The Reason Why Many Nonprofit Organisations in Nigeria Fail

Although, the word "nonprofit" sounds straightforward, many individuals still find it difficult to define nonprofit organisations and its modus operandi. According to Wikipedia, A nonprofit organisation, also known as a nonbusiness entity, nonprofit institution, or simply a nonprofit, is a legal entity organised and operated for a collective, public or social benefit, as opposed to an entity that operates as a business aiming to generate a profit for its owners.

Having worked in the nonprofit for over five years, I have heard people ask what the difference between NGO, Nonprofit, and Foundation are, as it can seem very confusing. But, all three entities (NGOs, nonprofits, and foundations) share a common goal of serving the public good and addressing various social, economic, or environmental issues. They operate without the primary aim of making profits for distribution to owners or shareholders. Instead, any surplus generated is typically reinvested into their mission-related activities. However, Nonprofit is a broad category that includes any organisation that operates for a collective, public, or social benefit, rather than to make a profit for owners or investors; while NGO is a type of nonprofit that operates independently of government influence (though they may receive government funding). NGOs typically focus on broader international or regional issues; and Foundations provides funding or support to other organisations or individuals. Foundations often have endowments, which are large sums of money invested to generate income for grant-making purposes.

The history of the nonprofit sector in Nigeria is deeply intertwined with the country's socio-political development and has evolved significantly over time. Before the advent of colonial rule, community-based organisations and traditional forms of mutual aid were common in Nigerian societies however, the formal establishment of nonprofits began during the colonial period. Missionary organisations played a significant role in this era, focusing on education, healthcare, and social services. Notable examples include the establishment of mission schools and hospitals. After Nigeria gained independence in 1960, there was a surge in the establishment of nonprofits. Many of these organisations were driven by the need to address the socio-economic challenges faced by the newly independent nation.

During the oil boom of the 1970s, the Nigerian government took on a more significant role in social service delivery, leading to a reduction in the activities of nonprofits. However, economic downturns and political instability in the 1980s led to a resurgence of nonprofit activities. Organisations began to focus more on human rights, democracy, and development issues. The era was marked by the emergence of notable human rights organisations and advocacy groups.

The return to civilian rule in 1999 provided a more conducive environment for the growth of nonprofits, leading to increased government recognition and collaboration with these organisations. This period saw a significant rise in nonprofits addressing issues such as HIV/AIDS, education, poverty alleviation, environmental conservation, and gender equality. The sector continued to expand, with enhanced professionalism, strategic approaches, and the adoption of robust monitoring and evaluation frameworks. Technology and social media have further enabled better communication, advocacy, and fundraising efforts. Today, Nigeria's nonprofit sector is diverse and vibrant, comprising local and international NGOs, community-based organisations, faith-based organisations, and professional associations.

Regardless of the historical development, nonprofit organisations (NPO) in Nigeria still face numerous challenges that can and have led to their failure.

• Many NPOs in Nigeria rely largely on funding and donations. According to the report of Philanthropy Circuit, over 70% of Nigerian nonprofits identified funding as their primary challenge. While this is a major problem, another interconnected issue is that of poor financial management and lack of financial transparency which can deter potential donors. One thing that I have realised in my few years of experience is that most individuals in Nigeria go into the nonprofit sector for the wrong reasons: Some of employers (owners of NPO) set up nonprofit structures with the mindset of making money and not impact, while some employees (NPO staff) go into the sector for the purpose of receiving fat salaries from donors (mostly, international funders) hence, there is no transparency with financial management as there may be fraudulent activities needed to be covered.
• Nonprofits often struggle to attract and retain skilled staff, especially local-based nonprofits. Contrary to most peoples' belief of the nonprofit space, most local nonprofits offer low salaries and lack of professional development opportunities for their staff. In 2023, Nigeria Network of NGOs (NNNGO) revealed that 60% of nonprofits cited lack of skilled personnel as a major issue. These issues can account for the reason why many NPOs have weak organisational capacity.
• Effective leadership is another major problem. Most founders in Nigeria may have little or no idea of how to run a nonprofit but would insist on assuming the office of CEO or Executive Director, thereby running down the organisation due to no experience. This ownership mentality has led many NPOs to a shutdown. Still on leadership, many nonprofits face issues of board effectiveness and governance. This could be because the board is poorly constituted or its members came in without proper due diligence.
• A study by the United Nations Development Programme (UNDP) highlighted that less than 40% of nonprofits in Nigeria have robust M&E frameworks. Some NPOs pay little attention to monitoring and evaluation and without effective M&E, nonprofits cannot track their progress or demonstrate impact, which is crucial for securing ongoing support. Some organisations run projects without proper M&E system in place and project report. Every project is implemented and forgotten or cannot be adequately measured as a result.

Nonprofit organisations in Nigeria face a myriad of challenges that contribute to their failure. The aforementioned points are only but a few as study and research have shown. As a development practitioner, I have been studying and observing these trends to find solutions to these issues but, I have come to realise that the popular saying, "Money Move Mountains" by Salma in the book, The Life Changer, is truly true. Most of the issues cannot be changed or corrected without money or proper funding.

With proper funding, NPOs will survive, they will attract and retain skilled staff, board members will be motivated, meaningful impact will be made. However, money does not answer all things when the right mindset is considered a currency.

Here are a few things you need to think about before you open a nonprofit organisation or apply to work in one (it may sound harsh).

1. Do you have enough to eat and take care of your family? If you are hungry, you cannot save the world, you need a job not setting up a nonprofit organisation.
2. Are you starting a nonprofit because you want to address a social problem or because you want to be seen as someone who is addressing a social problem? These are two different things.
3. Are you coming to the nonprofit space because of the fat salaries donors pay to NPOs to implement a project? In nonprofit organisations, the one common thing with every staff is passion for positive change; as crazy as it may sound, it should come first before your salary expectation - if not, stay in the for-profit sector.
4. Can your organisation sustain itself financially for the first three years without grants and donations? You need to look for the fund before you start not when you have started, if not, it may not work out.
5. Starting a nonprofit does not translate to leadership capability. What is your experience level? Founding a nonprofit is not the same thing as leading a nonprofit, join the board and appoint a CEO or ED, if you don't have the experience and/or ability.
6. Are you a life-long learner? All development practitioners are lifelong learners, learning and the quest for knowledge does not end for people in the nonprofit sector.

Let's be true to ourselves, NPOs started for a reason. This reason is like a vision, it cannot be easily changed overnight - it is for the sole purpose of making the world a better place - and any positive way you plan to do that is your mission (support) to the vision.

References

• https://en.wikipedia.org/wiki/Nonprofit_organization
• Philanthropy Circuit. "Challenges Faced by Nigerian Nonprofits." 2022.
• Nigeria Network of NGOs (NNNGO). "Survey on Capacity Challenges of Nigerian NGOs." 2023.
• United Nations Development Programme (UNDP). "Evaluation of Monitoring and Evaluation Frameworks in Nigerian Nonprofits." 2022.
• Nigeria Network of NGOs (NNNGO). "History and Evolution of Nonprofit Organizations in Nigeria."