.1 Types of Non-Profit Organisations

Non-Profit Organisations in South Here is a quick, creative video on the different types of NPO’s.
https://www.youtube.com/watch?v=vGB8X5qZUd8 (5.07)
Africa Types of Non-profit Organisations

Introduction
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in the
LMS due to student access restrictions.

African people were subjected to unfairness throughout South Africa’s

apartheid era. Discrimination was a major feature of the government
established under the basic principles and laws of a nation in 1910. Policies
In South Africa, an NPO can be a trust. The New loveLife Trust,
developed during this time period, which began in 1948, favoured the
popularly known as “loveLife,” is a non-profit youth organisation
existing rich white population. As a result of the inequalities caused by
based in South Africa that was founded in 1999 as a
apartheid, non-profit organisations (NPOs) arose to support the groups
collaboration between leading non-governmental organisations,
disadvantaged by the apartheid system.
private foundations, and the South African government. With
time, the organisation’s aim has shifted from focusing just on
NPOs provided a range of services intended to provide support and
HIV to becoming a “leader in Youth Health Promotion,” where
assistance towards particular groups, which commonly included the
health is defined by the World Health Organisation (WHO) as a
disadvantaged. NPOs, for example, played a key role in reaching those
“state of complete physical, mental, and social well-being.”
individuals who were denied access to healthcare by the apartheid
government. During apartheid, the late Steve Biko and Dr. Mamphela built a
The organisation portrays its programs as a generator of
health clinic in the Eastern Cape to provide healthcare. Mobile clinics were
empowered young people with a better future, not just for risk
also introduced through an NPO project called Black People Convention in
reduction and active lifestyles. It is their sole purpose to make
order to provide for poor communities.
young people immediately productive. When young people
enrol in a loveLife program, they are immediately put into action
With the end of apartheid in 1990’s, the newly elected government
and embark on a path of self-discovery. Young leaders are not
identified the importance of non-profit organisations and implemented laws
considered as passive recipients of our programs, but as active
to aid their development. According to the Global Journal (2013), there
participants in whatever they do.
are approximately ten million non-governmental organisations (NGOs)
worldwide, with 153 667 in South Africa. Let us study the types and roles of
NPO’s in South Africa in this section. Types of NPOs include:
• Non-governmental organisations (NGOs)
• Community-based organisations (CBOs)
• Faith-based organisations (FBOs)
• Organisations that have registered as Section 21 Companies under the
Company Act 61 of 1973
• Trusts that have registered with Master of the High Court under the
Trust Property Control Act 57 of 1988

SERVICES SETA _ NPO : Module 1 _ v1 10

• Any other voluntary association that is not for profit. So, what is special about foundations?
Foundations are often private organisations founded by wealthy families
NPOs are also called, NGOs, NPC, section 21 company, social enterprise, or by big companies with their own funds and goals for example Motsepe
voluntary associations, or civil society organisations. Foundation, Cyril Ramaphosa Foundation, Allan Gray Orbis Foundation,
Look at the table below for a basic summary of the different types of non- Nedbank Foundation and SAB Foundation. Because there is no legal entity
profits. for a foundation in South Africa, it can register as any of the various entities
and call itself a foundation. If an organisation did call itself a foundation and
Organisational did not actively raise and distribute funds, it would seem fake to call itself a
Description foundation.
type
IAOs are government instituted or private foundations
International
and make funding available to governments and NGOs.
Aid
Their programmes are usually global in nature. The Bill &
Organisations
Melinda Gates Foundation and Oxfam are examples of
(IAOS)
IAOs.
NGOsare professional-driven organisations that receive
funding from IAOs and governments, either using it
Non- themselves in their broad spectrum of prgraammes, or
Governmental redistributing it to NPOs and CBOs. Their programmes
Organisations are usually country-specific in nature, with a global view.
(NGOS) loveLife Trust and Childline are examples of NGOs. In
South Africa, their legal form can take that of a Voluntary
Association, Non-Profit Company or Trust.
NPOs are professional-driven organisations that reveive
funding from NGOs and governments for specific
Non-Profit
programmes. Their programmes are usually regional to
Organisations
local in nature. Ikhala Trust is an example of an NPO. In
(NPOS)
South Africa, their legal form can take that of a Voluntary
Association, Non-Profit Company or Trust.
CBOs are community-driven organisations that receive
Community- funding from any source for specific programmes. Their
Based programmes are usually local in nature. In South Africa,
Organisations their legal form can take that of a Voluntary Association,
(CBOS) Non-Profit Company or Trust. If they choose to formalise
their relationship.

Source: https://conclusive.co.za/comparing-npo-types/

This is a good time to explore the roles of NPO’s.

