Sustainability is a long-term perspective in which organisations or programmes aim for independent operations. The concept of sustainability has long preoccupied donors and development practitioners, but there is a lack of clarity in its meaning. Sustainability can be defined as the ability of organisations and individuals to continue their institutions and programmes beyond the termination of external assistance and remain reactive to changes (Devkota 2010). According to Swedish International Development Cooperation Agency, “A development programme is sustainable when it is able to deliver an appropriate number of benefits for an extended period of time after major financial, managerial and technical assistance from an external donor is terminated”.
Sustainability has many dimensions but institutional and financial dimensions are particularly important in the context of managing community health projects. Institutional sustainability refers to the ability of the organisation to govern and manage its work according to the principles of accountability and transparency without interference of external agencies. It is essential that health care institutions are governed and led by a group of people who have vision and commitment and the organisations are positioned in the strong values. Financial sustainability refers to the capacity of generating required revenues locally or ensuring that the external sources of funds are available to continue the programmes. In fact, institutional and financial sustainability are mutually interdependent (Hailey 2000a; Low and Davenport 2002). Many community-based health programmes are not sustainable because they are not organisationally capable, economically viable and financially independent. The sustainability of programmes can be promoted through generating local revenue and building leadership and management capacity. Most international agencies desire their community-based programmes evolve into self-reliant local entities that are able to continue the project activities. With increasing international donor fatigue and the potential availability of local resources, many development professionals are talking about local institutions becoming independent and financially sustainable (Mango 2010). However community-based health care institutions remain weak because they lack reliable and long-term funding. They become vulnerable to outside influence and project-based funding that inhibits the ability of the local institutions to respond to their beneficiaries. It needs a long-term strategic vision for them to become financially self-sufficient by generating local revenues. Long-range planning and budgeting process and efficient financial management are important aspects to pursue financial sustainability. From the financial sustainability point of view, it is good to have diversity of funding or income sources to avoid dependency on a single donor or income source. The organisation called, Mango (http://www.mango.org.uk/Guide/TT4) provides some tips for the secrets of financial sustainability that include:
- A diversified funding base
- Availability of unrestricted funds
- Availability of financial reserves
- Strong stakeholder relationships
- Assessing and managing risks
Funding assistance from international donor agencies in the form of time-bound project funding does not contribute to long-term financial sustainability. A couple of strategies including setting up an ‘endowment fund’ as suggested by Holloway (2001) and Moore (2005), and the idea of ‘matching fund’ as suggested by Conradie (1999) and Hoksbergen (2005) are found to be important strategies towards achieving financial sustainability. The ‘endowment fund’ is a fund that is set up using money or property donated to an organisation, with the stipulation that the fund be invested, and the principal remain intact. The expenditures of the organisation are met by the income earned from the investment, without using the principal fund. It is very challenging to become self-reliant financially for those health care programmes whose primary mission and vision is to help poor people at the grassroots level. Even in the concept of the ‘endowment fund’, there is a need of huge external grants support to set up the fund and it is an important issue to own and handle the fund with care in the resource-poor countries where there is the lack of transparency, integrity and accountability. However it is more applicable to certain types of organisations, such as hospitals and training institutions. The ‘matching fund’ is the term used to describe the requirement or condition placed by donors to their local partners that a certain level of contribution (preferably 50%) should originate locally. In this context, local organisations raise half of total income locally and donors contribute the other half as grants support. There are few donors who are willing to provide start-up capital as seed money or a revolving fund. However due to lack of skills and linkages to wider networks grassroots institutions do not have strong access to regular sources of capital.
Moore (2005) also claims that NGOs are predominantly dependent on international donor funding. However NGOs are challenged by the tendency of withdrawal or reduction of levels of support by international donors, thereby increasing the urgency of long-term sustainability. He has outlined the mechanisms that promote the financial sustainability of NGOs. These include government or public sector support, private charity, self-generated income, community contribution and volunteerism.
It is advisable that the community health care programmes run their institutions like a business and the concept of user charges be promoted to aim for financial viability. However there is a danger of health care institutions moving away from being a value-driven service provider to a profit making business. The identity of community health programmes can lead to conflict between profit goals and a non-profit mission. If programmes begin charging fees or operating for a “profit” then a negative public perception of charitable health care providers could result. When a charity institution enters the for-profit or cost recovery sector, it becomes as vulnerable as other businesses to the usual challenges of business management and development (Devkota 2010).
It is a huge challenge for community-based health programmes to become financially viable on their own without external support, especially in the context of resource-poor countries. The feasible target for such organisations would be to cover some expenses by generating local income through selling their services or products. They should have a cost recovery strategy for a certain level of expenditures that can be covered through local revenue. Many community-based health care programmes do not have a strategy for cost recovery through local income as they are heavily dependent on the external grants. It is appropriate for community-based health programmes to develop a fundraising mechanism that includes both internal and external sources of funding. Most community-based health programmes are struggling to develop a sound funding base due to a lack of a fundraising strategy. It is essential for them to develop a marketing plan with both short-term and long-term fundraising strategies. Maintaining donor relations and being able to attract donors that provide long-term funding assistance is also a part of being sustainable.
Community-based health care institutions can be regarded as viable organisations if they are driven by their mission and vision and are able to generate some of their required income locally. It is too optimistic to expect local charitable health care institutions not to rely on external funding support particularly in the context of the resource-poor countries. However, institutions should not assume that external grants shall continually flow in their direction. Through launching income generating programmes that are sustainable and regularly produce income, the economic situation of local people can be improved. Their improved economic status and increased purchasing power may lead them to being able to pay the fees of the services provided by health care institutions. Hence, a valid strategy of community-based health programmes could be to develop the purchasing power of their beneficiaries. In this way they can generate local income and aim for financial sustainability. It is quite simple that institutions should run like a business with sound fundraising mechanisms and balanced income and expenditure. However, it is essential for them to maintain their charitable status and values by adopting business tools and techniques that are in keeping with their ethics and vision.
References:
· Conradie, H.F. (1999). Non-governmental organisations and financial sustainability. Development Southern Africa . 16 (2).
· Devkota, B. (2010). Nationalisation of International Non-Governmental Organisations: A Study on the Process, Problems and Pitfalls of the Transformation of Development Institutions through the Process of Nationalisation in the Context of Cambodia University of Reading
· Hailey, J. (2000). Learning for growth: Organisational learning in South Asian NGOs. In: New roles and relevance: Development NGOs and the challenge of change. (D. Lewis and T. Wallace, eds.). Bloomfield
· Holloway, R. (2001). Towards financial self-reliance: A handbook of resource mobilisation for civil society organisations in the South. London
· Hoksbergen, R. (2005). Building civil society through partnership: Lessons from case study of the Christian Reformed World Relief Committee. Development in Practice. 15 (1):16-27.
· Low, W. and Davenport Asia Pacific Viewpoint. 43 (3): 367-379.
· Mango (2010): Financial Sustainability. URL: http://www.mango.org.uk/ [Accessed on 1 December 2010]
· Moore, D. (2005). Laws and other mechanisms for promoting NGO financial sustainability. URL: http://www.icnl.org/knowledge/pubs/Financial_Sustainability.pdf [Accessed on 1 December 2010]
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