Making education a profit centre: Project Literacy

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

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.

It is estimated that up to 50% of adult South Africans are illiterate. Project
Literacy (PL), a large national 'adult basic education and training' (ABET)
NGO has been trying to address this problem since 1973. It has shown the remarkable
ability to survive for almost twenty years by moving from a dependence on donor
grants to become mainly self-financing through income generation projects. PL's
programmes go beyond the scope of basic literacy training and embrace relevant
issues such as health and agriculture, targeting historically disadvantaged
adults and those who belong to the so-called 'lost generation' of school dropouts
that grew up in a time of intense political strife in South Africa.

Identify a viable income source and develop a business plan

In 1995, PL realised it needed to transform its fund raising strategy to
a more comprehensive and sustainable resource mobilisation strategy. PL's board
of trustees and directors, many of who come from corporate backgrounds, set
about developing a business plan. The plan addressed issues in relation to income
generation and how to develop its employees' capacity to secure substantial
government contracts. PL identified donor trends, among them, a shift away from
core funding to more project specific funding. PL's leadership put in place
a restructuring plan that gave the organization a year to shift its structure
and build its capacity to tender for government training contracts.

Develop a marketing plan

PL's success is based in part on developing and implementing a concerted
marketing effort. A two-pronged approach was adopted. The first element entailed
broadly advertising the organisation in the print media and in cinema advertisements.
The second involved going on road shows. The road shows comprised business breakfasts
and lunches targeted primarily at government departments and parastatals because
they hired large numbers of low level workers who were potential ABET or literacy

Create a 'costing' system, emphasizing subsidization and internal accounting

The corporate sector was also targeted through PL's trustees who have friends
in the sector. A special effort was made to emphasize the point to the corporate
sector that NGOs can deliver services professionally and at the same time not
be ruled by a profit motive. Andrew Miller, PL's chief executive officer argues
that PL applies a 'Robin Hood strategy' by charging fees on a sliding scale
to organisations ranging from small community based organisations to large corporate
companies. The funds generated from the higher priced corporate and government
contracts are used to subsidise the work done with the small organisations.
This strategy has also appealed to the corporate clients because of its 'feel
good' value.

The marketing strategy was supplemented by an internal strategy that was focused
on building the administrative capacity of the organisation in an effort to
increase efficiency. The organisation is currently managed along strong business
principles. A 'costing accounting' package was introduced so that every piece
of work could be costed in advance enabling PL to charge accurately for its
services and project income. A pre-billing system was initiated to ensure that
some percentage of fees was received up front - providing cash flow for implementing
the contract.

Shift to a performance-based bonus

In addition, the traditional 13th cheque was disposed of. Now PL employees undergo
bi-annual performance appraisals. Bonuses are awarded to staff that meet their
performance objectives through an improved understanding of service delivery,
customer care and so on. This shift to a performance-based bonus has helped
create an incentive for PL employees to perform at their highest levels throughout
the year.

Rationalise functions that can be outsourced cost-effectively

Linked to the restructuring of the organisation was the outsourcing of secondary
functions to save costs. Historically, PL carried all the stock (books) it produced
for its programmes at a great expense to itself. At a value of 1,5 million Rand,
it was an expense the organisation could ill afford and it was struck out. Today,
PL maintains a commercial partnership with a publishing house that carries PL
stock valued at 3 million Rand, at its own expense. PL merely carries the responsibility
for marketing the books. As a result of this partnership, more books are available
to PL's clients and it earns royalties on sales.


In the last five years, PL has moved from 16% to 80% self-financing. Thus, despite
a dramatic decrease in donor funding, PL's resource mobilisation strategy has
enabled it to flourish from just two regional offices to nine in the last decade,
simultaneously increasing its outreach and impact. PL has increased the number
of learners it reaches directly from just around a thousand to 4,500 annually.
However, the number of learners it reaches directly does not solely determine
PL's success. The real impact of the organisation, which is more difficult to
quantify because of its multiplier effect, is achieved indirectly by the books
sold and the outreach of PL trained educators.

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