What role will nonprofit organizations play the future in developing countries?

I started this semester skeptical about the idea of for-profit companies addressing social problems in developing countries fearing exploitation of the poorest, most vulnerable populations. However, as we advance through the course, I find myself questioning my previously held beliefs and asking rather, what role nonprofit organizations will play in this age of globalization, as businesses race to capture a share of the BOP market?

Several models we explored promote for-profit organizations as the way to create lasting change. In the reading for this week, A Social Solution, Without Going the Nonprofit Route Sam Goldman, the cofounder of D.Light, extends this idea saying "that only as a business could a project become large enough to reach the great number of people who use these lamps as their primary source of light.” Further, in the PBS video we watched last week about the water pump KickStart one of the people interviewed, Mark Bell, a professor of international agricultural development went as far to say, “The well-meaning tradition of nonprofits in developed countries, giving tools and equipment to poor people in Third World countries, is a poor model.”

Is the traditional model a poor fit? I tend to agree. The traditional nonprofit model often has no revenue stream, as goods are given away for free. Therefore, they depend heavily on charities, donations, and the government for their funding. However, that funding stream is vulnerable to people’s generosity, changes in the economy, and government politics. Moreover, what happens when funding dries-up? The organization leaves and the people in need must fend for themselves again. Yes, some people were helped, but the social issue persisted.

This is changing, though, as emerging economies grow and developing countries grow their wealth. As developing countries as they gain wealth and spending power, they are more equipped to tackle their own social problems and less reliant on outside support. For example, I stumbled upon a nonprofit organization called Akshaya Patra on the Stanford Center for Social Innovation website (http://csi.gsb.stanford.edu/social-enterprise-reduce-hunger-india). This innovative non-profit organization started in 2000 and now feeds about 1.2 million children throughout India. The model combines local products, local labor, and pre-existing government funding (directed to feeding poor school children) with innovative kitchen technology developed through frugal engineering. The key difference between this non-profit and the traditional non-profit, doesn’t lie in its funding structure as Akshaya Patra is funded through the government and private donations. The distinction is that the organization is a local solution that relies on local products, local labor, and domestic support.

The success of Akshaya Patra suggests that for-profit companies aren't the models that can solve social problems but I return to my initial question; what role will nonprofit from developed countries play in the future? Maybe traditional NGOs from developed countries will, in fact get phased out but I believe that is a good thing. It will signal a shift from an outside solution to a local and thus a balancing of equality.