For the exclusive use of A. Alneel, 2020.
S
w
W12064
IPODERAC: FINDING THE PATH TOWARDS SUSTAINABILITY
Gerardo Lozano and Francisco Layrisse wrote this case solely to provide material for class discussion. The authors do not intend to
illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other
identifying information to protect confidentiality.
Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written
permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies
or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University
of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.
Copyright © 2012, Richard Ivey School of Business Foundation
Version: 2012-08-16
On April 11, 2009, the first cases of so-called “swine flu” were detected in Mexico. Within a few weeks,
the World Health Organization had labeled this disease as “Human Influenza Virus caused by H1N1, a
subtype of influenza A. By that time, Mexico’s financial environment had already felt the negative effects
of the global economic crisis, and the emergence of the influenza crisis made an already bad situation
even worse.
A few days after the first of the H1N1 victims had been declared, a national contingency plan led to the
closure of virtually every public place, mainly in Mexico City. Initially, the closure included schools and
public entertainment places, but subsequently, it extended to bars, nightclubs and restaurants. Marcelo
Ebrard, head of the Federal District, announced that “Mexico City should be prepared to live with this
virus for a long time. We must take extraordinary measures.”
Meanwhile, in his office in Atlixco, Puebla, a small town in México, Francisco Jaimez Luengas,1 the
executive director of the Rehabilitation Institute of Puebla, Civil Association (i.e., IPODERAC, by its
Spanish initials) read the news in the local paper. Since his organization earned its revenues through the
production and sale of gourmet cheeses, Luengas recognized that this decree would have a profound
impact on IPODERAC, one that was unprecedented in the history of Mexico. Shortly after the news had
been published, the sales of the organization’s gourmet cheeses began to decline sharply. Since Mexico
City’s restaurants constituted IPODERAC’s main customers, the government closures resulted in a 40 per
cent decrease in business for the organization in the months following the closure announcement, a
situation that threatened IPODERAC’s financial sustainability.
As the situation worsened, IPODERAC’s board asked Luengas to submit a plan to strengthen the
sustainability model as a way to avoid similar crises in the future. Without having a clear idea on how he
should deal with the current situation, Luengas wondered whether the diversification plan that had already
1
Francisco Javier Jaimez Luengas graduated in Philosophy and Social Sciences from ITESO Guadalajara, Master in Urban
Management from the Universidad Iberoamericana Puebla. He also has further studies in fundraising from Procura AC and
Social Leadership from the Instituto Tecnologico de Estudios Superiores de Monterrey. He has a 20-year career in NGOs of
different kinds (indigenous, rural, migrant, vulnerable children), especially in the areas of productive projects.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 2
9B12M066
been launched within the organization might serve as a reasonable plan of action. In order to comply with
the board’s request, Luengas had to provide a response in less than a week, so he immediately started
reviewing the organization’s financial data (see Exhibit 1).
A Glimpse into Present IPODERAC
More than four decades after its founding, IPODERAC, a home for street children, had managed to
develop a solid educational model that aimed to educate boys. Abandoned and living in vulnerable
circumstances, the members of this societal group required support and training in order to become selfsufficient.2 IPODERAC’s model, based on personal development through work,3 had proven to be
successful, having achieved a high level of social reintegration among Mexico’s homeless young people.
IPODERAC had achieved a financial sustainability strategy in which 75 per cent of the revenue came
from its own internal production projects — primarily from the production of gourmet cheeses — which
meant that the organization had to rely on donations and other fundraising activities for only 25 per cent
of its income. However, accomplishing this self-sustainability model had not been an easy road. On the
contrary, throughout its history, IPODERAC had experienced some highly difficult times amid its efforts
to sustain the organization and realize the dream of Maria Elena Landa, one of the institute’s founders.
On the road to financial sustainability, IPODERAC tried to develop countless productive projects,
unfortunately with as many failures. Through trial and error, the organization accumulated a wealth of
experience that was later used to achieve a turnaround of production activities. Luengas put it this way:
The real change in IPODERAC was the result of a reflection process in which it was concluded
that the purpose of the productive projects was not only to generate money, but to find a way to
link the organization’s business to its educational model. This way, the productive activity would
not only generate income, but also teach great lessons to the boys, develop their skills and prepare
them for their future jobs. From that moment on, the institute developed business units to selfgenerate income. Each of these units became true social enterprises involving the youngsters and
other people from the community, who provided their expertise, intelligence, skills and their
desire to do things the right way. As the business side of the organization grew, the educational
model was reinforced because it demanded greater efficiency. It was like a virtuous cycle: the
business model reinforced the educational model and vice versa.
The Social Issue in Mexico
The problem of street children in Mexico was a very serious one. “The country had approximately
100,000 children in the streets, and, in the capital alone, there were approximately 18,000.”4
2
IPODERAC’s current mission states: “To guarantee help for street boys and abandoned boys, supporting other institutions
with the same mission and organizations that decrease the generation of homeless and abandoned children, favouring selfsustainability, to construct a better future together.”
3
For more than a decade, IPODERAC has developed the “Training model by working” together with the international
organization Terre des Hommes and the Centre for Educational Studies, AC (EEC). This model seeks to develop skills for
life and for work.
4
El Universal, “Registran 100mil niños de la calle en México,” August 2004,
www2.eluniversal.com.mx/pls/impreso/noticia.html?id_nota=241778&tabla=notas, accessed February 22, 2012.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 3
9B12M066
Moreover, in a census made by UNICEF it stated that 70.17 per cent of children living on the streets had
come from families consisting of five to 10 members; from that 70 per cent, 11.86 per cent of the families
were made up of nine or more people. Moreover, 22 per cent of these families were sustained by the
mother, in contrast with 13.98 per cent in which the father was the breadwinner; 9.68 per cent were
economically supported by both parents, and 7.53 per cent of the households were supported by the
stepmother or a stepfather. Among these groups, 13.98 per cent reported that “everyone looks out for
himself or herself,” and 18.28 per cent said that the support of the house was divided “among all.”5
According to the descriptions in UNICEF’s census, once on the street, these children lived under
extremely poor conditions: only 5.38 per cent ate meat, while 61.29 per cent consumed tacos, sandwiches,
and cornbread, and 23.65 per cent ate junk food. Respiratory and gastrointestinal problems represented
the major diseases in this group, and during a six-month period, 90.3 per cent of the children reported
being ill. According to interviews done by UNICEF, seven out of 10 of these children abused substances
such as thinners, cement, marijuana, alcohol and pills; 8.6 per cent had used drugs within the past year,
32.6 per cent had been users for one to two years, and 24.73 per cent for more than three years.
Furthermore, sexual activity among these children started early: 43.02 per cent reported first having sex
between the ages of seven and 14 years old. Almost half of the children (49.46 per cent) reported having
an active sex life.6
IPODERAC’s Long Road to Success
From the “boteo”7 activity to the procurement of more than 10 million pesos8 annually through productive
projects, IPODERAC had lived out countless stories throughout its 45 years of existence.
The original conception of the institute’s founders was to assist the prison inmates of Puebla. Realizing
that their attempts to rehabilitate these individuals remained unsuccessful, the members did some research
and discovered that more than two-thirds of the prisoners came from broken families and had been abused
within the family circle and left on the street. After this discovery, the founders decided to shift the
organization’s focus, instead devoting their efforts towards developing a home for street children, thereby
attacking the problem by its root.
In 1966, IPODERAC began its operations on nine hectares of land, and, at about the same time, the
group’s production activities bagan. As a necessity, the organization used part of the fertile land for
agriculture and livestock activities in order to grow and produce food for the children and staff.
Simultaneously, the educational model for children was created, based on the same philosophy of the
rules of street life in which work was necessary to live. The organization’s leaders discovered that
homeless children developed great skills for survival, with begging representing their main “job.” As a
result, the children learned useful tactics for convincing people to buy or give them the things they needed
to survive. IPODERAC’s own organizational model was developed on this basis.
The appointed educational team decided to use the children’s skills to their advantage. As before, the
children had to work to obtain the necessities of life, but at IPODERAC, there was one fundamental
5
Infancia-Pobres Blogspot, “Estadísticas de los Niños de la Calle en México,” 2009, http://infanciapobres.blogspot.mx/2009_05_10_archive.html#6936487069396127631, accessed February 22, 2012.
6
Ibid.
7
Boteo: common fundraising activity in Mexico that consists of asking for donations at major traffic intersections in the city.
The collection is made in cans or jars, which is why the practice is known as “boteo” (meaning “can” or “jar” in Spanish).
8
10 million pesos = US$770,000. As of the time of writing of the case, 13 Mexican pesos= one U.S. dollar.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 4
9B12M066
change: the boys had to achieve their living through dignified employment. Additionally, IPODERAC felt
that the best way to teach children was to lead by example. The educational director at IPODERAC,
Ignacio Pérez Mondragón, said:
This logic also influenced IPODERAC in its strategy to obtain resources to achieve its mission.
