Written by Daniel Pacheco, Executive Director of NRG Solutions
“So, are you guys a company or NGO?” This is probably the most dreaded question for anyone trying to make a difference in either the for-profit or non-profit sectors. Trying to create change as a smaller non-profit comes with the burden of decades of previous failed international aid operations— it’s unsustainable and ineffective for making large-scale impact. But trying to make a difference as a for-profit company makes many question your character and intentions. Critics always seem to be saying, “How dare you make a living out of helping others?” The general answer chosen by many (including me) has been the “social enterprise” label. I make sure to never forget using the air quotation marks to try and avoid the cynical response such a loaded terms can generate in this community.
I’m an engineer who came to Cambodia over 4 years ago. After only a few months here, I saw the opportunity to create an impact for a large portion of the population by giving them access to electricity via solar energy. With this in mind, I had the chance to start working under an existing NGO. But it didn’t take long to run into some of the limitations of the non-profit sector. After many months ignoring the usual sentiments of “Oh that’s cute”, ”How very nice of you”, and “But when are you going to start making a living for yourself?”, the real limitations of working as an NGO became apparent. There were legal and financial limitations, an over-dependence on donations and fundraising, and a general inability to attract investments to consider. On top of that, we were constantly concerned with being taken seriously by key players in this field, who’s support was crucial to our growth.
But ultimately two questions made me re-think the non-profit approach:
1. How can I make a truly sustainable difference working as a non-profit?
2. Is it really such a bad thing that I want to do charitable work AND make a living for my self? Why is it ok for my friend to make good money selling insurance, but I get frowned upon if I want to make a decent living while helping others?
We ultimately saw that as a non-profit, our growth and ability to invest in overheads to increase our capacity was significantly limited.
So together my colleagues and I decided that it was time to take action. We changed our name to NRG Solutions and launched as a for-profit company selling solar lighting, hoping we could then attract more funders. We believed that this would allow us to have a more sustainable model, both for the business and for our customers. But it didn’t take long to face the limitations of trying to make a difference as a company. Despite the initial interest in our projects and goals, a lot of eyebrows were raised when people saw we were a for-profit business. Thus, the “social enterprise” label came in very handy. Even though some cynics might still give us a look for using such a loaded term, it has made a big difference in the public perception about our work. It has now allowed our team at NRG to work hand-in-hand with both NGOs and for-profit companies. A recent example of this collaboration is our partnerships with a local NGO and a micro-finance bank. The NGO is helping us establish a national distribution network for solar energy products because they really liked our social mission. The micro-finance bank sees our potential profit and growth and chose to invest in NRG. Due to our label as a social enterprise, both of these relationships are now possible.
Overall, I truly believe that both the for-profit and non-profit sectors have a crucial role to play in the grand scheme of global development. Unfortunately, the rules and perceptions we impose on non-profit organizations and NGOs are limiting the impact they can have. This mentality has lead more of these organizations to adopt the for-profit model, forcing them to use the social enterprise terminology. Until a fairer and more inclusive playing ground is allowed— one where non-profits are allowed to invest in overheads and growth, where they are encouraged to promote marketing, permitted to re-invest their raised capital to increase sustainability, and ultimately impact more people— many of us will have to continue using the social enterprise label. We will continue using it even if it seems displeasing to some. I have experienced the benefits and limitations of both non-profit and for-profit approaches. I have no doubt that this for-profit/social enterprise model is by far the best in allowing for growth and sustainability, while allowing myself along with many others to make a decent living. It is possible to do all this while supporting local people and communities.
Although it’s old and most of you reading this have probably seen it already, I would highly recommend watching this TED Talk by Dan Pallotta called “The way we think about charity is dead wrong”. Whether or not you agree with anything I’ve said, if you have a response to this topic or any interest in the subject… watch that video. Nobody has been able to explain AND prove this issue so clearly. Watch until the end, when he even goes back in history to try to explain why we have got this whole debate on charity so “dead wrong”. I don’t regret making the jump from non-profit and creating NRG Solutions. I just hope that with time, the global community at large will begin to understand the enormous benefits of an enterprise-based model.
Daniel Pacheco has a BA in Economics from Bard College and a BS in Engineering from Columbia University. Since 2009, he has lived in Phnom Penh, Cambodia, working with solar energy in both the for-profit and non-profit sectors. Daniel currently serves as the Co-Founder and Executive Director of NRG Solutions.
**All photos are the property of NRG Solutions**