SERVICES SETA _ NPO : Module 1 _ v1 11

2.2 Non-Profit Organisations Roles in South
Africa
NGOs have played various roles and benefited from different abilities
and levels of support depending on the country’s historical and political
circumstances, as seen in Figure 1: South African NGO landscape.
Prior to 1990, they played an important role in the anti-apartheid movement,
defending the rights of disadvantaged people and providing public
services such as education, health care, and welfare where the apartheid
government refused to do so. NGOs took an aggressive, activist position
during this time period, and they received huge financial backing from
international donors, who considered them as trustworthy receivers for
funding.
The sector took a more peaceful and collaborative approach after the 1994
move, with various NGOs working alongside the government to design the
new constitution and legal framework. Money was allocated through joint
agreements between the South African government and funders, which
changed the financial environment as well. This had an impact on the shape
and character of the government-NGO relationship, as well as the capability
of NGOs.
SERVICES SETA _ NPO : Module 1 _ v1
Many NGOs now saw their primary role as that of service providers rather
than activists for change and accountability.
Later, in the years post-2000, NGOs increasingly focused on service
delivery. International and local funding also fell sharply at this time,
increasing competition for cash and risking the continued existence of
many NGOs in the long-term. Furthermore, donors upped their demands on
NGOs, expecting better levels of accountability, and stronger control.
Despite the shift toward a service-providing function in recent years, a small
number of NGOs remained to play an important advocacy role, holding the
government accountable for its international and constitutional human rights
obligations. Throughout the modules of this course are examples of several
types of NPO’s.
What role does your NPO play? Are the applied principles of your NPO
aligned with those shared above? If not how and where can you embrace
some of these good practice principles?
NGOs’ operations can be roughly classified as follows:
• Activist NGOs that serve as critics and watchdogs of policy and its
implementation, holding the government accountable. The Right2Know
Campaign is a non-profit advocacy organisation based in South Africa
that was founded in 2010 with the goal of reducing state secrecy in
law-making, increasing access to information, and protecting freedom of
expression, particularly on the internet.
• Social partner NGOs that expand the government’s capabilities in
training, development, and assistance in order to help it achieve its
goals. Harambee has established an employment network that assists
companies in hiring young, first-time job seekers in South Africa in
order to address the country’s youth unemployment crisis, in which
approximately 40% of South Africans aged 15 to 34 are unemployed,
enrolled in school, or undergoing training. The organisation has created
a mobile-based network that collects information about job searchers,
evaluates prospects, provides training, and connects them with
employers seeking their skillsets.
12
• Service-provider NGOs that are contracted by the government to assist
in the delivery of its own programs. SABRI (South African Business
Resources Institute) is a non-profit organisation that specialises in the
facilitation of business resources needed to start, expand, and sustain
small and medium-sized enterprises as well as non-governmental
organisations (NGOs). SABRI offers a comprehensive service that
includes everything from following laws and rules and marketing
assistance to strategic interventions. Strategic interventions refer to sets
of planned actions or events intended to help an organisation increase
its effectiveness.
`
• Research and development NGOs that work in areas of innovation and
program design: this category includes NGOs that act as innovators
testing new ideas or new ways of doing things. The Archival Platform
is a South African civil society organisation dedicated to strengthening
democracy by using memory and archives as dynamic public resources.
The Archival Platform was founded in 2009 by the University of Cape
Town’s Archive and Public Culture Research Initiative and the Nelson
Mandela Foundation to raise awareness of the country’s archival crisis.
• Humanitarian NGOs that give material or logistical support to save lives,
reduce suffering, and maintain human dignity. SHAWCO (Students’
Health and Welfare Centres Organisation) is a student-run non-
governmental organisation located at the University of Cape Town that
aims to improve the quality of life for people living in developing areas in
the Cape Metropolitan Area.; and
• NGOs that provide a way for social entrepreneurs to legally operate.
UnLtd South Africa is a non-profit organisation in South Africa that seeks
for and supports social entrepreneurs. The organisation provides social
entrepreneurs with financial and non-financial support based on their
level of growth.
SERVICES SETA _ NPO : Module 1 _ v1
Watch the next fascinating interview that discusses how non-
profits help improve our communities.
https://www.youtube.com/watch?v=KNuZLElDPgI (7.33)
The Non-profit Sector: Why It Matters
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in the
LMS due to student access restrictions.
Non-profit organisations employ almost 800,000 people and
provide important services to marginalized areas. However, as a
result of the pandemic’s economic issues, South African non-
profits have seen significant reductions in donations and other
forms of funding.
The Covid-19 pandemic has created a good deal of problems
that affect us all in different ways. It has a wide range of
weakening effects, including global and local economic
downturns, poverty, unemployment, probable famine, and
inequality, to mention a few.
As a result, many individuals all across the world are now in
desperate need of help. Despite the fact that the damage done
by Covid-19 has been difficult for humanitarian organisations,
it has once again emphasized the critical role they play,
particularly in times of crisis.
Source: https://www.dailymaverick.co.za/opinionista/2020-08-16-
non-profits-deliver-vital-aid-in-the-covid-19-pandemic-and-need-
our-support/
13
 Read how NGO’s play a crucial role in helping government fulfil
its constitutional requirement by providing nearly 70% of the
welfare services in South Africa.
https://www.inyathelo.org.za/media-centre/inyathelo-s-blogspot/
item/south-africa-npos-play-critical-role-cape-times.html
South Africa NPO’s Play Critical Role. By Nazli Abrahams -
Cape Times
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in the
LMS due to student access restrictions.

Some NGOs “fill the gap” in public services that are not provided by local
authorities. They do this by extending public services to the smallest level
of the community, especially low-income households, and by watching and
communicating public opinion.

In your workbook complete activity 1.2 where you are required

to:
1.2.1 Discuss the differences and the similarities of the different
types of Non-Profit Organisations
1.2.2 Think about the type of NPO that best suits your
organisation.
1.2.3 Explain three roles of NPOs in South Africa
1.2.4 How would you describe your NPO?