To put it in simple words, if the philosophy behind the educational model is that the children must
obtain their own resources to live with dignity, then the organization must do the same. Words
may convince, but leading by example will achieve much better results. This is the reason why
our educational and business models evolved at the same time.
Under this premise, from its own farm production, IPODERAC began selling vegetable surpluses that had
initially been designated for consumption on the farm itself, marketing any excess produce from the farm
in the nearby towns. Shortly thereafter, in 1971, due to growth and to the admission of more children, the
organization began to invest in production projects of greater scale. With technical and financial
assistance from the government, IPODERAC embarked on a business venture to operate a major
plantation of avocado trees, which were indigenous to the region.
Atlixco, located 20 minutes from the city of Puebla, was an avocado-growing area, and the founders
thought this new farming venture represented a logical and seemingly viable project. They proceeded to
plant the trees and then waited for the usual five-year cycle to harvest the fruits of their investment. This
waiting period brought unpredictable risks, a large investment, and, of course, delivered no income.
Time passed, and by 1976, the trees bore fruit and the business started to generate an income. However,
even though the boys living in IPODERAC assisted in the production tasks, the cost of running the new
operation was extremely high. Additionally, after a while, increasing competition caused sharp
fluctuations in prices, and the surrounding population’s constant theft of the fruit eventually made the
operation unprofitable. The situation could not be salvaged, so a decision was made to cut down the trees.
When the ground was cleared, vegetables were planted, always with the help of the youngsters who lived
at the institution. As time passed, this project became more than simply a source of food for the staff or a
source of income; it became a key component in the organization’s educational model. Mondragón
explained:
When boys come to live at IPODERAC, we do not have ways to force them to stay here at the
institution since the doors are always open for when they want to leave. This is where vegetable
sowing plays an important role in the retention of the boys. On arrival, they are assigned each to a
small plot of land, which is theirs and nobody else’s; they are solely responsible for its care. The
boy might not be motivated to stay in the institution, but he feels a strong motivation to stay and
to see the results of his work. Later on, he will be able to share the fruits of the earth with his
peers. For many, this is the first time they have a sense of belonging.
After the vegetable project became well established, in 1980, the staff at IPODERAC took a stab at quail
production, which seemed a logical step because the area was a big producer of these birds. IPODERAC
launched this initiative, but it ended in failure since the organization’s supplier of quail eggs became
privatized and made the decision not to sell eggs to independent companies. Additionally, the
overproduction of quails in the area lowered the price to a point where production simply became
unjustifiable.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 5
9B12M066
In spite of these failures, the entrepreneurial spirit remained strong at IPODERAC, and the organization
pushed onward to launch another new initiative in 1984: the production of rabbits and, thereafter, a fur
shop. The staff procured 2000 rabbits, but just as the operation began to take off, a rare disease overcame
the fur industry, and although the IPODERAC farm was free of sickness, health authorities forced it to
sacrifice the animals to prevent the illness from spreading.
Once again, the staff began to search for yet another profitable business that could supplement
IPODERAC’s revenues. Many arose, such as aquaculture, a pastry shop, a bakery, and a tortilla factory,
among others, but given the fact that there were no key elements present — such as a basic market
analysis, a business strategy, a clear direction, a business vision, professionalism, and, frankly, a bit of
luck — each one of these business ideas fell apart, until finally the staff struck on goat breeding.
IPODERAC’s director, Ms. Landa, contacted a friend who produced goat milk in the state of Queretaro
and who was willing to donate a herd of goats to IPODERAC. The production of goat milk had certain
advantages, primarily the daily cash flow derived from the sale of milk. Additionally, from the standpoint
of the institution’s educational model, the animals tended to improve the youngsters’ progress in terms of
helping them to achieve a work ethic through honest labour. However, as with all IPODERAC’s
production projects, problems began to arise in the market. The sale of milk was a low-margin business
with significant fluctuations in production. The business itself required the processing of milk into low
quality cheese such as “panela cheese”9 among others. The competition was high, the demand was low,
and the margins were small. With this ongoing series of misguided projects, a crisis eventually arose in
IPODERAC, but along with it came an opportunity for the organization to redefine itself.
In her late 80s, due to health problems, Ms. Landa decided to retire from IPODERAC in 1988. In her
place, she appointed her 26-year-old nephew, Agustin Landa, as the organization’s new director.
Alongside his college friend, Fernando Balla, Landa had worked for four summers as a volunteer on the
farm, and both men had grown fond of the institution and its mission.
Landa was a graduate engineer from Tecnológico de Monterrey,10 and he possessed a clear business
vision; Balla was a doctor with humanistic inclinations. Both men agreed to split the main functions of
the institution. Landa would take over the financial management, and Balla would oversee the children’s
development. Thus, IPODERAC embarked on a new course, which led to developing the activity that
finally guided the institution towards self-sufficiency: the production of gourmet cheeses (see Exhibit 2).
Towards Professionalization
Cheese production at IPODERAC began in a very rudimentary way. According to Landa:
Imagine a cheese shop in a little room; we had to make a hole in the ground to have the required
moisture level. Our cheeses were sold outside churches to anyone that we could convince...
because, think about it for a minute: Cheeses made by street kids! I guess people bought it to help
us, but who knows if they ate it.
Shortly thereafter, in the early 1990s, Landa made a connection with a retired gentleman, Rafael Perler,
who owned a gourmet shop in Puebla. Knowing that Perler was a master artisan cheesemaker who had
worked for Nestle, Landa pressed for a meeting with him. He convinced Perler to contribute his cheese9
Fresh, unripe, low-flavoured cheese, handmade by many informal milk producers.
Tecnológico de Monterrey is one of the most respected private universities in México.
10
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 6
9B12M066
making knowledge and expertise as a tool that could help IPODERAC achieve its goal of self-sufficiency.
This new relationship was perhaps one of the most fortunate and important alliances for the organization.
Perler began working as a consultant to the cheese shop, and as a result, the cheese quality immediately
grew in an impressive way. IPODERAC stopped production of fresh cheese to make way for its newly
introduced, highly differentiated, high-margin products. One of the organization’s prime cheeses even
won third place in a contest held in Switzerland.
The cheese shop thus began a phase of accelerated professionalization, and when Landa felt the products
had reached a sufficient quality standard, he took his best samples to the director of The Mesoneros, a
Mexico City business dedicated to organizing high-profile events, which was located only two hours
away from Atlixco. The director tried the cheeses, and commented bluntly: “They’re good, but they lack a
bit of salt.”
A week later, Landa returned with a new sample. The director was pleased and congratulated him for his
high-quality cheeses. As a way of contributing to IPODERAC’s efforts, the director personally called all
his friends and business contacts to facilitate the organization’s entry into the market, a move that resulted
in significant sales growth for IPODERAC and a major advance toward financial self-sustainability.
Up to that point in time, Mexicans were familiar only with French or Swiss cheeses, and practically all of
these products were imported. After all, the market for such products was not large enough in Mexico
itself, so it was more profitable to bring them from abroad than to produce them locally. However, this
high-end market had begun to grow in Mexico, and, as a result, an opportunity appeared for IPODERAC.
The organization’s high-quality production and its attractive price/value ratio resulted in the successful
positioning of the product in the market.
Having great quality cheeses, a growing market, and a defined business model made it easy for
IPODERAC to obtain the required resources for starting a high-level, hand-made cheese establishment.
Luengas remarked:
Our approach was focused on accountability and the creation of credibility. With this, we
obtained the initial capital through corporations, foundations and individuals who believed in the
project. It is much more comprehensible for companies when it is all about business because you
just have to show them the numbers and tell them [your business plan]. For them, it is easier to
give money to organizations like us because we speak the same language.
About six years later, just entering the new millennia, the persistent growth in sales and the customer
diversification process presented new challenges for the organization, so IPODERAC, along with a group
of business partners, founded the company Villa Nolazco Wholesales. Luengas commented:
This [move] took us to another level, and the wholesale business required a lot from us. We had
to manage quality as usual, but many new areas arose, like distribution, customer relations,
inventory management and having tighter control on all the highly trained personnel. This meant
paying attention not only to the production area but also to the marketing section.
The joint venture allowed the new company to grow significantly, virtually doubling its production every
year. Additionally, starting in 2002, and for the four years that followed, MBA students from the
University of California at Berkeley volunteered to provide consulting services to IPODERAC during the
summer. These consultancies revealed that the potential market was huge and that, in the Cancun area
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 7
9B12M066
alone, IPODERAC could capture 11 per cent of a total market that represented 80 tons of cheese per year.
Additionally they discovered other important tourist regions in Mexico that could be tapped for sales.
