One sad fact in our capitalistic world is that funding for many worthwhile efforts is often difficult to obtain if there is not a direct profit opportunity to be had.  Non-profit’s and local community leaders need special assistance, especially in developing countries, to gain access to appropriate resources of capital devoted to their respective purposes.

Attempting to improve the health, education, and welfare of the impoverished by starting a business designed to support the local need is admirable, but your typical banker is not the one to be approached for a business loan. Most people that follow this route are too often met with the reality of bank lending practices.  Loans cannot be made without collateral, and the security of this collateral must meet high standards set by each individual bank.  If the project fails, the bank wants something to salvage to recover its money.  It also will not lend unless there are “visible” flows of cash to pay back the loan over the loan’s term

If banks will only make a business loan under these conditions, how is a local effort to get funded in the first place?  Most often, if the initiative is not driven by an organization that already has funding, then the effort will require more effort than with a normal startup venture.  There are philanthropic institutions, both charitable and faith based, which are devoted to this purpose.  The difficulty involves approaching the right organization and applying for a grant in the appropriate manner, not an easy task when language and cultural barriers stand in the way.

Local development agencies should be approached first since their reason for being is to assist with projects of a non-profit nature for the good of the regional community.  These groups should also have information and contacts at larger organizations that may not be in the local area.  There are an enormous number of philanthropic groups around the globe that network through many smaller organizations.  If you do not meet success at the first one contacted, they may connect you with a group that will be eager to help.  Here are a few examples of these larger groups:

• The Africa Grantmakers’ Affinity Group (AGAG) is a membership organization of foundations that either fund or are interested in funding in Africa.  AGAG has its roots in the South Africa.  These influential managers are instrumental in sharing and learning the most effective ways to support development efforts in Africa.
• The African Women’s Development Fund (AWDF) is a fund-raising and grant-making initiative, which aims to support the work of the African Women’s movement.  AWDF, the first Africa-wide fund-raising and grant-making fund, was established in June 2000.
• The U.S. Agency for International Development (USAID) promotes peace and stability by fostering economic growth, protecting human health, providing emergency humanitarian assistance, and enhancing democracy in developing countries.  USAID has working relationships, through contracts and grant agreements, with more than 3,500 companies and over 300 U.S.-based private voluntary organizations.

Tom Cleveland is a writer for SmallBusinessLoansDirect.com.  He has over 30 years of experience in executive management, corporate governance and business development.  Tom served as CFO for various Visa International entities from 1980 until his retirement in 1999 and was instrumental in expanding the global reach of the Visa system.  Tom’s writing on business issues has appeared in the NY Daily News and BusinessInsider among others.

Well, Tax Day is upon us, and hopefully you’ve gotten your forms filled, your returns filed, and you’ve got a nice refund on the way. With all things fiscal in the air, it’s a good time to think about your company’s legal structure, and how that’s affecting your business tax status.

There are both legal and tax-related distinctions to different business types. Read these Bplans articles from the experts at Nolo to make sure you are structuring your business to use those differences for your benefit:

• How Sole Proprietors are Taxed
• How Corporations are Taxed
• How Limited Liability Companies (LLCs) Are Taxed
• How Partnerships are Taxed
• Earning Income as a Nonprofit Corporation

Sara Prentice Manela
Editor

Planning software like Business Plan Pro does a good job of helping you evaluate the financial projections for your non-profit – how many donations you will need, what expenses you will have, and how many projects you will fund.

But what about evaluating the effectiveness of your programs, efficiency in using your funds, and choosing which new program to add to your non-profit’s purview?

GiveWell, an independent, non-profit charity evaluator, has come up with a process for assessing which charities make the best use of donor funds, not just in terms of administrative costs, but how well charities accomplish their stated mission: how many people do they actually help, and at what cost?

Although GiveWell presents itself as a tool for donors, their evaluation model is helpful for anyone running a non-profit, as well. Consider how your non-profit organization would measure up to their criteria:

1. What’s your cause? Is it clearly defined, or does it try to straddle multiple challenges and populations? The more narrowly you define your cause (your ultimate goal), the more likely you are to be able to produce measurable outcomes, and direct your efforts where they are effective. For example, “providing refrigeration units and the energy to run them in 15 rural clinics which serve children in need” is a more measurable goal than “helping poor children in rural areas.”

