B-Corps or A-NGOs?

A few months ago, the Donar Online team started to flirt with the idea of being certified as a B-Corp in order to reach social impact investors. I had actually never thought of Donar Online as something other than a nonprofit, still I am aware that B-Corps have a bunch of very seductive attributes that can make the funding process flow quite smoothly.

B-Corps are usually described as professional, efficient, impactful, innovative and revenue-generating. And guess who aren’t ever described this way? NGOs. More precisely, there is a widely-held belief in NGOs being the exact opposite.

I won’t deny philanthropy has, at times, given place to mismanagement in the social sector, but isn’t it quite unfair to state that NGOs will never meet B-Corps’ allegedly professional standards? There are great ideas out there, in the third sector universe. Great ideas that come along with incredibly engaged teams and a remarkable delivery capacity.

I like to call these five star professional nonprofits ‘A-NGOs’. This new generation of social tech nonprofits shares B-Corp values and principles: they are professional, autonomous, groundbreaking and they produce measurable impact. Basic differences between A-NGOs and B-Corps are:

• Unlike with some B-Corps, in A-NGOs there is no dividend payout whatsoever. This allows for the reinvestment of all revenue generated, attaining full impact maximization.
• The legal vehicle distinction implies tax privileges for A-NGOs. These privileges are resources that can be allocated to program budgets, again, maximizing impact.
• The use of technology and innovation is a must for A-NGOs. This is, on one hand, a supplementary approach to maximizing impact through process optimization and, on the other, the development of civic tech solutions to address pressing social challenges.

All of this sounds very nice, yes, but how is it that these A-NGOs generate revenue? Thanks to the development of custom self-sustainability models based on their value proposal. Just like private sector income sources, the range of options is wide: product supply, consultancy, service fees, trainings, subscriptions. A-NGOs generate value on a daily basis and their high performance teams are there to turn this value into a unique income source. And it doesn’t end there. What’s so great about this is that the higher the income, the higher the impact and vice versa, maximizing impact necessarily derives in a higher income. Self-sustainability equals social impact sustained over time.

A further advantage for A-NGOs in terms of income source development is that they can also develop individual donor strategies that imply a stable monthly income with an outstanding growth potential. In any case, whether it’s recurring individual donations or the supply of products and services, A-NGO income models are endorsed by a solid audience supporting their mission.

Does this mean B-Corps and A-NGOs have a conflict of interests? Not at all. B-Corps do a wonderful job refreshing the private sector with an impactful approach. A-NGOs refresh the third sector instead, with a sustainable approach. In both cases, social impact is a must. So let’s think of B-Corps and A-NGOs as friendly counterparts in this quest for innovation and change.

Without even realizing it, we’ve been nurturing A-NGOs in our Civic House Community for several years now. We have learned how to work iteratively, turning mistakes into opportunities. We have seen robust leaderships grow and collaborative work blossom. At this point, I’m pretty convinced we should put the spotlight on A-NGOs and on their vital role redefining the third sector ecosystem.