14. Max Foundation (B): What Is the Best Route Forward?
08/2011-5788
This case was written by Martijn Thierry, independent strategy consultant for profit and non-profit organisations, and Luk Van Wassenhove, the Henry Ford Chaired Professor of Manufacturing and Professor of Operations Management at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
The authors gratefully acknowledge the support of Mirte Gosker, Research Associate at INSEAD Social Innovation Centre.
Copyright © 2011 INSEAD
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I. Finding Partners for Growth
At the beginning of 2011, one of the main challenges facing Max Foundation is that the group of local partners in Bangladesh cannot keep up with the speed at which the Foundation is growing. In other words, their capacity to implement projects falls short of what the Foundation would like them to do.
2010 was another record year for funding. A total of €724,912 was raised, almost doubling the previous record of €376,711 in 2009 (see Exhibit 14), but as Steven observed:
“Our existing local partners are not able to grow at the same level. We faced the same situation in 2007. Then we solved it by finding Aungkur as a new partner. This time is different as we face a capacity shortfall in 2011 of around 250 villages. In normal circumstances, a new partner of the size of Aungkur can do around 25 to 50 villages in the first year. That shows that we need to find 5 to 10 new partners in 2011 if we follow this route.”
The existing local partners share several characteristics. They have between 100 and 300 employees per organization. They are established in the local community and offer other programmes besides micro-sanitation, such as micro-credit and education. They operate as NGOs and hence make no profit. There are no management development programmes in place. Each partner is led by a director—at this time all the directors are men—and his personal span of control sets the limit on how much the organization can handle. In most cases, directors have spent their entire professional career in the NGO sector.
Steven is considering two alternative partner routes.
“The first alternative is to work with medium-sized local NGOs, employing say 500 to 5,000 people, instead of the small local organizations that we work with now. We have not done this before. One advantage of working with small organizations is that you are sure that they listen to you, that they are open to your suggestions. An advantage of working with medium-sized organizations is that they should be able to handle many more villages, providing them with micro-sanitation and TBA support, than small organizations.”
The second alternative is more radical.
“We know the benchmark cost for providing micro-sanitation and TBA support to a village of 200 people: around €800 to €1200. We roughly know which areas in Bangladesh have the highest need for micro-sanitation and TBA support. What we can do is to make a social entrepreneur, or multiple social entrepreneurs, interested in seeing this as a business opportunity. The deal would be that they provide a village with micro-sanitation and TBA support at a cost of €1200 per village. They make a profit when they can do it for less money. More villages means more revenue for them. An advantage could be that this attracts ambitious people from outside the NGO world with fresh ideas.”
Should Joke and Steven aim to grow Max Foundation? Which of the three proposed partner routes (small local NGOs, medium-sized local NGOs, or via social entrepreneur(s)) should Max Foundation choose and why?
II. Measuring and Analysing Impact for Better Performance
A second challenge is to measure and analyse the impact of Max Foundation approach (micro-sanitation and TBA training) on child mortality in rural Bangladesh in a comprehensive and systematic way. The ultimate proof that the approach works will be when it can produce reliable quantitative data that child mortality has declined as a result of its work. Max Foundation would then also have the possibility to analyse the data and look for new opportunities to make the approach more effective, as Steven explained:
“For instance, should partners position new DTWs in a cluster, all located closely together, or should they first cover a larger area, with larger distances between DTWs, and fill in the gaps later? At the moment we do not know for sure.”
Max Foundation has taken steps in that direction but is not there yet, as Steven pointed out:
“We have a lot of anecdotal evidence from our visits in 2008, 2009, and 2010 to the villages in Bangladesh. Everywhere people told us that their children were not dying of diarrhoea any more. But anecdotal evidence is not the same as hard data.”
At the beginning of 2010, the Foundation commissioned a study to examine the impact on child mortality in a limited group of villages that started micro-sanitation in 2006. The Bengal consultancy NCB study showed a 70% reduction in child mortality three years after implementation of the micro-sanitation programme in a selected group of 12 villages. In the report, NCB indicated that it had been very difficult to get reliable data on child mortality.
The WHO World Health Report 2008, entitled “Primary Health Care. Now more than ever”, calls it “the scandal of invisibility: where births and deaths are not counted”, estimating that 40% of 128 million global births go unaccounted for due to the absence of civil registration systems. Moreover, two-thirds (38 million) of the annual total of 57 million deaths world-wide are not recorded. These are the global figures. The situation in Bangladesh is worse: only 7% to 10% of child births are registered.1
1 Source: UNICEF - http://www.unicef.org/bangladesh/media_5291.htm.
Should Max Foundation develop a system to gather and analyse data on its own? Or should it collaborate with other NGOs, such as UNICEF, which face similar challenges?
III. Developing One Marketing Strategy for a Specific Donor Segment
Scaling up requires a continuous increase in funding. This creates a dual challenge for Max Foundation: to retain existing donors (and where possible increase their funding) and find new donors at the same time.
The number of fundraising contacts—individuals who have made a donation to Max Foundation at least once—reached 1600 at the end of 2010. For most people, sponsoring a DTW for €350 is a significant donation. In return they receive a picture of the DTW that is dug in their name (see Exhibit 4). All fundraising contacts receive the digital newsletter of Max Foundation, published 12 times per year. In general, Steven and Joke would like to strengthen the relationship with existing individual donors:
“We would like to create a closer bond. We would like to offer them something so that they stay more connected to Max Foundation. Today, most individuals that donate a DTW, which we find a great contribution, will do this only once.”
More specifically, Steven and Joke would like to find more individual donors in the 55-plus age group.
“The majority of our current donors are 30 to 55 years old, and most of them work as professionals. What should we do to get more donors in the 55-plus age group?”
Research in the US shows that members of the older generation give more to charities. A study conducted by Edge Research2 found that members of ‘Generation Y’, who were born from 1981 to 1991, gave an average of $341 to charity, while members of ‘Generation X’ (those born from 1965 to 1980) gave an average of $796. By contrast, the ‘baby boomers’ (people born from 1946 to 1964) gave an average of $901, and those born in 1945 or earlier gave an average of $1,066 to charity.
2 Source: Edge Research, The Next Generation of American Giving: a Study on the Contrasting Charitable Habits of Generation Y, Generation X, Baby Boomers, and Matures, March 2010.
What marketing strategy should Joke and Steven adopt to get more donors and funding from the 55-plus age group? What other benefits could they get from targeting this group? What are the main needs and concerns of this group with respect to giving to humanitarian causes?