By this time, IPODERAC was no longer just an organization; it was also a partner in a socially committed
company with more than 30 people on its payroll.
Strengthening the Educational Model
The progress of the cheese shop ignited a positive pressure that demanded greater efficiency in the areas
of life quality and education. By this time, IPODERAC had been operating for several years, with a
current total of six houses (Saint John, Saint Peter, Saint Paul, Saint Luke, Saint Mark and Saint Joseph),
each of which sheltered 12 children, a teacher and two volunteers. The house called Saint John hosted
children from five to six years of age, Saint Peter from six to eight years of age and so on, up to Saint
Joseph, which housed teenagers from age 16 and onwards.11 Approximately 50 per cent of the children
living at IPODERAC were 12 years old or older.
Among the daily activities performed by the children (see Exhibit 3), according to the guidelines of the
International Labor Organization, a maximum of two hours a day could be spent working, and only after
the children had attended school and participated in recreational activities. Regardless of age, each child
had to pass a rigorous process, similar to getting a real job. Periodically, job fairs were held, wherein
children had to bring their resume and apply to the position of their choice (i.e., working in the cheese
factory or the carpentry shop, soap-making, goat care, agriculture and vegetables, and general
maintenance of the farm). Like any other job, there were a limited number of openings, and the children
had to be distributed accordingly (see Exhibit 4). Then, educators and area leaders (featured kids who are
identified as leaders) determined whether the applicant was fit for employment or not, based on their
behaviour and overall performance in daily activities, such as attending school and working at previous
jobs. The educational model not only sought to teach job skills to the boys at IPODERAC, but it also gave
them an opportunity to experience the reality of everyday life, which they would eventually have to face
on their own.
Fulfilling the mandate of IPODERAC’s educational model meant going through a series of evolutionary
changes. The organization sought out important alliances, and from this search an important agreement
emerged with an organization called Terre des Hommes,12 or, in English, Land of Men. In association
with the Centre for Educational Studies (EEC),13 Terre des Hommes helped to document and refine the
educational model, based on five major processes: homes, educational training, job training, human
development and independent living (see Exhibit 5).
Thus, IPODERAC consolidated an important phase in its existence. It had shifted towards process
development, professionalism and the creation of a solid institution for both its production and
educational areas. Due to its alliance with Land of Men and the volunteer help of Perler, IPODERAC
published manuals, received public recognition and awards, and earned sufficient income to sustain the
organization.
11
Ages that make up the houses are used as reference. Children do not necessarily go to the next house at a certain age,
but rather when they have fulfilled certain stages or processes of education and maturation.
12
For more information about the organization Terre des Hommes visit www.terredeshommes.org.
13
For more information about the organization Centre for Educational Studies visit www.cee.edu.mx.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 8
9B12M066
Road to Diversification
“Relying on a single product for revenue is like having a single donor. This [situation] is too risky, and
ultimately, we lived out the consequences with the whole influenza problem,” said Luengas.
A diversification process had been started years before the onset of the flu, but it was viewed as a way to
strengthen the educational model more so than to generate income. The cheese production process could
take up to six months to deliver a finished product, and while this timeframe offered a great advantage for
many of the boys (i.e., because they could participate in a lengthy and complicated process that improved
their self-esteem and provided them with an opportunity to develop long-term vision), for others, it was
too difficult to visualize the end results of their work and their actual contribution to it. Hence,
IPODERAC created a carpentry program in 2005, which enhanced the boys’ training by offering them a
more easily visualized end-product. The goal of the carpentry program was to generate more jobs for a
greater number of boys.
IPODERAC began producing the kind of rustic furniture that was common in the area, but the arrival of
similar furniture of Chinese origin hurt production, not only IPODERAC’s but that of the whole area. In
2009, with contributions from 13 donors, including a significant contribution made by IPODERAC itself,
approximately two million pesos were invested to build a new and advanced carpentry shop. Shortly
afterward, the organization received an order from Italy for the manufacturing of highly specialized rustic
furniture. The first samples were sent for evaluation, but as of [January 2010], IPODERAC was still
awaiting a firm response.
The organization’s search for diversification activities continued, and, to provide an outlet for goat-milk
surpluses during times of low demand for cheese, IPODERAC started a small soap factory in 2006.
Through a personal friend of Landa, the organization contacted a man in Canada who had a recipe for
goat-milk soap that dated back 200 years. Just as Perler, the Swiss cheesemaker, had done, the Canadian
soap maker volunteered to come to Atlixco to teach his process to the staff and residents at IPODERAC.
He spent two weeks with them, and the organization took two years afterwards to master the production
process. From an educational point of view, this initiative was of great value. IPODERAC’s education
principal, Mondragón, said:
We assigned students who had concentration problems to this area. [Soap making] is a repetitive
and consistent work, and the boys do not have to make big decisions at the time of production.
Once they have conquered this process, they are transferred to other areas that require greater
skills.
About 80 per cent of the total production of soap was exported to the United States through Villa Nolazco
USA, a retailer that was established in 2001 by a former volunteer of the IPODERAC organization. Villa
Nolazco was not a very sophisticated business; sales were made from home using the Internet.14
The goat-milk soap business was the first initiative that resulted from a market study conducted by
Berkeley MBA students. The students developed a customer profile and segmented the current market.
Goat-milk soap was a very expensive product approximately three times the price of regular soap —
which required the organization to be very careful with its production. The consultancy from the students
bore many suggestions. For example, IPODERAC had to offer more promotions for bigger profit-margin
soaps, improve its soap quality in order to have more consistency in colour and texture, and improve its
14
Sandy
Graham,
“Mile
high
soap
opera:
importer
finds
buyers
for
http://findarticles.com/p/articles/mi_hb6416/is_7_29/ai_n28930120/, accessed February 22, 2012.
hand-crafted
bars,”
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 9
9B12M066
packaging and product labeling. Like the cheese shop, the soap factory started very small, but after a
while, it experienced significant growth, with an average production of 2,500 bars of soap monthly.
In mid-2008, IPODERAC’s soap business received a large order from a major Canadian company for
140,000 soaps, with the advantage that the product did not require special permits to be imported into
Canada. This order required the staff to multiply its current production by 30, which constituted an
immense increase in the operation. The Canadian company had placed the same order with other similar
soap producers, but only IPODERAC had been willing to accept it. To meet the commitment,
IPODERAC had to hire 12 new workers from the community, who were then trained by the staff who
worked in the soap-making area. These changes required a realignment of everyone’s efforts within the
organization and resulted in a tight style of teamwork that had never before existed in the organization.
The new process involved clockwork precision across all departments, since the goat farm supplied milk
to the soap production area, and the carpentry shop provided the packaging for the soap product.
The production manager remarked that the new process was a matter of great pride for the team at
IPODERAC, but the real climax came in October, when the order was shipped. Director Luengas
commented:
A truck left, loaded with 12 tons of soap, and it was a joyful day. The pride of having fulfilled the
commitment was something rarely felt in the organization. Being able to accomplish this task
allowed us to rediscover ourselves as an organization/company. The challenge was huge, but we
finally achieved it. We realized we had enormous capacity for growing and adapting to harsh
circumstances. In addition, we integrated the production areas: the milk production area supplied
the soaps unit; and the carpentry area manufactured packaging — of course, very rustic but very
nice in order to give the product a Mexican touch, but, more importantly, to demonstrate that this
soap had been manufactured in a place where street kids are taken care of. I think the ultimate
consequences of this large order have yet to be seen. Each bar of soap was identified with an
IPODERAC label, and each package included a note explaining the origin of the product. It may
open more doors. Who knows?
Luengas claimed that without the partnerships the institution had formed throughout its history, little
could have been achieved. IPODERAC developed natural alliances with all its donor institutions, from
government agencies to corporate foundations. The organization had a huge advantage over companies,
since, as Luengas put it, “Companies cannot receive grants.” The Ministry of Social Development and the
National Lottery represented very important resources for IPODERAC because they contributed large
donations that were invested mainly in the production area.
However, other companies such as Volkswagen (VW) Mexico, which was established in Puebla;
Benteler, a provider of VW; and American Express (AMEX) also became important allies. IPODERAC
soon realized that companies could donate more than money; they could also provide priceless
knowledge. The organization approached many companies and asked, for example, VW to advise it on
how to systematize production processes and logistics functions; IPODERAC also asked AMEX to teach
the organization how to excel at customer service. In these ways, a much deeper relationship was formed
with the various partnering companies, “Otherwise, it would have taken years to reach the level that we
are right now,” confessed Luengas. IPODERAC learned from other companies how to secure its own
installations and, very importantly, how to take care of its information. Many times, people tried to steal
the organization’s cheese recipes and, as a result, the information was divided and saved in segments.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 10
9B12M066
Another important alliance was made with the Popular Autonomous University of Puebla (UPAEP by its
Spanish initials). The government had begun to install greenhouses in various parts of the region, but after
a while, this project had been abandoned. IPODERAC owned a portion of unused land that also had the
advantage of having a reliable water supply. The staff installed one of these government-sponsored
greenhouses so that UPAEP students could use the facility to gain practical experience. This relationship
delivered two advantages: IPODERAC earned extra income for the rental of the facilities, but more
importantly, the children themselves could be trained on intensive production techniques.
