Friday, March 4, 2016

It will be a foolishness to say that social organisations are No Profit, No Loss entities. They are in fact the most cost heavy units running to sell services at cheaper rates while their profit comes from buyers who invest in their ideas.
Here is an explanation: 
Taxation ImpactAn ordinary company manufactures goods/ services & sell it at a price which includes tax components & markup price. Now, goods are sold, taxes are collected & are spent again to the benefit of the nation. On the other side, imagine if the same manufacturer gives away goods to the NGO & deducts the same from its balance sheet & also NGO gives away these goods tax-free. What impact does these practice have on the nation?
Because the country needs the tax system to keep the system running, it will start imposing more taxes & make the good costlier. More the free service, more taxes, more the need for NGO's.
Work Impact
Many people are drawing huge salaries working at NGO's & any strategic partnership with the corporates is all about optimum utilisation of free funds. NGO's are not investing on R&D or developing new avenues of revenue generation at least on the records, rather they lease technology & pays the least price for the acquisition. Again devaluing the technology & leading to lesser investment in R&D - Lesser profits, lesser investment, lesser jobs, lesser upgrades. That is why many countries with a high number of NGO's always end up begging more.

Solution:
We need a change in an NGO model. Every NGO should have R&D department & linked with a consolidation of direct interest companies that ensure it works efficiently. Any losses should be compensated from profits. e.g. Every NGO should be a part of industry, giving best quality products or services & a part of the profits should be disbursed for the expansion plans. The logic is we don't need small, tiny NGO's with a unscattered approach, rather we need a bigger approach with Product & Service oriented NGO's.

e.g.
Food Problem: Hire an entire region, work with farmers, develop roads, establish a unit & best practices, engage the locals in jobs & earn.
Girl Child Education: Lease an entire region, engage the parents in a profession, give them a steady earning, meanwhile open a day care education centres & incentivise parents by giving a small amount extra if their child attends school.

For more ideas, just ask your heart. Be Smart

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