More and more nonprofits are turning to for-profit, market-based models to help achieve their societal goals.
There are many ways to participate in this popular trend. Three of the most common are:
1. Identifying, promoting, and investing in businesses that provide socially useful products or services.
2. Supporting individual entrepreneurs who seek to start socially useful businesses in developing countries.
3. Bringing commercial operating and marketing techniques right into the nonprofit context.
One Earth Designs fits the first category. This company manufactures and sells solar-powered cooking units “bringing cleaner air to families around the world.” The solar stoves can also be used to purify water. Focusing especially on western China, the company expects that its cookers will significantly reduce air pollution there, and provide a new, clean source of energy.
In the second group, Virginia-based Ashoka “Innovators for the Public” supports entrepreneurs who have social aims. For example, Fabio Rosa, an Ashoka fellow in Brazil, has helped bring electricity to large rural areas of his country, and cut rural electrification costs substantially. Ashoka seeks out and supports such entrepreneurs around the world.
The third category is where I have personally had the most experience. DKT International, a worldwide family planning organization that I ran for 25 years, uses a standard commercial approach to delivering affordable contraceptives to many millions of couples in developing countries. The approach is called social marketing and it takes advantage of already existing commercial channels to make contraceptives widely and conveniently available.
A DKT program usually starts with market research followed by the creation of new brands of condoms, pills, emergency contraceptives, IUDs and other methods. On contract, a distribution company takes on the job of placing these products in the tens of thousands of retail outlets that exist in every country. The distribution effort is backed by traditional mass media and, more recently, online advertising to promote the products, stressing the advantages of birth spacing.
A major secret of this method is the harnessing of shopkeepers in their tea stalls, market stores, bodegas, kiosks and pharmacies. The shopkeepers make a modest profit on every sale and thus are pleased to be involved. The result is that these programs are able to enlist a whole army of retailers and this, in turn, makes it possible for social marketers to make low-cost contraceptives (the prices are subsidized in low-income countries) as conveniently available as Coca-Cola, tea and other everyday consumer items. Attractive, modern packaging completes the picture.
For contraceptives that require trained practitioners such as IUDs, social marketers train and sell to midwives and to private and government clinics where these methods can be obtained.
Charging a modest price for the contraceptives makes it possible to engage the retailers who would otherwise have no interest. Another advantage of charging — even if it’s only a very small amount — is that use of the contraceptives is virtually assured. Consumers will not part with their hard-earned money unless they are going to use the items they buy.
The social marketing system has been remarkably successful. In 2014 there were 82 contraceptive social marketing programs in 62 developing countries, serving nearly 70 million couples: a substantial portion of all persons using birth control in the developing world.
There are at least three lessons from this experience that other nonprofits can use:
First, consider charging for your products and services, even if it’s only a very small amount. DKT charges around $0.25 per condom for its commercial contraceptive sales in middle-income Brazil, for example, but only around $0.02 for each condom in much-poorer Ethiopia.
A major additional advantage here is the income to your organization. In a country like Brazil, all of DKT’s program costs are covered by revenue. Even in the poorest countries, prices charged can provide significant revenue, lessening the need for donor inputs. Affordable prices can be charged for everything from useful medicines to oral rehydration salts (an inexpensive mixture of sugar, salt, and zinc to prevent dehydration in infants), to a few pennies for nutritious foods.
Secondly, embrace modern marketing techniques. TV and radio are still very strong in most developing countries as are tried-and-true approaches using point-of-purchase displays, posters, event sponsorships, T-shirts and key chains. Social media are also coming on strong. DKT in Mozambique has a website that explains the basics of birth control and the special features of DKT’s contraceptives. Online ordering of nonprescription contraceptives is possible from DKT websites in Turkey and Indonesia.
Thirdly, enlist locally available cadres in your cause. In addition to shopkeepers and pharmacists, there are also cadres of health workers in virtually every country and they can often be enlisted to take part in health-related programs. India, for example, has over 200,000 auxiliary nurse midwives trained and employed by the government. They provide a valuable resource to a variety of health programs, including private ones. Other ideas include getting entertainers or sports figures to spread your message, nutritionists to help with child health, and teachers to promote hygiene messages.
A word of warning. While the commercial approach can be very helpful in expanding your reach and generating income for your projects, be careful not to stray from your mission.
Revenue-generating projects that are not directly related to your organization’s purposes can be both distracting and expensive. The batting average for such projects is poor. However, if you can borrow the appropriate techniques and methods from the for-profit sector you should enjoy many long-lasting benefits.
Making Markets Work is an online conversation to explore what’s being done to make global health care markets accessible to people at the base of the pyramid. Over 10 weeks, Devex and its partners — The Abraaj Group, Philips and Population Services International — will amplify the discussion around effective health financing, analyze key challenges blocking universal market access in the health care supply chain, and explore the key strategies to make markets more effective. Join us as we look at this important issue, and share your thoughts by tagging #MakingMarketsWork and @Devex.