From Corporate Donations to Self-Financing: MBARC Resource Centre

Wednesday, 28 August, 2002 - 23:00

The following case study comes from Ashoka's booklet Creative Strategies for a New Era - South African NGOs Mobilise Local Resources, written by Fazila Farouk and edited by Lisa Cannon.

The following case study comes from Ashoka's booklet Creative Strategies for a New Era - South African NGOs Mobilise Local Resources, written by Fazila Farouk and edited by Lisa Cannon.

Located in downtown Johannesburg, the Master Builders Association Resource Centre (MBARC) develops the entrepreneurial skills of emerging contractors from disadvantaged backgrounds that have practical building related skills and wish to venture into the business world on their own. Members join the centre for a modest annual fee of one thousand Rand, which gives them access to business and computer training, professional services, information and contacts. According to MBARC, computers are a necessity to overcome disadvantage. Therefore, it places an emphasis on providing computer training that enables members to master basic computer applications, including spreadsheets and in some cases advanced applications, such as computer-aided design.

Dominic Tweedie, founder and director of the resource centre, says: "Fund raising was difficult to the point of impossibility - if the resource centre was to be replicable, it had to be able to get its income from its customers, which means being frankly commercial and therefore part of the normal economy of the country."

Launch organization with support from a donor
The resource centre was launched in 1996 through a strategic partnership with the Master Builders Association (MBA), a voluntary association of employees of South African construction companies. MBA agreed to fund the director's salary. It also gave its name to the resource centre as a way of gaining access to emerging black contractors that were favoured in government contracts for the development of massive low-income housing and public works contracts. In this partnership, MBARC attracted and trained emerging black contractors, while the MBA had access to a pool of trained entrepreneurs and gained credibility by supporting the centre.

Four years later, the MBA began to downsize in order to remain profitable. They continued to assist MBARC on a reduced basis for the next 10 months. This gradual reduction in assistance gave MBARC a soft landing in its transition to self-management and self-financing.

Build a client base, recognizing both its needs and its personality
MBARC's unique resource mobilisation approach has its roots in a market-based approach called the 'New Paradigm' where the client pays for services and may be assisted to do so, but will make the choice of service provider him/herself. Within this approach, the service provider is not funded and is expected to rely on a thorough marketing relationship with the clientele. Thus, clients are given greater control over the choice of service provider because they pay for services. This approach challenges the somewhat limiting benefactor/beneficiary carrot dangling NGO/client relationships that often exist.

Introduce a direct mailing system
MBARC finds that its most effective channel for drawing in customers is direct mail, though this is augmented by word of mouth, local newspapers, and construction related newsletters and journals. Thus, members independently identify and choose to buy the services of the MBARC.

Keep costs to clients low by keeping costs to organization low
MBARC is favourable to its clients, because its costs are kept low due to their poor economic circumstances. It is possible to be profitable at such low rates because of MBARC's unique 'open-access' service provision that corresponds with a very lean cost structure. This involves presenting a daily set menu of courses on a rotating basis. Each morning a different topic is offered, once all the topics have been dealt with, the cycle of topics is repeated. Consequently, members attend classes at their own convenience because missed classes may be caught up at other times in the year. This cyclical system reduces deadline pressures and brings down costs for both the centre and its clients.

Results
MBARC is an example of a small resource centre that is successfully attracting a growing clientele in spite of charging fees for its services and respecting the client's right to choice of service provider. The centre's operating and staff costs are paid for entirely through sales income that currently averages approximately twelve thousand Rand per month. This is sufficient to support the existing two staff members and service each new member, between thirty and sixty each month. Working on its own since January 2000, MBARC has become a company supported entirely by its clients. The MBARC model has been replicated in Soweto.

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