Is there any discussion about the compromises inherent in the quest for autonomy?
The sources explicitly highlight the trade-offs inherent in the DO/NGO quest for autonomy, particularly with regard to the three tensions you mention.
BETWEEN SOCIAL MISSION AND PROFITABILITY LOGIC #
The book “Financing Differently” emphasizes the need to reconcile the logic of aid, focused on social issues, and the logic of business, focused on profitability. They acknowledge that these two approaches may seem incompatible at first glance.
- The economic profitability/social profitability dilemma is directly mentioned as a set of constraints that “peasant enterprises” must master. It is a question of knowing whether to finance an economic activity with a view to social or financial profitability, since both can be justified. The authors emphasize that the objectives and development logic of the social movement are very different from those of the companies created, the former wishing to respond to social needs, the latter preferring to make the maximum profit, objectives that are rarely compatible.
- The risk of mission drift is a central issue. When a nonprofit organization or NGO creates a business, it is crucial to maintain a connection with its initial social objective. The question arises as to who decides in the event of a problem: the company’s board of directors or the association’s? Too much independence on the part of the company can lead to a permanent break with its social mission.
- Confusion between social development and economic development is a pitfall to avoid. Funding social activity is only possible if economic activity has generated the necessary resources. The businesses created must respect the association’s charter and be part of a social and solidarity economy.
- The need for a strict separation between the company and the movement is advocated to differentiate economic and social functions. The company must acquire autonomy in management and decision-making from the association to avoid confusion.
- The question of the priority between economic and social profitability is raised. Should a company be closed down if its social profitability is real but its economic profitability is zero or negative? Should it then be subsidized, and can it still be considered a business?
BETWEEN DEMOCRATIC CONTROL AND EFFECTIVENESS OF FINANCIAL MANAGEMENT #
The sources highlight the tension between member participation and the need for competent and effective financial management.
- The risk of technocratization is raised in the context of cooperatives, where excessive priority given to management over member participation can occur in favor of extreme profitability. Similarly, when creating complex financial mechanisms, there is a risk that recruited specialists will impose their rules, removing control from the rank-and-file members.
- The “one man, one vote” principle guarantees democracy in cooperatives, provided that management does not “technocratize” management and monopolize decision-making power.
- The need for new skills to manage economic activities leads to changes in power within the organization. DOs/NGOs rarely have the capacity to independently manage complicated financial mechanisms and have difficulty finding competent staff.
- Power sharing is a democratic principle that is championed, implying the participation of all in the development, management, and evaluation of development activities. In the context of solidarity banks, participation in loan allocation bodies and in the reflection on procedures is seen as a means of strengthening accountability.
- Balancing grassroots power with required skills is a challenge in the management of savings and credit unions. It’s about giving maximum power to the grassroots to encourage involvement and cost control, without exceeding the necessary threshold of information and skills, and avoiding excesses.
BETWEEN INDEPENDENCE FROM EXTERNAL LENDERS AND POTENTIAL DEPENDENCE ON A MARKET OR CUSTOMERS #
The pursuit of financial independence is presented as a strategy to free oneself from dependence on external aid. However, this independence can lead to a new form of dependence.
- The logic of aid is different from the logic of business, and reconciliation is necessary. The transition to business management introduces key concepts such as profitability, competitiveness, and market control.
- Market dependence means that goods and services produced must be competitive in terms of quality and price. DOs/NGOs must control procurement and marketing. Market research is necessary to assess commercial potential before launching new productions.
- The financial risk associated with starting a business includes the possibility of generating losses. Development companies must calculate their cost and selling price to be competitive.
- Fundraising is evolving. Instead of relying on grants, NGOs/DOs must develop their own sources of revenue through the sale of products and services. This requires clearly defining their products, prices, distribution channels, and business model.
- The importance of local elites is highlighted as a potential resource for funding and expertise, but it is necessary to maintain decision-making power at the local community level to avoid a new form of dependency.
- Advocacy and lobbying actions are presented as a long-term solution to promote financial and political autonomy by addressing the economic constraints imposed by the market.
En conclusion, les textes de l’IRED reconnaissent pleinement les compromis et les tensions inhérents à la recherche d’autonomie. Ils mettent en garde contre la dérive de mission et la perte de contrôle démocratique lors de la professionnalisation et de la diversification des sources de revenus. Ils soulignent la nécessité d’une gestion rigoureuse, d’une planification stratégique et d’une réflexion approfondie pour naviguer entre ces différentes logiques et dépendances.