SERVICES SETA _ NPO : Module 1 _ v1 14

Section 3: Advantages and
Disadvantages of Non-Profit
Organisations in South Africa
Introduction
Non-profit organisations serve the needs and interests of millions of people
and fulfil a variety of goals and activities in society. Non-profits, on the other
hand, are not without their drawbacks, which range from finance challenges
to social pressure. Despite the difficulties, non-profits rely on monetary and
in-kind gifts from donors and supporters to stay afloat.
Because they operate for the public good, non-profits qualify for privileges
that are not available to for-profit organisations. Let us take a look at a few
of their benefits first.
Source: pintinterest.com
3.1 Advantages of Non-Profit Organisations
The sense of personal fulfilment gained from contributing to making a
positive difference in the world is perhaps the biggest and most visible
benefit many people report from working in the non-profit sector.
SERVICES SETA _ NPO : Module 1 _ v1
Second, NGOs offer a variety of other personal and practical benefits, many
of which are often overlooked:
• Permanent Life: Non-profit organisations (like for-profit organisations)
can continue to exist long after their founders have passed away as long
as their mission remains relevant, and revenue is generated. The Kong
Gumi construction company in Japan is the world’s oldest company,
dating back over 1,500 years.
• Organisation at Scale: Organising a non-profit around your chosen
cause is the ideal approach to develop a team to broaden your efforts
and make a bigger effect if you are a mission-driven individual who
wants to make the world a better place.
• Personal Liability Protection: Non-profit employees are not personally
accountable for the organisation’s debts. This implies that if someone
wants to sue your non-profit for a business debt or injury, they can only
go after the corporation, not the individual owners’ personal assets or
belongings.
• Tax-Exempt Status on Net Income: Because non-profits do not pay
taxes, all surplus funds can be reinvested in the organisation to help it
grow. Note that the Income Tax Act defines the types of activities that an
NPO can undertake before it is granted a tax-exempt status. Obtaining
a Tax exemption is not automatic. An application must be made to the
South African Revenue Service (SARS) who, on review, may grant the
NPO a tax exemption status.
• Incentives from the public and private sectors to assist you:
Individual and corporate donations are tax deductible, which encourages
people to contribute to organisations. All you have to do is come up with
a clear mission and a fundraising approach. You will learn more about
this in later modules.
• Grants Eligibility: Government grants are another source of income for
NPO’s.
• Employee Benefits: If your organisation has a large enough workforce,
it may be eligible or qualify for group discounts on medical aid and life
insurance.
• Formalised Structure: Formalised roles with job descriptions and
responsibilities can be created by incorporating a non-profit, which can
attract more professional and skilful candidates to work with you.
• Non-profit Board Members: Typically, non-profit board members are
not paid, which can save a lot of money. Another advantage of having a
board of directors is that they provide a wide range of useful talents and
expertise, as well as considerably growing your network.
15
• Highly Motivated Employees: Employees that are highly motivated documentation is completed appropriately. All of this translates to higher
are motivated by client accomplishments and a strong work/life balance, fees and obligations. The management and reporting compliance based
rather than salary, according to research. As a result, you may expect on how the organisation is registered also requires much work.
to attract employees that are passionate about your non-profit’s mission
and want to help you make a difference. 4. Tax Status
A non-profit organisation’s tax status can be cancelled. It may not be
allowed to keep its tax-exempt status if it fails to meet its yearly reporting
Watch how running an NGO can be highly rewarding as you date. In this scenario, the deadlines are really strict. If an organisation
help others. chooses to generate revenue through its services, there is limit to how
https://www.youtube.com/watch?v=-cicVqLoaCQ&t=104s (3.27) much revenue is generated before a tax liability comes into effect.
South Africa Social Development: Cape Town non-profit
organisation uplifts poor communities 5. Competition for Funding
Non-profit organisations, as previously stated, rely on grants, donations,
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in the and permitted investments to fund their operations. There is no
LMS due to student access restrictions. assurance that you will receive the fund of your choice because there
are thousands of groups competing for these resources. If you want to
get noticed, you need have a solid business plan and vision.
3.2 Disadvantages of Non-Profit Organisations in
6. Public Scrutiny
South Africa A non-profit’s finances are open to public inspection because it is
Despite the benefits, there are several downsides to starting a non-profit dedicated to the public good. This means that the general public can
organisation. Some of them are explained below. obtain copies of tax returns as well as information on salaries and
expenses. This could be used against the organisation’s best interests.
1. Lack of Funds
Donations are the primary source of funding for non-profit organisations.
You are asking people to give out of the goodness of their hearts,
whether it is cash or other assets. And to be honest, not everyone will
like the concept of giving. As a result, funding could be a major concern
for NGOs.

2. Lower Pay Scales
Most non-profits use a lower salary scale to compensate you as
compared to a for-profit firm would. As non-profit’s surplus is usually
reinvested in the company’s operations; profit-sharing is not an option.

3. Paperwork and Administrative Costs
The documentation required to form and register a non-profit is usually
more effort than that required to launch a for-profit business. To qualify,
you must complete tax documents and form a non-profit corporation. It
is preferable to hire an accountant and a lawyer to verify that all of the

SERVICES SETA _ NPO : Module 1 _ v1 16

 Responsibility, integrity, honesty, and transparency to everyone who has
put time, money, and faith in the organisation are the most important
lity System components of non-profits. They have faith in organisations as long as they
Visibi s
stay true to their objective, but if they stray from it, people lose faith in them,
St which leads to their failure. You are okay to proceed as long as you are
c t ru
ct
pa ur
es
prepared to confront the problems and your business idea can help deliver
Im
a general good to communities.

Or
ic

g
eg
rs

an
t In your workbook complete activity 1.3 where you discuss
tra
holde

isa
S how trading as an NPO can benefit you and how you intend to

tio
na
overcome the major challenges of NPO’s.
Stake

l
Did you know that NPO’s should be partners to business, not just receivers
of funding? Let us look at this aspect as well as various case studies of
Data

Te

successful NPO’s in the next section.

c

g
hn

in
ol

nd
og

Fu
ica
l

Se ce
rv
ice l l i en
si
Re
Comm
unica
tion

Adapte from: Vectors Group

Non-profit organisations (NPOs) have played an important role

in addressing the issues and injustices that affect South African
society, but they face a future with more limited funding and
support as the economy worsens. Read what NPO’s can do to
overcome these challenges.
https://mg.co.za/article/2014-04-10-20-years-on-the-role-of-non-
profits/
20 Years on: The role of non-profits