Towards the Future
Recalling the soap production achievement, Luengas thought about IPODERAC’s future and wondered
where the organization was heading. At the council’s last meeting, the members had discussed many
possible alternatives: installing a seventh house, starting a new home for girls, or opening another branch
in another region of the country. With these things in mind, and with the intention of evaluating the
existing diversification process, Luengas continued to review the financial statements and studied
Mondragón’s notes on the involvement of children in the various business units.
As Luengas took a piece of bread with Camembert cheese, his favorite one from Villa Nolazco, several
questions that needed to be answer for tomorrows board meeting circulated in his mind: What business
unit represented the best investment option, in terms of generating income and providing a role model for
the boys? Would it be better to continue investing in the dairy unit, but making and selling other types of
cheeses, or should IPODERAC expand its sales territory and move into other regions?
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 11
9B12M066
Exhibit 1
IPODERAC’S FINANCIAL INFORMATION
INCOMES BY AREAS AND ACTIVITIES
Additional Funding Sources
National Financial Campaign
Foreign Financial Campaign
Events
SUB TOTAL
2006
$3,261,385
$987,077
$456,302
$4,704,764
2007
$974,951
$1,453,467
$879,800
$3,308,218
2008
$725,276
$1,433,208
$868,524
$3,027,008
Productive Activities
Cheese Sales
Carpentry
Soaps
Goats
Greenhouses (vegetables)
SUB TOTAL
GRAND TOTAL
2006
$5,537,114
$78,457
$121,789
$156,734
$5,894,094
$10,598,858
2007
$6,770,409
$365,789
$404,376
$254,800
$88,765
$7,884,139
$11,192,357
2008
$7,446,227
$404,574
$1,830,251
$378,690
$147,491
$10,207,233
$13,234,241
2006
43,200
812
2007
47,250
2,695
2008
53,400
12,200
Productive Activities
Cheese Shop
Carpentry
Soaps
Goats
Greenhouse
SUB TOTAL
2007
$3,932,665
$338,270
$287,607
$583,764
$22,350
$5,166,663
2008
$4,449,979
$240,094
$621,624
$444,222
$29,232
$5,787,160
Activities of the organization
Teaching
Administration/Management
Development and Funds Procurement
SUB TOTAL
GRAND TOTAL
2007
$3,454,170
$825,345
$402,867
$4,682,382
$9,847,037
2008
$3,820,989
$795,145
$391,014
$5,007,148
$10,792,299
Productive Activities (In Kilograms)
Cheese Sales
Soaps
Expenses by areas and activities
Source: Created by authors from IPODERAC’s given financial Statements
Note: In Mexican pesos. As of 2009, the Mexican peso was worth about 13 Mexican pesos per U.S. dollar.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 12
9B12M066
Exhibit 2
PHOTO GALLERY
Vegetable production
Goat Herd
Carpentry
Soap Shop
Cheese Shop
Products from the carpentry
Source: photographs taken on site by authors.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 13
9B12M066
Exhibit 3
TYPICAL DAY OF AN IPODERAC CHILD
05:30 a.m.
06:30 a.m.
07:00 a.m.
02:00 p.m.
02:30 p.m.
03:00 p.m.
06:30 a.m.
07:00 a.m.
02:00 p.m.
02:30 p.m.
03:00 p.m.
03:30 p.m.
03:30 p.m.
05:30 p.m.
05:30 p.m.
06:45 p.m.
06:45 p.m.
07:45 p.m.
08:45 p.m.
07:45 p.m.
08:45 p.m.
09:15 p.m.
Get up, take a shower, eat breakfast
Go to school
School
Arrive from school, children in charge of food distribution
Lunch
Clean different house areas
Workshops in different work areas. (Working time varies according to age, stage of
process, capacity and level of responsibility in each workshop. At the same time,
several children have counseling and therapeutic hours scheduled.)
Homework, study, advisory in different courses. (At the same time, several children
have computing and/or English courses scheduled.)
Sports and/or artistic activities
Dinner (there might also be group meetings for different topics discussions).
Television, go to sleep
Source: Created by authors based on Interview with Ignacio Pérez Mondragón, educational director of IPODERAC
Note 1: It is difficult to encompass all IPODERAC’s youngsters in a single schedule, as several of them go to technical
schools in Puebla or are already working part time in a business outside IPODERAC, or participate in sports or arts groups,
as well as in special classes.
Note 2: In the same way, because of the educational structure, young people can become apprentices, assistants or leaders
at work or at home; these activities also change the schedule of each child.. Besides, each one has a specific schedule of
therapeutic or psychological care.
Exhibit 4
AVERAGE DISTRIBUTION OF THE CHILDREN IN THE DIFFERENT WORK AREAS
Various animals
Goats
Carpentry
Kitchen
Vegetables
Soaps
Eastern garden
Western garden
Teaching areas maintenance
Productive areas maintenance
Cheese shop
TOTAL
2
10
11
3
9
11
5
5
6
6
4*
72
Source: IPODERAC files.
Note: These quantities might vary depending on the work cycle and on the educational and productive necessities.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Page 14
9B12M066
Exhibit 5
IPODERAC’S EDUCATIONAL MODEL
Educational Director Mondragón tells us in his own words about the educational model at IPODERAC:
“An essential feature of the model is its integral hinge, as it requires that all processes work in harmony to achieve
your goal. The following five processes make up the model.
1)
Households: This process has the function to take the house where children live as a central axis where they will
learn matters of structure and coexistence. They learn that there are times for different activities and that it is
essential to respect themselves for their own benefit. The house also represents a safety shaft for the children,
as they have the support of a responsible adult accompanying them all the time.
2)
Training at Work: The aim of this process is not for children to work; is that the kids develop skills through work
actions such as psychomotor skills, socialization, teamwork and quality awareness in the workplace.
3)
Academic Background: This process is an option for growth and personal development, as the children arrive
with impressive academic gaps that are filled in school. Through the services of the psychology area, each child
will perform a series of tests to form a diagnosis from which a plan is designed for individual work will that
gradually reach the child’s corresponding academic level.
4)
Human development: This process focuses on the child achieving a reconciliation of his present with his past in
order to aspire to a stronger future — safer and more humane. To achieve it, the children receive psychotherapy,
and the therapist works with them in humanizing processes such as personal development for community living
in an atmosphere of respect, solidarity and spirituality. Because of the personal background of each child, they
have to learn to forgive, because the only thing that will set them free from their resentment towards life is
forgiveness.
5)
Independent living: A stage for young people who have stayed for several years in IPODERAC. This stage
begins with an assessment of skills and vocational guidance. The therapists responsible for this area apply
different psychometric tests to determine the youngster’s real skills, their career orientation and the academic
tools required to achieve their labour goals.
With the results of the diagnosis they go back to work with the young man who is now building a decision that allows
him to advance to the next step: his life plan. This instrument records the definition of the young man’s objectives,
activities and offers the correct timing.
After that, the young man executes his life plan, and the educational team accompanies him through this transition
until it is time to leave the institute.
The closing process starts in IPODERAC because leaving causes grief; the staff works with the young men to
transform this pain into triumph. The educational team accompanies the young man for a while, until it is certain that
he is fully responsible for his actions.
Finally, the young man leaves the institute, having a living space and a decent job and with the assurance that
IPODERAC will always be his family. “
Source: Created by authors based on an interview with Ignacio Pérez Mondragón, educational director of IPODERAC.
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
Harvard Business School
9-399-016
Rev. October 13, 1999
IPODERAC
For the first time in our thirty-two year history the possibility of achieving financial
self-sufficiency is within our grasp. We must determine how to achieve and solidify this goal.
This is a critical juncture for us.
In June 1998, Agustín Landa, the director of this Mexican civic association that housed and
cared for abandoned street children, was optimistic but anxious about IPODERAC’s future.
Origins and Evolution
IPODERAC, Instituto Poblano de Readaptación, A.C. (Puebla Institute of Rehabilitation),
was founded in 1966 by María Elena Landa, María Elena Gomez, and a few other colleagues who had
decided, according to Señora Landa, “to not waste their lives in daily routines and to make a
contribution to the community.” They began providing volunteer social counseling to male inmates
at the prison in Puebla, a city of 2.5 million people located 80 miles east of Mexico City. They
discovered that over two-thirds of the prisoners came from broken families, were abused as children,
and abandoned to a life in the streets. Many had been in youth correctional institutions in deplorable
conditions that fostered further delinquency rather than rehabilitation.