2. How scalable is your work? If you suddenly received ten times as much funding as you currently have, would you be able to generate ten times as much benefit for your targeted beneficiaries? Or are there non-monetary obstacles surrounding your projects (political resistance, lack of qualified personnel to carry out the program, etc.)? If there are non-monetary obstacles, these are good opportunities for working with other groups to fix these structural problems. Perhaps you can jointly sponsor training in related fields, or create a united political front about the need to help your targeted population. Be creative.

3. Are you sure that the solutions you’re providing are actually working, and not just correlating with unrelated changes, or even making things worse? This is a tough one. It requires not only that you have good intentions, but that you make tough choices about proven vs. likely solutions. It’s easy to measure the benefit of providing a tuberculosis vaccine in a community with high TB rates, because years of scientific study have already been done. It’s much harder to measure the long-term impacts of providing a micro-loan to a small business owner (who has already demonstrated the gumption to get a business going, and might do fine with a different funding source). For a nice example of counter-intuitive donating advice from an economic perspective, see Begging in India and How to Actually Help the Poor, by GoriGirl.

4. What are the opportunity costs of the ways you deliver aid? Essentially, this is the question of how many people you are helping per dollar spent. Ideally, you want to be able to track, long-term, not just how your aid helps an individual directly receiving it, but also all those others that are indirectly affected. If you loan money to a woman to buy a cow, with which she can support her family, are you also helping: her children, who go on to have an education? Her extended family? Her community, as she re-invests those profits and hires others in her village? Are there more cost-effective ways of helping that number of people in those ways? This question requires a thorough economic, social, and possibly medical understanding of the conditions in which your aid is being delivered, so you can clearly outline the situation both with and without the aid you provide.

5. How well are you documenting your successes and failures? Every non-profit has failures. The beneficiary who sells the donated goods to buy drugs; the medical effort that fails because a flood washed out the road and the doctors couldn’t arrive in time. It’s okay to have failures and make mistakes – but it’s essential to document them, analyze them, and learn from them. This is how you hold your organization accountable to donors and beneficiaries for the way you use funds.

These are just a few of the really good questions that GiveWell asks when it reviews a charity. Take a look at their website for more ways you can improve your non-profit’s ability to measure its effectiveness and efficiency.

by Sara Prentice Manela
Editor
Palo Alto Software

I’ve been spending a lot of time (maybe way too much) with Twitter lately (you can find me there as timberry) so I feel like at least one of the good things about that is suggestions such as idealist.org, which I got from a Twitter friend and seems like a really good recommendation for people looking into nonprofits or social media.

That site seems to have very good basic information on setting up and running a nonprofit, on a wide variety of topics ranging from legal to fundraising, marketing, etc.

Today is Blog Action Day. Through out the day, thousands of bloggers will unite to discuss a single issue – poverty. The purpose? To raise awareness and initiate action on this very important topic.

In keeping with that theme, I’m going to re-introduce you to Kiva. We’ve mentioned this company before, [Steve Lange wrote on becoming an investor/lender through Kiva]  but such a great company with a goal to bring people out of poverty by helping them start or continue their business is a topic worthy of more than one blog post.

Kiva.org is a nonprofit organization that lets you lend to a specific entrepreneur in a developing world, empowering them to lift themselves out of poverty. You can look through the list of pre-screened entrepreneurs on the kiva.org website and choose one to send your loan, which can be as little as $25.00. You’ll receive updates and eventually, as the business succeeds, have your loan repaid.

Kiva is the world’s first person-to-person micro lending website and has brought together worthwhile entrepreneurs with people willing and able to aid them in their struggle to make a business dream live.

Too often we hear about the businesses that need thousands and sometimes millions of dollars to start or continue operating, but with small micro loans, these companies are starting and growing successful businesses.

Kiva.org – Loans That Change Lives
Make a Small Loan, Make a Big Difference – Check out Kiva.org to Learn How!

‘Chelle Parmele
Social Media Marketing Manager
Palo Alto Software