SERVICES SETA _ NPO : Module 1 _ v1 17

Section 4: Non-Profit
Organisations Case Studies and
NPOs as Business Partners
Introduction
Non-profit organisations in South Africa encounter daily challenges and
often find creative strategies to solve them. These success stories and
solutions are rarely mentioned. In this section, we will look at characteristics
of successful NPO’s as well as how NPO’s can partner with business for
greater success.
`
The Non-profits in South Africa Website was created by
Phambano Technology Development Centre NPC to help Non-
profit Organisations achieve greater social impact by means
of an online resource hub. This website (https://www.non-
profitsinsouthafrica.co.za/) has a dedicated area to give their
solutions and success stories a spotlight. In addition, there is
a one-stop resource section for any registration; governance;
compliance; statutory; fundraising; marketing and technology-
related questions NPOs tend to ask.
Source: https://www.non-profitsinsouthafrica.co.za/
Is there a large number of non-profit organisations in South
Africa? Are they effective? Ricardo Wyngaard, a specialist in
non-profit organisations, addresses the popularity of NPOs in
South Africa and their success in this episode of LawTV.
https://www.youtube.com/watch?v=9q3xCgoZobs (2.16)
Are there a lot of NPOs in South Africa? Are they successful?
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in the
LMS due to student access restrictions.
SERVICES SETA _ NPO : Module 1 _ v1
4.1 Case Studies of Non-Profit Organisations
It is never easy to create a high-performing, effective non-profit. It is
much more difficult to maintain one, especially in the new “normal” of a
complicated and unclear world.
Despite this, non-profit organisations must stay stable, relevant, and tough
in the face of funding shortages, new risks and challenges and an ever-
changing landscape.
A non-profit must be financially solid, have a passionate volunteer base,
and devoted and effective leadership, among other things, in order to
actually prosper. But those are not the only differences between NGOs that
are barely surviving and those that are actually prospering. There are a lot
of good features you can embrace to assist your non-profit succeed if you
are founding or running one.
4.1.1 Characteristics of Successful Non-profits
1. They Are Agile
Agile is about being able to move quickly and easily. In self-managed
teams, agile non-profits focus on producing results. Transparency is vital,
as is the importance of frequent, short talks.. Agile non-profits focus on
adapting to change rather than sticking to a strict yearly plan on a shelf
someplace in the office.
If a non-profit wants to be successful today, it must be able to deal with
change and unanticipated risks on a consistent basis. The agile technique
can be extremely beneficial in terms of learning and adapting quickly.
Organisations that can learn and adjust quickly are the ones that succeed.
2. They Are Focused on Their Mission, Always
The mission of an organisation is its reason for being, its purpose, and
where it wants to go. Despite the firefighting that practically every non-profit
organisation has to undertake on a daily basis, a successful non-profit
always stays focused on its objective.
A healthy non-profit clearly states its mission into a mission statement and
then shares it. Employees at all levels of the business, as well as all other
important stakeholders, are informed of the mission statement, along with
the vision and values.
18
Mission, values, and purpose are not just words on a wall in a successful
and healthy non-profit organisation; they inform all daily decisions and
actions of the organisation.
3. Build long-term relationships with donors
Successful NPO’s build long term partnerships with donors who buy in to
what they are doing. Once off donors are great, but an organisation cannot
really plan and execute a strategy if they are chasing funding every year.
Donors who make multi-year commitments become partners, and this is
where true value is built. As you progress through this course, you will learn
that strong relationships are built through demonstrating high levels of
responsiveness, professionalism, and evidence=based impact.
Your non-profit’s work is made possible by donors. Non-profits that are
successful show their donors how their donations have made a difference
in the world. They keep their contributors up to date on the developments
and explain what their gifts have accomplished in measurable terms. They
devote time and resources to cultivating relationships with their supporters.
4. They Develop Diverse Funding Sources
A non-profit organisation is similar to a for-profit company. Non-profits
cannot exist if they are out of money, regardless of whether they are
focused on social progress or profit. This is why it is critical for organisations
to keep track of their money while also keeping their goal in mind.
While there is no general agreement on what a non-profit’s “ideal” funding
model is, using a variety of sources to ensure sustainability is typically a
good idea. In general, organisations should never obtain more than 30
percent of their money from a single source. If a company loses 30% of
its revenue, it will almost certainly have to restructure in order to survive. A
smart non-profit never depends on only one funding source for its survival
and success.
5. They Are Able to Mobilise and Inspire Others
Non-profits that are successful are able to organise and excite their
employees, volunteers, and funders. They are always thinking of new
methods to engage these people and connect them to the non-profit’s
purpose and beliefs. They help to create and maintain strong communities.
While successful non-profit organisations excel at managing their internal
operations and stakeholders, the most impactful non-profits are those that
can mobilise every sector of society – government, business, non-profits,
and the general public.
SERVICES SETA _ NPO : Module 1 _ v1
Non-profits that are genuinely great go beyond their organisation’s limits.
They motivate others to take action by setting an example and allowing
others to participate in their cause.
6. They Are Digitally-Savvy
Technology is changing the way non-profits operate and how their
employees interact with donors and supporters on the internet. While
offline fundraising continues to be a key part of charitable giving, internet
fundraising is increasing year after year. A well-run non-profit is well-versed
in all aspects of the digital world.
It is always improving its digital capabilities and learning new tools,
applications, and platforms. The contrast between the new generation’s
donating habits and those of previous generations, for example, is founded
in how they connect to organisations and issues digitally. To enhance their
missions, the most effective organisations use digital tactics and resources.
7. They Continuously Listen and Improve
Non-profits that are successful take the time to listen on a regular basis.
They pay attention to their beneficiaries, their Board of Directors, their
employees, their volunteers, and other organisations. To identify, share, and
utilise results and lessons learnt from their programs and initiatives, such
organisations employ a number of innovative ways. They collect and learn
from data to develop new or better programs that meet the evolving needs
and requirements of their beneficiaries.
Creating a feedback culture in your organisation is one method to ensure
that you are continually listening and improving. Every organisation’s
success depends on cultivating a feedback culture. People must be allowed
to give and receive feedback on any aspect of organisational life in order to
create an open, feedback-oriented company culture. This feedback, on the
other hand, should be offered and accepted in a clear and useful manner.
Non-profits must also bring enthusiasm, a desire to grow, and a willingness
to tackle the world’s most pressing social issues. Non-profits that are
successful are always looking for new ways to learn and grow. They bring
creativity and curiosity to all elements of business management. Keep also
keep connected to the changes in their context.
19
A non-profit organisation’s mission has always been to effect social or
environmental change and pave the way for a better future. That has not
changed in any way. Today’s atmosphere, on the other hand, is dramatically
different from that of just a decade or two ago. As a result, if non-profit
leaders aspire to fulfil their purposes, they must adapt and evolve with the
times.
Here are a few uplifting stories focusing on Non-Profit
Organisations in South Africa.
https://www.youtube.com/watch?v=KtXBk6IU92w (11.12)
Stories of upliftment focusing on Non-Profit Organisations in
South Africa.
This video is the work of a third party, and we acknowledge that the use of this video is for educational
purposes only and is not the property of Services SETA. This video is embedded in the LMS due to
student access restrictions.
What are known as new-generation NGOs are a subsection of the current
NGO sector. They are set up in such a way that they can form strong
partnerships with both the public and private sectors, as well as have
innovative finance systems and a variety of resource utilisation methods.
Let us learn about this in the final part of this section.
4.2 Non-profit organisations as business
partners
NPO’s are more and more partnering with government and business. This
is a mind shift of the old thought that NPO’s are only receivers of funding
when NPO’s can equip themselves to be contributors as well.
Non-profits vary from businesses in that they are driven by a mission
and strive to meet society’s needs. Non-profits are socially beneficial
organisations. Whether they are “for profit” or not, all businesses must
solve a problem and add value to others. As observed in the business
world, the value provided might be a product or service for potential clients.
However, it can also be valuable in the form of programs and services
that help starving children, stop animal cruelty, or protect the environment,
as highlighted by the work of non-profit organisations. From the donor’s
viewpoint, the satisfaction of being a part of the solution to a society
SERVICES SETA _ NPO : Module 1 _ v1
problem comes from their “buy” of investment in a non-profit’s work.
Businesses have wisdom from which non-profits may have a greater impact
and perform at their best, all with the same objective of producing value
in mind. The profit gained by NGOs when they run their organisations
appropriately does not have to result in higher profit, in the end, is the social
impact. But in order to achieve the greatest impact, non-profits must invest
in their companies – just like a business would.
What can your company do to prosper and make quick progress toward
achieving its goals? Read on to find out how your non-profit might benefit
from tried-and-true business techniques.
Invest in your team
You should invest in your employees, hiring the best personnel available.
This necessitates a high-quality corporate culture, benefits, and competitive
pay for employees. Your employees should feel valued and fulfilled in
order for them to make a long-term commitment in your non-profit, which
will result in the maximum value production from them. You must look
after your organisation in order to improve the lives of the people in your
neighbourhood. Your employees are the ones who make the difference thus
they must be cared for.
Invest in technology
You will also need to invest in good technology to help you communicate,
analyse your data, and impact, and raise the finances and support you will
need to continue your job. While there are many free resources available
to help you get started, your non-profit will need to select what would suit
your organisation best by checking the different resources. By investing in
the proper technology for your company, even if it comes at a cost, you are
giving it the tools it needs to prosper.
Invest in marketing
Marketing refers to activities a company undertakes to promote the buying
or selling of a product or service. You should invest in your non-profit’s
marketing and public image, which includes a strong brand (identity and
personality, name, culture, vision, emotion, and intelligence), advertising, a
social media presence, a well-designed website, and a network of people
with whom you can share your campaigns. This will also ensure that your
non-profit receives funding in the future.
20
Treat donors as customers
Customer expectations are crucial to the survival of both organisations
and corporations. You must also deliver on your promise once you have
generated something of value (by identifying an issue to be solved and the
programs and services required to solve that problem). A good rule of thumb
is to under-promise and over-deliver in order to keep your donors happy.
Set realistic expectations for your contributors and go above and beyond
their expectations. If one of your donors has an issue, treat them as if they
were a consumer of a business. Donors and customers alike will feel more
satisfied after addressing a problem with your team than if the problem
never existed in the first place.