Professor James Austin, Wendy Bermudez, and Gustavo Escobar prepared this case as the basis for class discussion rather
than to illustrate either effective or ineffective handling of an administrative situation.
Copyright © 1998 by the President and Fellows of Harvard College. To order copies or request permission to
reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to
http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system,
used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of Harvard Business School.
1
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
IPODERAC
The founding group decided to turn their efforts toward setting up a home for abandoned
boys. They determined that it would be in a rural setting to avoid the temptations of the streets but
near a small town so that services and public education would be available. With a bank loan they
purchased a nine-hectare site outside of Atlixco on a highway about 25 miles from Puebla. They
named the site “Villa Nolasco” in honor of the founder of the Catholic Order of Mercy, whose
members had encouraged and advised the founders. Servicing the loan was a constant struggle, as
Sra. Landa explained, “
In the beginning we went out in the streets with collection cans to ask for
money. It was embarrassing but none of us had a cent. Nonetheless, we fought for
this goal. We pawned personal belongings and made other collections. It was a very
difficult task, the results didn’t appear as fast as we had hoped, and many who had
been helping abandoned the effort. People give money and effort when they see
something done. We only had a piece of land full of rocks.
Slowly the founders continued soliciting donations, and in 1969 the first house for eight boys
in Villa Nolasco was inaugurated by the State Governor. In 1971 a second house was added with
funding from the Mary Street Jenkins Foundation. A third house was financed by the president of
Mexico in 1972. Funding from the Puebla Municipal Board of Moral, Civic, and Material Betterment
enabled the construction of the fourth house and a sports field in 1974. Funds raised by the
IPODERAC board of trustees and friends provided the house furnishings. The fifth house was added
in 1981 with another major private donation from a Catholic religious organization in Germany. By
1988 Villa Nolasco housed 60 boys whose average age was 8.3 years. In 1991 the Dutch embassy
donated a health clinic. In 1992 IPODERAC was awarded the Luis Elizondo Humanitarian Prize in
recognition of its social contribution. The boys remained at Villa Nolasco on average 10 years until
their late teens, so a sixth house was added for older youth in 1994. In 1998 there were 72 boys
ranging in age from 5 to 20 with the average being 14.6 years. A total of 550 boys had grown up
under the care and guidance of IPODERAC. (See Exhibit 6 for photos of the facilities at Villa
Nolasco.)
Children’s Care and Development
IPODERAC’s initial mission was the personal and social rehabilitation of children from poor
and disintegrated families. Street children are often sent out or abandoned by their parents to beg or
even rob as part of their struggle to eke out an existence. The children are often abused and have
little formal education. Their situation leads to frustration, low self-esteem, skepticism, mistrust,
insecurity, independence, and aggressiveness. IPODERAC’s aim was to provide a family
environment with education and a moral orientation that would foster personal identity, self esteem,
and habits of cleanliness, order, discipline, and work. IPODERAC operated on the following
premises: street children need considerable help in gradually adapting themselves to society; they
have the right to special attention and protection by the community; and they and their families are
capable of communicating and deciding their own development and are not objects of charity.
These premises led to an open-door policy whereby boys would enter Villa Nolasco under
their own volition and were also free to leave. Children were referred to IPODERAC by other social
or governmental agencies who worked with street children and juvenile delinquents. Applicants
would visit Villa Nolasco and learn about the community before deciding to enter. By living together
in groups of 12, the boys had a “substitute family” environment. They attended public schools in the
nearby town, thereby being integrated into a community as part of their educational and
developmental process. In 1993-94 over 90% of the boys passed their yearly exams and 10% finished
in the top three places in their classes. Manual work was also seen as an integral part of the
children’s development. The principle was that the children should contribute to their own
maintenance and the goal was to inculcate them with an attitude that work was dignified and
educational, that it builds character, and that you earn through effort.
2
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
399-016
The original model for the children’s houses came from a conference on caring for abandoned
and orphaned children in Chile sponsored by the Order of Mercy, and attended by Sra. Landa. At
Villa Nolasco each two-story house had four bedrooms with three children in each, a dining and
living area, common bathroom, kitchen, and a bedroom for the Educator, who served as the primary
caregiver. Each of the six houses corresponded to a specific age group, with the children moving into
new houses as they reached the next age category.
The Educators were the backbone of IPODERAC’s care giving system. They had to be over
25 years of age, single, and high school graduates. They lived with the children and had primary
responsibility and authority. An Educational Director, Dr. Fernando Ballí who also ran the health
clinic, supervised the six Educators. They received training on their duties, although the care giving
procedures and cumulative knowledge at Villa Nolasco were never documented in any manuals.
The Educators stay, on average, about 3.5 years. Recruiting replacements is a difficult task
because the work is very demanding. Most are found by word of mouth, and indicate that they are
motivated by the joy of caring for the children and by the pay, although it is very modest. The
Educators stated that it was difficult to balance being a friend to the children while also being the
authority. The Educators’ and the children’s days began at 5:00 a.m. and ended at 8:30 p.m. (see
Exhibit 1). The Educators received 2 days off every two weeks and 30 days of vacation annually.
The house with the oldest youth did not have a resident educator in order to transfer greater responsibility and independence to them in preparation for their forthcoming graduation. In its early years
IPODERAC had a psychologist and a priest who provided counseling and support services but these
positions did not currently exist. The combined living, working, and educational experience was
aimed at creating a transformation process: developing values, attitudes, and behaviors that would
enable the children to become independent, productive, and responsible members of society (see
Exhibit 2 for the developmental model).
Production Activities
From its inception, Villa Nolasco engaged in farming both to provide food and revenues as
well as to engage the boys in structured work activities. The children were compensated for their
work at the minimum wage rate. From their savings accounts, the boys could draw out money for
personal expenditures. At the beginning of the school year, the children are provided by IPODERAC
their school supplies. Previously, the children could also get replacements for these supplies, but
when it was discovered that they were selling them to their classmates at school, the children were
required to replace any “lost” supplies from their savings accounts.
The various agricultural undertakings at Villa Nolasco met with mixed success. From the
beginning they planted vegetables to feed the children, with surpluses being sold in the nearby town.
In 1974 they planted 1,100 avocado trees with technical and financial assistance from the government,
including the installation of a drip irrigation system, a farming innovation that attracted considerable
attention in the region. Avocado sales generated significant revenues, covering nearly half of Villa
Nolasco’s operating costs by the late 1980s. However, increasing supplies from other producing
areas and theft of the fruit at night made the operation unprofitable. The farm started raising rabbits
to eat and sell for skins and meat, primarily to the cafeteria in the Volkswagen plant in Puebla. A
disease threat led to a governmental embargo on rabbit sales, thereby ruining the business. Quails
were raised for sale to nearby restaurants from eggs provided by a government incubator. However,
when this government operation was privatized, the new owners stopped supplying outsiders with
eggs, thus ending the quail operation. A similar experience occurred with ducks. The farm also
raised a small number of cows and goats for milk for its own consumption. To feed them they tried
to use a system of hydroponics but the resultant grass was not sufficiently nutritious. The lack of
animal husbandry skills led to poor health and low productivity. They also produced small
quantities of cheese for sale, but there appeared to be little demand. The disappointing efforts to
3
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
IPODERAC
generate earned income led to a rethinking of the traditional approach, which coincided with an
unexpected change in the leadership of IPODERAC.
Leadership Change
In 1988, Sra. Landa, after serving 16 years as the director, suffered a deterioration in her
health which led to her retirement. Finding a successor with the same deep level of commitment and
energy as this founder was a major challenge for IPODERAC’s Board of Trustees. Fortunately, Sra.
Landa had recruited her nephew, Agustín Landa, an agronomist, to come to Villa Nolasco in 1987 to
be in charge of the agricultural operations. When Sra. Landa was hospitalized and resigned, Agustín
was named as the new director at the age of 26.
Agustín was exposed to IPODERAC as a child when his family would visit his aunt. When
he was 19 he brought the first goats to Villa Nolasco and was so deeply touched by the children and
the mission that he recruited fellow university students to work as volunteers during the following
four summers. He then decided in 1986 to leave his position as manager of his family’s farm in
Monterrey and come to Villa Nolasco full time, with the idea of learning about vegetable and flower
production for two years and then returning to Monterrey. When Sra. Landa resigned, Agustín
decided, “This effort was very important and nobody other than the founder and I knew the internal
system of education for the children and the basic principles that they wished to attain. So I decided
to stay for two more years.” In 1990 Agustín faced another crossroads. His father offered to give him
the family ranch worth over a million dollars, if he would return home to run it. This would be an
opportunity to provide economic security to his young family and he consulted his wife, who
responded, “ You said to me that God will provide for us if we concern ourselves with His realm, so
what do you need the ranch for?” Agustín thanked his father and recommitted his energies to
IPODERAC. His father sold the ranch.
