Road to financial sustainability : how managers, government, and donors in Africa can create a legacy of viable public and non-profit organizations

This paper provides a conceptual framework and a course of action to create more effective, financially sustainable organizations in Africa, where 80-95% of an organization"s budget may come from foreign sources. Natural resource management and agricultural research and transfer organizations are used as examples throughout the paper, but the framework, which emphasizes the importance of competition and the proper incentive environment to nurture organizational performance, is applicable to many kinds of organizations, including universities and non-profit organizations. At the heart of the paper is a 10-step Road to Sustainability that managers of organizations can follow to gain credibility with stakeholders and enhance their competitiveness in a new environment of funding scarcity. The Road to Sustainability encourages organizations to embark on a program of rehabilitation of four kinds of capital: physical and financial; social; intellectual; and organizational. Since organizations do not exist in a vacuum, the success of these organizations in becoming sustainable will also depend on how African governments and foreign aid donors restructure the incentive environment in which the organizations can operate. Hence, parallel roadmaps for these two players are also proposed. The key points are the establishment of continent-wide performance standards for organizations, the introduction of large-scale continent-wide and regional competitive funding mechanisms that pool donor funds, and greater reliance on these mechanisms to allocate partial endowments for organizations that have successfully traveled the Road to Sustainability. Includes bibliography and brief appendices providing guidance for assessing financial systems, financial accounting standards, organizational diagnosis, governance of public-interest organizations, and oversight boards in Africa.