3 Blunt partnership questions every business should ask a

Nonprofit
How will my business benefit?
There's a reason why “Marketing” is part of Cause Marketing. Marketing is the name for what
1 businesses do to get and keep customers. Anytime you add “Marketing” to something (e.g content
marketing, word-of-mouth marketing , email marketing) the focus is on how that tactic can help grow
your business. Cause marketing is no different. So don't hesitate to ask what's in it for you.

How will you support our partnership?

Ask the non-profit what they will contribute to the success of the partnership. Do they have a well-
2 recognized brand? Do they have a large active group of supporters? Are they social media wizards
who can spread the word about the partnership? If they don't have anything to contribute to the
partnership, it's not a partnership.

Why work with you instead of your competitor?

There are 1.5 million nonprofits in the United states. Businesses have a choice of which non-profit
3 they work with. If your business isn't issue-focused, you can hunt for the non-profit that delivers the
biggest ROI. If you want to focus on a specific issue, say cancer research you have many non-profits
to choose from. Choose one that can have the biggest impact on your cause and your business.

Adapted from: mietafrica.org

In your workbook complete activity 1.4 where you are required

to interview two NPO owner’s and take note of what has made
their organisations successful.

SERVICES SETA _ NPO : Module 1 _ v1 21

Section 5: Non-Profit
Organisations as Social
Enterprises
Introduction
You may be hearing the terms ‘social enterprise’ and ‘non-profit’ more
frequently. Social enterprises can be for-profit or non-profit.
A social enterprise or social business is defined as a business that has
specific social objectives that serve its primary purpose. Social enterprises
seek to maximise profits while maximising benefits to society and the
environment. Their profits are principally used to fund social programs.
Social enterprises exist at the intersection of the private and volunteer
sectors. They seek to balance activities that provide financial benefits
with social goals, such as providing housing to low-income families or job
training.
Funding is obtained primarily by selling goods and services to consumers,
although some funding is obtained through grants. Because profit-
maximisation is not the primary goal, a social enterprise operates differently
than a standard company.
A social enterprise in Cape Town is empowering young people
living in townships. Watch how Houtkappers helps out-of-school
youths realise their dreams.
https://www.youtube.com/watch?v=fNCEcpV6LUw (2.55)
Social enterprise helps youths in South African townships
This video is the work of a third party, and we acknowledge that the use of this video is for educational
purposes only and is not the property of Services SETA. This video is embedded in the LMS due to
student access restrictions.
SERVICES SETA _ NPO : Module 1 _ v1
5.1 Social enterprises and non-profits
A non-profit organisation is one that devotes all of its funds to a social
cause. A social enterprise, on the other hand, uses the proceeds from the
sale of a product or service to further a cause.
As you can see, the two are extremely similar, and the differences can vary
depending on the structure of each non-profit or social company. Here is
where the differences occur:
For starters, they differ in terms of how they get money. Non-profits raise
finances through fundraising, whereas social enterprises operate like a
for-profit company, providing a product or service to the general public and
raising funds through sales.
Second, their operating methodologies are vastly different. Non-profits
operate in a unique way, relying on government and donor funding. Social
companies, on the other hand, employ the same procedures and practices
as for-profit corporations in order to achieve large profit margins and
income.
Third, the return on investment (ROI) for the two types of businesses differs.
ROI is used to calculate the benefit an investor will receive in relation to
their investment cost. There is a range of ROI for any company, ranging
from 100 percent financial return to 100 percent social return. Non-profits
operate with a near-perfect social ROI, allocating nearly all revenue to
their goal statement. Traditionally, social enterprises have functioned on a
blended ROI, which is a mix of social and financial returns.
Here are some examples of how NPO’s are run as social
enterprises:
The Clothing Bank
The project was established 10 years ago in Cape Town. They
now have strategic connections with most of South Africa’s
leading clothing stores, including Woolworths, Edcon, MRP, Pick
& Pay Clothing, Clicks, TFG, Truworths, and Checkers, who
donate their extra goods to the Clothing Bank. Customer returns
and end-of-season products make up this type of stock.
22