Agustín lived with his family in a modest house next to the children’s houses. His $600 a
month salary was many times less than what he could earn outside. To help out, an IPODERAC
supporter committed himself to financing the education of the older of Landa’s two children in
private schools in Puebla. Agustín reflected, “There have been many other times that we have asked
ourselves if we should leave or have thought that it was the moment for others to carry on, but we
have always concluded that a better life we still could not find.”
As director, Agustín was deeply involved in all aspects of the operation from administration
to production and marketing to the boys’ education to external relations and fundraising. The staff
was very small and dedicated, but it was difficult to attract highly talented people due to the low
salaries and rural setting. Exhibit 3 presents the formal organizational chart, but Agustín’s reality
was that “at times I have to do some of everything.” The organization’s limited administrative
resources also meant that only recently had they begun to develop formal and systematic
management record keeping and procedures.
The 23 paid staff members were supplemented by volunteers and outside organizations, both
local and international, who would primarily assist in activities with the students, such as tutoring,
educational trips, and recreational activities. In 1997, 17 volunteers worked at Villa Nolasco between
15 days and a full year, providing an estimated 160 person-days of labor. Among the outside
organizations sending volunteers was the British GAP and various local and overseas universities. A
few corporations also provided volunteers, for example, 70 employees of General Electric Mexico
spent a day painting the IPODERAC houses and interacting with the children on other occasions.
Other companies provided summer internships for some of the youth, over half of whom were
between the ages of 15 and 19. Various professionals provided special educational services to the
children. IPODERAC had on-going operational relations with 25 suppliers and financial or assistance
relationships with 2 civic, 9 governmental, 10 philanthropic, 2 religious, and 69 business
4
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
399-016
organizations (with the majority of the latter being individual donors using funds from their
businesses). Twelve of these various organizations were international.
Agustín was the primary person in charge of these external relationships. He was
continually developing other contacts, generating new ideas, and starting projects aimed at
generating funds or mobilizing resources in a constant search for solutions to IPODERAC’s problems
and needs. However, the follow-through for many of these activities often was impeded due to the
lack of time, organization, and staff capacity.
New Path toward Self-sufficiency
From its inception IPODERAC depended primarily on donations in money or in-kind. The
principal function of the 15-person Board of Trustees was fundraising. Their main event was an
annual raffle in November of a new car, but a variety of other activities also were used from time to
time. In 1997 the raffle produced a net contribution to IPODERAC of 308,000 pesos. In 1994 Agustín,
with the assistance of a General Electric executive and another Mexican colleague, created The
Mexico City Group consisting of 17 professionals from various fields to assist IPODERAC in
fundraising, public relations, planning, mentorships, and internships.
The director also raised funds directly from foundations, corporations, government entities,
and individuals, amounting to 614,000 pesos in 1997. Donations were tax deductible. IPODERAC
had obtained donations from a few multinational corporations and several large Mexican companies.
Some firms provided in-kind donations, e.g., Hewlett Packard donated computers for the children,
others gave foodstuffs, clothing, toys, and school supplies. Agustín indicated that the key to all
donors was establishing a personal relationship, so much of his fundraising time was spent in finding
someone who could provide the personal contact within the donor organization. For corporate,
foundation, or civic organizations the personal relationship was more important than the nature of
the project. In contrast, donations from foreign governments through their local embassy depended
more on the nature and merits of the specific project, although having access to someone in the
embassy was important. Donations from the Mexican government during the early years were very
dependent on personal contacts and relationships. In recent years, however, federal government
funding through the Social Conversion Fund was based on a proposal competition. Three times
IPODERAC had won a 100,000-peso award. Agustín indicated that these competitions required only
about three person days to prepare the project proposal. However, they did not pursue this in 1998
because it was an election year and Agustín feared being used for political purposes.
IPODERAC also had created a Sponsor-A-Child program whereby for $150 per month
individuals or organizations could fund the living expenses of a specific child and have a personal
relationship with him. As of mid-1998, 8 of the 72 children were sponsored, but up to 30 had been
sponsored in the past. Exhibit 4 provides financial statements for recent years.
The cheese opportunity Soon after Agustín assumed the leadership, he and the Board decided to
make a more concerted and focused effort to generate earned income. They concentrated on cheese
production and marketing for several reasons. Agustín’s professional training was in agriculture and
he was particularly interested in the goats. The market for goat cheese in Mexico expanded when the
country’s trade liberalization brought significant increases in imported goat cheese, which sparked
demand. When Mexico’s economy went into crisis in 1994, imports fell, leaving a supply void in the
recently expanded market for goat cheese. A retired Swiss executive from Nestle volunteered his pro
bono services to IPODERAC and provided the technical knowledge for making various types of highquality goat and cow cheese.
In 1988 the small goatherd was increased, partially with donations from the Canadian
government and a major Mexican company. Unfortunately, 16 of these new breeding quality goats
were stolen, slowing down the expansion, but by 1998 the herd had reached 148 producing milk or
5
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
IPODERAC
pregnant and 115 in development. One of the members of the Mexico City Group conceived of and
launched in 1995 an “Adopt-A-Goat” program. For $125 individuals or groups could name a goat,
receive a certificate of adoption with a photo and a milk production report every six months for two
years, at which time the adoption could be renewed. Thirty-two goats had been adopted. The
avocado plantation was replaced by alfalfa to provide feed for the goats. A new, small cheese
fabricating facility with a pasteurizer, hand processing equipment, and refrigeration was developed
with a $25,000 donation that came from the General Electric Foundation in Connecticut through the
G.E. Mexico subsidiary. G.E. had selected IPODERAC as a recipient of its charitable donations only
after surveying many other candidate nonprofit organizations. One of the G.E. executives also knew
Agustín.
Marketing Finding customers for the cheeses was a major challenge for Agustín. There was limited
knowledge among food establishments about French-style goat cheese. He put his cheeses in an ice
chest and headed off in the microbus to visit a few restaurants in Puebla, using contacts made
through friends. Later he tried to penetrate the prime market of Mexico City by approaching the
classiest restaurants, again using personal contacts. To the manager of Maxim’s, instead of trying to
sell, he asked, “Tell me what’s wrong with our cheeses.” With this advice and the Swiss volunteer’s
expertise, IPODERAC made corrections in quality and packaging. Maxim’s became a customer and
the manager also referred Agustín to a restaurant wine and food distributor of which he was part
owner. The distributor facilitated their access to various other quality restaurants. In 1997 the Villa
Nolasco cheeses were sold to the following clients in order of importance:
1. Unilac—A distributor of cold meats and cheeses, IPODERAC sells this cheese
unbranded and Unilac sells it under its own name, mainly to supermarkets;
2. Ferrer & Associates—This wine distributor sells Villa Nolasco brand cheeses to
French restaurants, Price Club, and Carrefour Supermarkets;
3. Restaurants—IPODERAC sells directly to a few high class restaurants in Mexico
City, Puebla, and Cancún;
4. Supermarkets—Direct sales to HEBS, a Texan supermarket chain with two stores
in Monterrey, and Soriana, a Mexican supermarket in Monterrey.
In addition to imports, Agustín cited three main competitors with brands, plus numerous
small producers. Although he had little quantitative data on market size and growth, he pointed to
imports as being over a million dollars in the first semester of 1994. Additionally, he indicated that
he even had U.S. buyers interested. Agustín pointed to the quality of the Villa Nolasco cheeses as
competitively important and to his policy of pricing slightly below competition, stating that “we
believe in quality before charity. It’s important that people come back and buy the cheese more than
once.”1 The food and beverage buyer at the Four Seasons restaurant in Mexico City commented, “I
can buy imported French cheeses for less money but IPODERAC cheeses are such good products, I
buy from them instead.”2 Agustín added, “Another competitive advantage is our character as a
charitable organization. This makes the sale easier and the customer more receptive toward our
conditions, such as only 15 days credit and no merchandise returns. My clients know that if they
don’t pay me on time, it is the children who will not eat.” The Villa Nolasco label stated that “100%
of the profits to the producer from the sale of this cheese is destined to the care, education, and
development of abandoned children of our country.”
1 Food Arts, June 1997
2 Ibid.
6
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
399-016
The sales of cheese had grown to the point in mid-1998 that demand exceeded IPODERAC’s
production capacity. Agustín exclaimed, “Last week I sold 50,000 pesos of cheese but could not fill
orders for another 12,000 pesos due to the lack of milk.”3 This situation focused attention on Villa
Nolasco’s goat milk production.
