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Posts Tagged ‘benefit

Non-profit organizations, an added value for the society.

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In our society where economy is an important component creating wealth, I often heard critics about the non-profit organizations and associations. People are wondering if the subsides these organizations are receiving are correctly used. In other words, people are wondering if the institutions which do not create economical wealth, are not a charge for the society, and if there are useful. It is of course a pertinent question and people have the right to know how the taxes there are paying are used. People have the feeling that the taxes they are paying are not correctly used, but does it mean that non-profit activities are useless for the society? It should be a quick and wrong conclusion.

Non-profit organizations and associations, in different sectors, cultural or social are playing an important role in the society. We can see different interesting aspects of this sector of activity, but there are also conditions that need to be filled and which are filled in a lot of cases, making that people can have the feeling that their money is correctly used. What are these conditions?

  • Selection of project and the benefit they will produce: there are several needs to be covered in the society, needs that the private sector is not covering because there is no link with their activity and because the final goal is not the profitability. A detailed presentation and activity plan, and determined goals need to be presented in order to see what are the positive effects on economical, social and local level. The allocation of subsides need to be voted by a committee including independent members.
  • Project management and competences: non-profit organizations and associations are non-profit enterprises. It means that they have to face several challenges and issues on financial, legal and organizational level. In order to reach the goals on an efficient way with the allocated funds, some skills and competences are needed. As investing time myself in non-profit associations, I often see some lacks in term of competences, which has a negative impact in term of sustainability.

  • Concrete results: The associations launching projects have to produce concrete results, to justify the allocated amounts. They have the obligation to show the return on invested amounts, not on an economical point of view, but on social, educational, environmental level, depending of the scope of the project.

  • Financial sustainability: The allocated funds have to be spent correctly and each association has to implement controlling process in order to maintain the finance in break even. By creating debts and not paying contractors or employees, you do not reach the social goal of such organization. This is in my mind the weakness of some associations. The goal of a non-profit organization is not to make profit, as the name is saying, but it does not mean that the financial management is useless. I often see projects failure due to lack of management, with negative consequences.

These are some conditions needed to ensure that subsides are usefully allocated to projects. The quality of a project can be measured by the provided benefits. These benefits can be found on different levels, and make that non-profit activities are complementary of the economy. What are the benefits?

  • A positive contribution for the society: the associations are covering a range of services to the society, services not ensured by the private sector. It goes from social or medical services for aged people, for people facing temporary difficulties, also services in the education giving an access to knowledge and culture for everybody.

  • Local employment: this sector is creating local employment. Employment is a important key of social integration.

  • Local economical benefits: these associations are using local services. There are in fact a vector of wealth redistribution, as the allocated subsides have to be spent. The money they are receiving do not remain blocked and sleeping on bank accounts. It has a positive impact on local economy.

  • Personal positive effects: Some non-profit organization and associations are working with volunteers. Some studies show that people having a volunteer activity are in a better psychological and physical health. As mentioned, age is a question of mind. It is not because you reach a certain age that you are unable to contribute to a project, that you are unable to have activities. The fact to contribute to the community, empower the feeling to be useful and the feeling of social integration. We can see also a positive effect and cost reduction for the social security. If people are going well, they need less medical services. Globally, and as already mentioned in other postings on this blog, people need to have a project, to face challenges. The gained successes are an important factor of self- trust and wellness. Such activities have to be recognized, and encouraged. People should be encouraged to do an activity with the rhythm it agreed to them.
  • Social and educational benefits for the community: some social activities, related to education, are contributing positively to a better social and public environment. For instance, structures taking care of the children during holidays or when they are coming back from school and when the parents are still at work. These structures where animators are helping them to do the schoolwork, or by organizing games or activities, avoid these children to stay in the street, abandoned to the boredom, and avoid them to go to delinquency.

By mentioning these points, I tried to show that non-profit organizations and associations have a positive function in the society, on social and economical level. They have to be seen as a complementary activity of the economical activity. Do not forget that the economy is providing taxable wealth and that of course, without a strong economical activity, the public and associative world can not work. It is a question of balance, where each actor has to play the game, by respecting rules and with transparency, where initiatives have to be encouraged and supported.


Written by Eric Saint-Guillain

March 28, 2011 at 07:19

Development, a sustainable way of growth.

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BP's oil spill, an ecological disaster.

The United States of America are facing the worst ecological disaster since more than a month with the BP’s offshore platform accident. The flow was already categorized as the largest offshore oil spill in the American nation’s history, but the new figures are much higher than the previous estimates. President Barack Obama pronounced a speech, saying it is time to develop the field of new and renewable energies, cleaner for the environment.

But the question is to know if there is really a will to develop such energy field? There is a debate and different mind regarding oil reserves. The extraction of oil becomes more complicated as we have to extract it deeper. The development of more sophisticated extraction techniques shows that we are able to find new oil reserves. But this has a cost, not only on an operational level but also on the ecological level. Money is spend to develop more sophisticated extraction techniques, but have we the full control of the process in case of accident, and are the safety measures always followed? The present situation in the Mexican gulf seems to show it is not the case. As often, companies are focused on short-term profit, forgetting the risk management. Oil generates appreciable profits, but in the Gulf oil spill, the ecological and economical cost is probably much higher for the country, compared to the generated profits on the same period. The balance of such disaster is clearly negative, as the estimated cost amounts to 1 billion usd. This oil spill will have short and long term effects on an economical and ecological point of view.

I would like to make the following comment. Often, ecology and economy are considered as two distinct things, incompatible and with no links between. This is a wrong point of view. Each natural and ecological disaster generates re-construction costs and no added value. In the case of the gulf oil spill, it would have been more interesting to spend the lost money to the development of renewable energy technologies. Research and innovation are an economical motor. The development of sustainable and renewable energies resources provides long terms economical and ecological benefits.

In order to develop a sustainable economy, it is important to analyze the benefits and the risk of each choice, each alternative, but we have also to distinct the difference between growth and development. Let us take an easy example: the growth of the pharmaceutical industry in a country is a good deal for the economical statistics, but it means that the consumption of medicine is increasing, which means that people are not in good health. This is not a really positive situation. On the other side, if the building industry growth is increasing because you build new schools and empowered the education system, this growth contributes to development with future long term economical and social benefits.

Development is the key of sustainable growth. Each crisis we met is destroying values, and the time and energy we spent to recover the lost value, to be again on the start point is a pure waste. A growth based on sustainable value contributes to a long term development, where each step contributes to the next one. It means also that in a development process, each component needs to be taken into account, not only the economical side, but also the social and environmental components, and all these components need to be integrated on a long term view.

Written by Eric Saint-Guillain

June 20, 2010 at 10:27