Oasis in Cape Town provides sheltered employment for people
with intellectual disabilities. They generate 80% of their own
income through various activities such as recycling and a charity
shop.
The Living Goods Project
They believe that governments should employ data-driven
performance monitoring to ensure that community health workers
(CHWs) provide high-quality primary health care. They are
committed to expand the health services they provide and reach
more families by forming new partnerships with government.
When lives are on the line, coming up with new ways to deal
with health problems is important. This project is committed to
encouraging a culture of learning from both failure and success.
They use the community health programmes as tests for learning
and new inventions. The Living Goods Project also want to share
what they have learnt with the rest of the community health
movement. This example shows the importance of innovation and
forming partnerships. We will learn about innovation in module
two.
ICT 4SI
ICT 45I are a network of African telecom industry executives,
government officials, civil society organizations, researchers, and
experienced technical professionals who have joined forces to
effect change in their communities across the African continent.
They want to create collaboration that improves development
on the African continent using information and communication
technology (ICT) as a tool for possibilities and innovation.
Though social enterprises and non-profits are in theory different, they are
becoming increasingly connected in today’s environment. In the end, both
types of organisations strive to make the world a better place, and that is
what matters.
SERVICES SETA _ NPO : Module 1 _ v1
In South Africa there is specific registration requirement for a social
enterprise, although many are registered as NPO’s, a social enterprise
can also be registered as an NPO. It can only benefit non-profits to
consider operating as social enterprises to maximise their effectiveness
and sustainability. People setting up new organisations should think about
what they can do to generate revenue from the beginning. This would allow
NPO’s to be less reliant on donations to succeed and grow.
Read how social entrepreneurship is rising as a solution to the
challenges non-profit organisations (NPOs) face:
http://www.wilmingtonbiz.com/insights/diane_durance/non-profit_
or_social_enterprise_why_it_matters/1960
Non-profit or Social Enterprise: Why it Matters
5.2 How do social enterprise’s function?
The core differences between an NPO and a social enterprise are: Social
enterprises are usually led by social entrepreneurs, who seek to innovate
solutions to problems for sustainable change and impact. When a social
problem is recognised, social entrepreneurs look for the root cause of the
problem. This can be done by conducting research and/or verification of the
problem. Research is the systematic investigation and study of materials
and sources in order to establish facts and reach new conclusions.
Once the root causes are established, social enterprises attempt to connect
them to current societal patterns and trends. This will help them to generate
ideas that will assist them in addressing the societal issue that they have
recognised and innovating solutions. Social innovation refers to a new
way of doing things. It represents a breaking away from the usual solutions
offered and provides a creative response to social and economic problems.
It thus improves individual and collective well-being. In spite of the
differences between NPOs and social enterprises, their objectives in terms
of making or contributing to positive change is the same.
Here is a link that provides examples of social innovations in Africa. http://
www.socialinnovationacademy.eu/social-innovation-africa-8-remarkable-
projects/
23