Production Agustín had increased the size and quality of the herd from 30 to 263 through
purchases, breeding, and artificial insemination, using semen imported from France. A goat begins
milk production at 16 months and continues for 60 months. Each goat gave birth on average, to 1.8
offspring, of which 45% are female. The males are consumed or sold. During its 305 days of lactation
per year, the goat produces on average 2.5 liters per day or 750 liters annually, compared to national
averages of 400 liters in Mexico or 900 in France. The expanding herd required increasingly careful
attention in feeding, hygiene, and milking. The goats are fed alfalfa cut fresh daily from the farm’s
own fields; the climate allows ten harvests per year. Six acres can produce enough to feed 250 goats
for a year. Additionally, purchased feed concentrate is fed to the goats (three kilos for every kilo of
milk produced) while they are being milked in the milking stalls. The boys carried out these
husbandry tasks under the supervision of one employee, an outside veterinarian, and Agustín. The
growing demands of the operation led one of the Educators to remark, “Here the goats are most
important. They are capturing all of Agustín’s attention.”
To offset the shortage of milk from the farm, Agustín purchased goat milk from two nearby
farmers whose operations were less technologically advanced than Villa Nolasco but still yielded an
acceptable quality of raw milk. Other quality suppliers of goat milk had not been found. He also
bought cow milk, which was readily available. The purchased goat milk cost about US$0.36/liter
[3.10 pesos], which Agustín estimated to be slightly more than Villa Nolasco’s cost of production and
about $0.05 more than cow’s milk. In 1997 IPODERAC purchased 59,068 liters of goat milk and
43,062 liters of cow milk. Agustín believed that being able to offer the scarcer goat cheese is what
enabled him to also sell the cow cheese.
Processing The cheese production was done in a 170-square-meter building next to the farm’s
garage and near the bakery which produced the farm’s bread. An expansion of the cheesery in
March of 1998 gave it capacity to process 3,000 liters per day. Currently, the operation processed
daily an average of 350 liters of goat milk and 250 liters of cow milk to produce about 400 units of
cheese. These included five types of goat cheese: Boursin (multiple flavors), Selles-sur-cher, SaintMaure (aged and fresh), Valancay (with or without ash), and Feta; four types of cow cheese:
Camembert, Fromage Blanc, Brie, and Reblochon; and two types of mixed goat and cow cheese:
Tomme de Chevre and Flor de Atlixco. The cheese was made using French handmade techniques
that did not use artificial colors or aromatics or chemical preservatives. Milk production was
seasonal, peaking in July and August and lowest in November and December when demand was
highest. To offset these cycles, the product could be stored in freezers until needed.
Quality control was handled through tasting by the Swiss expert and Agustín as needed but
not on a regularly scheduled basis. The workforce in the processing facility was seven paid
employees and only two boys, as the growing quality requirements and working hours no longer
coincided with the children’s abilities and schedule. One of the employees was an alumnus of
IPODERAC who learned the cheese making business at Villa Nolasco and returned to work there
after graduating.
3 Exchange rate in May 1998 US$1.00 = 8.5 pesos
7
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
IPODERAC
Challenges
Agustín was greatly encouraged by the progress made in the first four months of 1998 (see
Exhibit 5, “1998 Partial Income Statement”), but he saw several operating and strategic challenges.
Milk supply To overcome the shortage of raw milk, Agustín formulated a proposal aimed at
expanding the herd size at Villa Nolasco to 500. This herd would yield a daily production of 1,200
liters. This project also would promote the development of goat milking herds among small farmers
in the area. The Villa Nolasco herd would be able to supply farmers annually 100 females aged 3 to 7
months and 43 males for breeding to create three herds of about 45 head.
The concept was for Villa Nolasco to act as a provider of animals and technical assistance to
small farmers wishing to start or improve their goatherds and generate a new source of income. In
the past, many farmers had visited the farm to learn informally about goat raising and milk
production. Agustín explained that in general goats were “the poor man’s cows.” They often served
as a “savings account,” with a few being purchased young and raised and grazed in a rudimentary
fashion by family members. The goats would be sold when there was a need for cash or butchered
on special occasions. Generally they were not milked. In the proposed project, Villa Nolasco would
donate the goats to a local development agency that would select and finance the small farmers, who
would “pay” for the goats over five years with new goats bred from their herds. These goats, in
turn, would serve to create milking herds for other farmers. Villa Nolasco would promise to buy the
milk production of these new farmers at the prevailing market price, if they wished to sell to them.
To finance the project Agustín planned to submit a request to the Mexican Foundation for
Rural Development. The costs were estimated as follows:
1.
Expansion of the corrals, food storage area, and
watchman’s room
2.
Alfalfa for 250 additional goats for one year
8,000
3.
Feed grain for 7 months until birthing and lactation
(0.3kg./day/goat = 21 tons @ $235/ton)
5,000
4.
Goats—250 nine month’s old @ $165
Total
$15,000
42,000
$70,000
Marketing Agustín was encouraged by the positive reception of his cheeses and by the strong
demand. However, he was concerned by the potential competitive threat posed by the possible
entrance of very large dairy products processors such as Nestle and Alpura, who, Agustín believed,
had made studies of the goat cheese market. In addition, he had just learned that Normex, a company
in northern Mexico producing 10,000 liters of goat milk daily, had contracted a French specialist in
goat cheese processing. He wondered what he should do to strengthen Villa Nolasco’s market
position. He also wondered whether or not he should pursue the export market in the United States.
Organization IPODERAC’s expanding commercial operations stretched even further Agustin’s
time. The growing demands also led him to express doubts about the adequacy of his managerial
knowledge, in spite of his continuous process of self-education through reading and practice. He
wondered what staff configuration and organizational structure would best equip IPODERAC for the
future and what it would take to attract and retain talented and committed people.
He also wondered what, if anything, he should do with IPODERAC’s Board of Trustees. The
Board ran the annual raffle and some other fundraising events and met formally once a year. It
basically went along with whatever the administration wanted to do. Most of the 15 trustees had
served for over 10 years and several since the inception. Agustín indicated that most of the trustees
8
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
399-016
feel that IPODERAC is quite successful and do not see any need for significant changes. However,
one trustee who had been on the board for four years stated, “The board needs to be restructured; it
needs younger people.”
Mission and vision The improving financial prospects of IPODERAC led Agustín and other staff
members to engage in a collective reflection on IPODERAC’s mission and vision. This led Agustín to
propose the following possible mission definition:
“Our mission is to help the most unprotected children in our country and the
organizations that assist them so that they have opportunities for a life of dignity and the
capacity to improve their life conditions.”
This would be achieved through the following programs:
1. Villa Nolasco
2. Financing and developing projects that care for street and abandoned children
3. Financing projects that prevent children from turning to the streets
4. Direct help to organizations that work with rural people to enable them to
remain in the countryside
Agustín thought that it was now important to indicate that IPODERAC had a mission larger
than Villa Nolasco. However, the organization had to consider carefully the merits and feasibility of
the strategic issue of whether to expand the number of boys cared for at Villa Nolasco or to set up
similar centers elsewhere or to help others do that. Agustín knew that the decisions and actions
taken now would fundamentally shape the direction and viability of IPODERAC as it entered the
next century.
9
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
IPODERAC
Exhibit 1
Daily Schedule (Monday-Friday) of Children
5:00-5:15
rise, make bed, get dressed [four youth rise at 4:30 to milk goats]
5:15-5:30
wash, comb
5:30-6:00
breakfast
6:00-6:45
brush teeth, clean house
7:00-8:30
transport to school (departure time varies by age)
8:30-9:00
staff meeting
8:30-1:45
attendance at school
1:45-3:00
return from school, wash, change clothes, lunch
3:00-3:50
clean up dining room, kitchen, bathroom
3:50-6:00
study, workshops, or assigned work activities (e.g., goat care, gardening)
6:00-7:00
games on the sports field or in the houses
7:00-7:30
bath
7:30-8:00
dinner
8:00-8:20
clean up
8:20
to bed
Exhibit 2
IPODERAC Transformation Process for Adolescent Development
TRANSFORMATION STAGES ----------------------- ! Values Affirmed in Each Stage
alum follow-up connection with community
graduation---- ! adulthood
preparation for independence - ! self-esteem, capability, liberty
participative responsibility ------! service, co-responsibility
facing up to past ---------------------! pardon, hope, faith, love
work ------------------------------------------------- ! responsibility, self-esteem
schooling------------------------------------------- ! responsibility, friendship
personal habits----------------------------------------! responsibility
acceptance that “I am here”-------------------! community
entry and initial adaptation ------------------------------ ! friendship, community, self-esteem, happiness, respect
CHILDRENS’ TIME IN VILLA NOLASCO --------- !
10
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
Exhibit 3
399-016
IPODERAC Organization Chart
BOARD OF TRUSTEES
[15A]
Legal [1A]
Other Advisors[5A]
Directora
[1A]
Director of Education [1A]
Development
Services:
–Educators
[6A]
–Food
[1A]
–Spiritual
[5A]
–HouseCare
[3A, 15Cb]
Office Staff
[3A]
Cheesery Mgr.
