Social Entrepreneurship as Funding Diversification Strategy for Non-Profit Organizations

One of the challenges faced by non-profit organizations and philanthropic organizations in Indonesia in recent years is related to funding. According to a report from the Department of Foreign Affairs and Trade, Government of Australia (DFAT) released in 2017, international donors to non-profit organizations in Indonesia decreased by around 85%-90%. This condition makes it necessary for non-profit organizations to diversify their funding sources, so that they can continue to carry out their social activities and expand the reach of beneficiaries.

“Diversification of funding is important because if we only rely on one source of funding, namely grants, the risk of sustainability of a non-profit organization becomes greater,” said Adisti Chandra, COO of Instellar in an online discussion forum entitled Sustainability of Philanthropic and Non-Profit Institutions through the Social Entrepreneurship Approach which was held by the Indonesian Philanthropy Association together with Instellar on Thursday, October 15 2023.

Adisti explained, by having business activities that generate revenue or sales, the operations of non-profit organizations can be helped and become healthier. It should be noted that having a business does not mean you will compromise the impact or goals of the organization.

“This business actually supports and complements each other. Is it easy and fast? Not really. However, that doesn’t mean this is impossible. “It took courage from friends in the organization to start this, of course through good planning,” said Adisti.

One strategy that an organization can carry out is to transform into a social enterprise or social entrepreneur. Instellar, through Instellar Impact Advisory (IIA), acts as a consultant for impact investors and nonprofit organizations who wish to have a business unit in the form of a social enterprise.

Irvan Faried, Impact Advisory Lead of Instellar, said that to help non-profit organizations start business activities that can generate financial income, Instellar uses the Organizational Readiness for Business Assessment tool. Through these tools, an organization’s readiness is assessed from six indicators, namely Top Management Commitment, Human Resources, Financial Resources, Business Competence, Assets, and External Resources.

Lingkar Temu Kabupaten Lestari (LTKL) is one of the organizations that formed its social enterprise business unit, namely Tanah Air Lestari with the help of Instellar. Febri Raharningrum, CEO of Tanah Air Lestari, said that Instellar’s assistance for transformation began in 2019.

“As the process progressed, from 2019 the business assessment started, in 2020 the ideas became sharper, and in 2021 the Tanah Air Lestari entity was formed whose core function was capacity building, by designing training, workshops and module development,” said Febri.

Are you and your organization keen to obtain alternative funding schemes? Contact us at hello@instellar.id for further discussion.