Lisa Hehenberger, Director of the Esade Entrepreneurship
Institute, explains how social entrepreneurs are bringing hope to
change the world for the better in the next video.
https://www.youtube.com/watch?v=PF4S5o_A1hc (3.06)
Social entrepreneurship: Can it change the world for the better?
This video is the work of a third party, and we acknowledge that the use of this video is for educational
purposes only and is not the property of Services SETA. This video is embedded in the LMS due to
student access restrictions.
5.4 Social enterprise legislation and principles
Social enterprises are businesses that aim to solve a social or
environmental issue. They show a coming together of typical corporations
and non-profit organisations by taking up a social or environmental mission
while using income, even profits, as an important driver of this business
type.
You will need to learn about the various legal forms available to social
enterprises. The legal structure that a company chooses to operate under
has effects on how it arranges its resources and belongings. Several legal
forms of business are available to entrepreneurial business owners. Each
has a special way for coping with profits, losses, tax considerations and
such matters.
Here is a comprehensive guide to legal forms for social
enterprises in South Africa.
https://www.gsb.uct.ac.za/files/Bertha_GuideToLegalForms.pdf
A Guide to Legal Forms for Social Enterprises in South Africa
Generally, the non-profit company and the private company are good fits for
social enterprises.
You will learn about the detailed rules and laws that applies to non-profit
organisations in module three.
SERVICES SETA _ NPO : Module 1 _ v1
A social enterprise, according to Social Enterprise United Kingdom, fits the
following principles:
• Generate most of their income through business activities
• Reinvest most of their profits
• Not rely on government
• Be mostly controlled in the interests of the social (or environmental) goal
• Be accountable and transparent. These concepts are covered
throughout the course.
Read these lessons from the experts in the NPO field, which
could spare you a lot of heartache.
https://www.socialent.org/pdfs/8BasicPrinciples.pdf
Eight Basic Principles for Non-profit Entrepreneurs
5.5 NPO types and income considerations
When figuring out what kind of NPO you want to start, you would need
to consider how you intend to make money. Generating income is more
challenging in some types than others.
• Welfare NPO’s – Examples of these NPO’s include care for orphans
(Starfish Great hearts Foundation), the elderly (NOAH) animals (SPCA),
severely disabled (Forest Farm). It is difficult to generate your own
income in line with your mission as these are very helpless groups
reliant on help from others. You can start subsidising in other ways such
as growing your own food crops and simple employment opportunities
for people with intellectual disabilities. As previously mentioned, Oasis is
a good example of an organization that generates its own revenue quite
successfully.
• Activism NPO’s – These are watchdog organisations such as Treatment
Action campaign. The Treatment Action Campaign (TAC) was founded
in December 1998 to campaign for access to AIDS treatment. It
is widely acknowledged as one of the most important civil society
organisations active on AIDS in the developing world. It is very difficult
to implement enterprise activity in these NPO types.
• Development organisations: These organisations are trying to solve
social problems in multiple sectors. The old NGO thinking was to
provide things for free, but these types of non-profits would lend itself to
the social enterprise model.
24
 Here is an article by Dambisa Moyo who speaks about the
damage AID has caused in Africa. She believes that we need
to trade instead of AID. Social enterprises solve problems with
business principles. In some cases, they find an entirely new way
of solving an old problem.
https://ssir.org/books/reviews/entry/dead_aid_dambisa_moyo
Just Say “No”
Dead Aid: Why Aid Is Not Working and How There Is a Better
Way for Africa by Dambisa Moyo
Below is a list of sectors and social enterprises working in these different
sectors. The links are provided should you need more information:
Health
Vula Mobile connects rural doctors with specialists in public
hospitals to diagnose and treat patients fast and efficiently. This
allows the isolated rural doctor to learn. It prevents the rural
patient from having the cost of going to an urban centre for
treatment. Because the diagnosis happens quickly, it prevents
the deterioration of the patient’s health while they wait to see a
specialist.
https://www.vulamobile.com/
Housing
By providing inexpensive and long-term housing solutions,
Hustlenomics is addressing expanding demands in these informal
human settlements. Hustlenomics is a South African Black
Owned Company that was created in 2015 with the objective of
replacing backyard shacks with excellent and durable homes.
At least 51% of the company’s revenue is re-invested in the firm
each year to help develop additional houses and jobs in South
Africa.
https://www.hustlenomics.co.za/
SERVICES SETA _ NPO : Module 1 _ v1
Conservation
Meat Naturally serves as a vital link between small-scale farmers in
Africa and commercial meat purchasers, as well as NGOs and rural
economic development, economic and environmental improvement,
traditional farming practices and new market opportunities.
https://www.meatnaturallyafrica.com/
Watch how Meat Naturally supports communal farmers in the
next video.
https://www.youtube.com/watch?v=MBDi1QHHFsk (3.06)
Meat Naturally - SAB Foundation Social Innovation and
Disability Empowerment Awards 2020
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in
the LMS due to student access restrictions.
Education
School in a Box develops and provides quality educational resources
to connect, equip and empower learners in Africa to reach their full
potential.
https://schoolinabox.co.za/ Science Nkazi Sciences
Most of the South African learners are not able to afford resources.
However, with the help of sponsorship from SA’s leading corporate
enterprises, PaperVideo have delivered over 20,000 resource packs
to those in need.
https://www.papervideo.co.za/
Gradesmatch is a comprehensive career advice technology that
helps African students plan their future careers and reach their
full potential. The technology is intended to connect career data
to learners, teachers, and mentors, aiding them in making well-
informed career selections that will improve long-term education and
professional outcomes.
https://www.gradesmatch.co.za
25
 Sustainable agriculture/food security/sustainable fishing
Reel Gardening is a social enterprise based in South Africa that
is dedicated to giving back. Reel Gardening will contribute seed
tape to the various schools and communities they serve in South
Africa for every product sold. They also provide these schools and
communities with the gardening skills and education they need to
successfully cultivate their own food.
https://reelgardening.co.za
AgriCool is a digital crowd funding platform that allows individuals to
invest in the agribusinesses of small holder farmers who are unable
to obtain financing from traditional banks. You will learn more about
crowdfunding in the resourcing module. AgricCool connects small-
scale farmers with market access options.
http://www.agrikool.com
See what Agricool is all about in this video.
https://www.youtube.com/watch?v=EXA1CjyCn-8 (3.17)
Agricool Finance - SAB Foundation Social Innovation and
Disability Empowerment Awards 2020
This video is the work of a third party, and we acknowledge that the use of this video is for
educational purposes only and is not the property of Services SETA. This video is embedded in
the LMS due to student access restrictions.
ABALOBI is a global social enterprise established in South Africa.
Through the collaborative creation of Technology for Good, their
objective is to contribute to the global development of prosperous,
and sustainable small-scale fishing communities.
https://abalobi.org
Umgibe Stop Hidden Hunger aims to empower communities in South
Africa to thrive in a sustainable and environmentally friendly manner
through planting crops, raising livestock, organizing resources, and
providing skills training. They want to get rid of poverty, hunger, and
malnutrition, as well as improve livelihoods and increase access
SERVICES SETA _ NPO : Module 1 _ v1
to excellent nutrition, water, shelter, education, health, information
technology, and provide income generation opportunities.
https://umgibe.org/
Disability inclusion
I Love Coffee is a premium coffee company in South Africa that
provides quality coffee and food services in in-office Corporate
Cafés. Their carefully selected items, one-of-a-kind service, and
laid-back atmosphere give the ideal setting for meeting, sharing,
collaborating, and being creative, as well as taking a quick coffee
break or spending quality time with friends.
They are committed to making an impact by hiring only Deaf
students as baristas, chefs, and kitchen workers at our locations. I
Love Coffee delivers professional skills-training to their employees,
ensuring not just job preparedness but also long-term career growth,
establishing the groundwork for a future career in the hospitality
business.
https://www.ilovecoffeegroup.co.za
Financial inclusion
Spoon Money’ s objective as a social enterprise is to help low-
income women grow their enterprises, improve their financial
capabilities, and move from survival to stable, profitable small
businesses.
Stokvels are used by many self-employed street vendors to save
money. While beneficial, stokvels frequently falls short of helping
to build up funds to cover unexpected financial demands or
considerably increase the standard of living in the long run.
Spoon Money addresses this challenge by delivering community-
based financial products and services. The stokvel concepts of
groups, trust, and social capital serve as the foundation for their
work.
https://www.spoonmoney.com/
26
5.6 Common social enterprise models
A business model is a framework, design, or structure that a company uses
to provide value to its consumers and clients. However, there are at least
three indicators of a business model’s success:
1. its ability to make money for its owners,
2. its ability to make a positive difference in the world, and
3. its ability to strike a balance between profit and positive change.
The first strategy is for traditional for-profit businesses; the second is for
traditional charities; and the third is for social enterprises (a balance of profit
and good change).
A social business model, according to the definition above, is a structure,
design, or framework that a social business follows in order to effect positive
change while generating healthy financial returns. Despite sharing this basic
foundation, social entrepreneurs can pick from a wide range of possible
social business concepts.
To help shed light on that variety, in 2012 Wolfgang Grassi (aka W. Grassi)
identified nine types of social business models.
1. The Entrepreneur Support Model
This social enterprise (SE) concept sells business assistance services
directly to its target community of entrepreneurs. In other words, this form
of SE helps entrepreneurs in launching their firms. Consulting services,
training, microfinance, and technical assistance are all examples of this
support.
2. The Market Intermediary Model
This form of SE assists clients by marketing or selling their products or
services on their behalf. This category would include, for example, an
organization that assists struggling small farmers by marketing and selling
their crops on their behalf.
3. The Employment Model
This sort of SE offers career opportunities and job training to their clientele.
The income created by those jobs covers the SE’s costs and goes back
into the services offered to individuals in need. This model is used by many
youth and disability organizations.
SERVICES SETA _ NPO : Module 1 _ v1
4. The Fee-for-Service Model
One of the most widely used SE business models is the fee-for-service
approach. For the socially beneficial services it delivers, the SE charges
the customer directly. The fee-for-service approach is used in a variety of
settings, including hospitals, schools, museums, and membership groups.
5. The Low-income Client Model
SEs in this category typically provide direct social services (as in the fee-
for-service approach) to low-income consumers. This concept is frequently
used by hospitals and healthcare organizations that provide services to low-
income patients.
6. The Cooperative Model
This is one of the most well-known SE subcategories. In most cases, a
cooperative is a fee-based membership organization that provides services
to a group of people who have a shared need or objective. The cooperative
is owned and run by its members, who benefit from the cooperative’s
success as well as run it.
7. The Market Linkage Model
This model is frequently used by SEs that act as brokers for their clients.
These SEs are primarily concerned with developing relationships and
connecting their clients with markets for their products and services. Unlike
SEs who follow the market intermediary model, these SEs do not market or
sell their clients’ products and services on their behalf. The market linkage is
used by many trade associations.
8. The Service Subsidisation Model
This sort of SE raises money for social activities by selling goods or services
on the open market. Because practically every SE can use it, service
subsidisation is one of the most common SE models. These SEs, unlike
organisational support SEs (see below), link their internal business with
external social activities. A law company, for example, might use earnings
from its regular legal business to fund a social program that gives free legal
services to those in need. The firm might run the initiative out of their own
offices and provide free legal services.
27
9. The Organisational Support Model
This type of SE offers products or services to fund social projects, similar
to a service subsidisation organization. The social initiatives they support,
on the other hand, are run by a distinct parent organisation. A parent
organization means that part of a non-profit organisation which coordinates,
supervises, or exercises control over policy, fundraising, and expenses. To
put it another way, an organisational support SE obtains cash for a parent
non-profit, which then runs the social projects the SE intends to support.
Despite the fact that most social companies fall into one of W. Grassi’s
nine categories, there is always potential for new and combined models to
arise. If one of these business models fails to meet your social enterprise’s
objectives, you may want to try something completely different.
Summary
You have now reached the end of the Introduction to Non-Profit
Organisation’s as Social Enterprises module. In this module you learnt the
following:
• the purpose and principles of non-profit organisations
• the types and roles of non-profit organisations in South Africa
• the advantages and challenges of non-profit organisations
• non-profit organisation case studies and non-profit organisations as a
partner to business
• how non-profit organisations can become social enterprises

here are creative approaches to designing social enterprise

business models that address affordability for those you serve in
a sustainable way. Read about the different ideas in the article.
https://acumenacademy.org/blog/creative-social-enterprise-
business-model-ideas-10-ways-address-affordability/
Creative Social Enterprise Business Model Ideas: 10 Ways to
Address Affordability

In your workbook complete activity 1.5 where you are required Source: Investopedia.com
to
1.5.1 Determine and explain how your NPO can be set up as a
social enterprise or according to social enterprises
principles.
1.5.2 Reflect on the NPO legal form for your social enterprise.
Make a list of the important things do you need to take
note of. Look at the requirements in this guide:
https://www.gsb.uct.ac.za/files/Bertha_GuideToLegalForms.pdf
1.5.3 Consider the different ways that you can use to earn
money for your non-profit especially if your customer
cannot afford to pay for your offerings. You may refer to
this article:
https://acumenacademy.org/blog/creative-social-enterprise-
business-model-ideas-10-ways-address-affordability/

SERVICES SETA _ NPO : Module 1 _ v1 28

Glossary of terms
Term What does this mean?
Any action that speaks in favour of, recommends,
Advocacy argues for a cause, supports, or defends, or pleads on
behalf of others.
Was a political system in South Africa in which people
Apartheid
were divided into racial groups and kept apart by law
Association A group of people organised for a joint purpose.
A person or group who receives money or other
Beneficiary
benefits as a result of something else
Collaborate To work jointly with others or together
Include any guaranteed and performance-based
Compensation pay the company offers for daily work, benefits add
and benefits extra value for employees in the form of monetary or
nonmonetary perks
The basic principles and laws of a nation, state, or
social group that determine the powers and duties of
Constitution
the government and guarantee certain rights to the
people in it.
Is a business or organisation run by the people who
Co-operative
work for it or owned by the people who use it.
A term used in accounting to specify an entity,
Creditor individual, or company that has delivered a product,
service, or loan, and is owed money
Is the right of a person to be valued and respected for
Dignity
their own sake, and to be treated ethically
The practice of unfairly treating a person or group
Discrimination
differently from other people or groups of people
Something that is given to a charity, especially a sum
Donation
of money.
A person or organisation who gives something,
Donor especially money, to a charity, organisation, or country
that needs it.
SERVICES SETA _ NPO : Module 1 _ v1
Eligible Qualify
A sum of money given by a government or other
Grant
organisation for a particular purpose.
Having concern for or helping to improve the welfare
Humanitarian
and happiness of people
The state of wanting or being able to do things for
Independence yourself and make your own decisions, without help or
influence from other people
A situation in which money or opportunities are not
Inequality
shared equally between different groups in society
Capable of being put or used in the place of each
Interchangeable
other
is a written narrative that describes the general
tasks, or other related duties, and responsibilities
Job description of a position. The analysis considers the areas of
knowledge, skills and abilities needed to perform the
job.
The core purpose of an organisation or a company. It
Mission
is the summary of the aims and core values
To come to an opinion about something, or have a
Perceive
belief about something
Broad statement that defines a suggested ethical or
Principle
managerial direction for a non-profit organisation.
Regulatory Serve two primary functions in government: they
agencies implement laws, and they enforce laws.
The act of supporting a person, organisation, or
Sponsorship activity by giving money, encouragement, or other
help:
Meeting our own needs without compromising the
Sustainability
ability of future generations to meet their own needs.
A person who works for an organisation without being
Volunteer
paid.
Exposed to the possibility of being attacked or harmed,
Vulnerable
either physically or emotionally.
29
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30