[7A, 2C]
Farm Mgr.
[2A, 50C]
Volunteer
Coordinator
[1A, 8 vols.]
–Drivers
[2A]
Note:
Bracketed figures indicate numbers of adults [A] and children[C] working in each activity.
aIn addition to supervising all the above direct reports, the director had primary responsibility for sales, fundraising, personnel
administration, and public relations
bYounger children engage in the cleanup of the common areas in the houses. In addition to the above, 2 adults and 20 older
children work in the various construction projects when they arise; e.g., corral, building repairs.
11
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
IPODERAC
Exhibit 4A IPODERAC
(in thousands of US$)
Financial
Statements—Profit
and
Loss
Statement
Exchange Rate
6.17
7.57
7.88
INCOME
1995
1996
1997
13
13
2
28
0.4
35
-36
0.3
39
-39
19
30
1
16
58
-7
0
130
46
1
23
1
22
8
25
0
128
20
15
1
23
-18
-78
5
4
5
1
61
0
77
7
20
-7
139
0
173
a
a
-9
253
3
265
Other income
--
--
1
Interest income
9
4
2
244
340
386
1995
1996
1997
8
1
5
2
17
2
1
5
3
-6
5
1
3
2
38
3
2
9
8
-16
10
1
5
4
28
4
2
3
11
-8
Income generated by Board
Scholarships
Events (annual raffle)
In-kind donations
Income generated by Management
Scholarships
Donations for the Cheesery
Donations for fixed assets
FAPRODE
Other donations
Donations for goatherd
In-kind donations
Other income
Self-earned Income
Alfalfa for goats (internal)
Milk for Cheesery (internal)
Milk for children (internal)
Sales of goats
Cheese sales
Other income, production
TOTAL INCOME
EXPENSES
Production Expenses
Alfalfa & Vegetables:
Children wages
Depreciation and amortization
Others
Goats
Children wages
Salaries and benefits, others
Alfalfa Ipoderac
External feed
Depreciation and amortization
Others
12
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
399-016
Exhibit 4A (continued)
EXPENSES (continued)
1995
1996
1997
39
3
-20
0
16
-1
65
77
2
1
48
1
24
5
3
128
99
2
6
50
0
41
-1
138
Administration
Salaries and benefits
30
16
30
14
42
17
Children
Salaries and benefits
Allowances
107
13
21
140
20
30
159
22
34
Annual event
Other expenses
--137
5
14
189
--201
TOTAL EXPENSES
202
317
339
42
23
47
Cheseery
Children wages
Salaries and benefits, others
Milk
Depreciation and amortization
Others
Carpentry
Humus (Californian worms)
Operation Expenses
NET INCOME (LOSS)
aNet income from these internal sales unregistered in 1997.
Exhibit 4B
Abridged Balance Sheet as of 12/31/97 (US$000)
Current Assets
Cash and bank
Accounts receivable
Other
Subtotal
Current Liabilities
41
20
14
74
Net Fixed Assets
Land and equipment
Office equipment
Buildings and furnishings
Cheesery
Other
Subtotal
Total Assets
Accounts payable
Taxes payable
Subtotal
12
1
13
Capital
22
28
84
13
10
157
231
Original patrimony
Retained surpluses
Current period surplus
Subtotal
Total Liabilities & Capital
60
111
47
218
231
13
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
Exhibit 5
IPODERAC
IPODERAC Financial Results, January-April 1998
Pesos
US$
INCOME
DONATIONS:
Board fundraising
57,995
Director fundraising
40,436
98,431
11,580
773,627
91,015
872,058
102,590
338,695
39,846
458,110
53,895
139,427
936,232b
16,403
110,144b
(64,174)
(7,550)
PRODUCTION REVENUES:
Cheese salesa
Goat sales
770,582
3,045
Total Income
COSTS
PRODUCTION:
Alfalfa and vegetables
43,046
Animals
68,218
Cheesery
227,430
CHILDREN:
Educators, housing, food, health, schooling
ADMINISTRATION:
Salaries, taxes, office, depreciation
Total Costs
SURPLUS/(DEFICIT)
aUnits of cheese sold—32,096 at an average price of 24.27 pesos. Liters of milk processed—Goat: 20,519, Cow: 50,829.
bTotal costs includes depreciation charges of 101,439 pesos
14
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
Exhibit 6
399-016
Vistas of Villa Nolasco
One of Boys’ Houses
Boys’ Bedroom
15
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
IPODERAC
Exhibit 6 (continued)
Boys’ Computer Room
Library; Volunteers with Boys
16
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
399-016
Exhibit 6 (continued)
Vegetable Garden
Goatherd
17
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
399-016
IPODERAC
Exhibit 6 (continued)
Augustín Landa with Boys Tending Goat
Goat Milking Stalls
18
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
For the exclusive use of A. Alneel, 2020.
IPODERAC
399-016
Exhibit 6 (continued)
Cheese-processing Operations
Finished Cheese Products
19
This document is authorized for use only by Asma Alneel in PUAD 636 NGO Policy and Management Fall 2020 taught by Char Mollison, George Mason University from Aug 2020 to Jan 2021.
THE ROUTLEDGE COMPANION TO
NONPROFIT MANAGEMENT
Over the past three decades or so, the nonprofit, voluntary, or third sector has undergone a
major transformation from a small cottage industry to a major economic force in virtually every
part of the developed world as well as elsewhere around the globe. Nonprofit organizations
are now major providers of public services working in close cooperation with governments at
all levels and increasingly find themselves in competition with commercial firms across various
social marketplaces. This transformation has come with ever-increasing demands for enhancing
the organizational capacities and professionalizing the management of nonprofit institutions. The
Routledge Companion to Nonprofit Management is the first internationally focused effort to capture
the full breadth of current nonprofit management research and knowledge that has arisen in
response to these developments.
With newly commissioned contributions from an international set of scholars at the forefront
of nonprofit management research, this volume provides a thorough overview of the most
current management thinking in this field. It contextualizes nonprofit management globally,
provides an extensive introduction to key management functions, core revenue sources and
the emerging social enterprise space, and raises a number of emerging topics and issues that
will shape nonprofit management in future decades. As graduate programs continue to evolve
to serve the training needs in the field, The Routledge Companion to Nonprofit Management is an
essential reference and resource for graduate students, researchers, and practitioners interested
in a deeper understanding of the operation of the nonprofit sector.
Helmut K. Anheier is a Professor at the Hertie School of Governance, Berlin, Germany, and the
Luskin School of Public Affairs at UCLA. His most recent books include Nonprofit Organizations:
Theory, Management, and Policy, Performance Measurement in Philanthropic Foundations: The Ambiguity
of Success and Failure, Social Innovation – Comparative Perspectives, and Governance Indicators: Approaches,
Progress, Promise. Currently, he co-edits the International Encyclopedia of Civil Society.
Stefan Toepler is Professor of Nonprofit Studies and Director of the Master of Public
Administration Program in the Schar School of Policy and Government, George Mason
University, Arlington, VA. He has written broadly on nonprofit management and policy,
philanthropy and global civil society. Among other books, he co-edited Legitimacy of Philanthropic
Foundations: United States and European Perspectives and also co-edits the International Encyclopedia
of Civil Society.
ROUTLEDGE COMPANIONS IN BUSINESS, MANAGEMENT
AND ACCOUNTING
Routledge Companions in Business, Management and Accounting are prestige reference works
providing an overview of a whole subject area or sub-discipline. These books survey the state
of the discipline including emerging and cutting-edge areas. Providing a comprehensive, up
to date, definitive work of reference, Routledge Companions can be cited as an authoritative
source on the subject.
A key aspect of these Routledge Companions is their international scope and relevance.
Edited by an array of highly regarded scholars, these volumes also benefit from teams of
contributors which reflect an international range of perspectives.
Individually, Routledge Companions in Business, Management and Accounting provide
an impactful one-stop-shop resource for each theme covered. Collectively, they represent
a comprehensive learning and research resource for researchers, postgraduate students and
practitioners.
Published titles in this series include:
The Routledge Companion to Critical Marketing
Edited by Mark Tadajewski, Matthew Higgins, Janice Denegri Knott and Rohit Varman
The Routledge Companion to the History of Retailing
Edited by Jon Stobart and Vicki Howard
The Routledge Companion to Innovation Management
Edited by Jin Chen, Alexander Brem, Eric Viardot and Poh Kam Wong
The Routledge Companion to the Makers of Global Business
Edited by Teresa da Silva Lopes, Christina Lubinski and Heidi J.S. Tworek
The Routledge Companion to Accounting in Emerging Economies
Edited by Pauline Weetman and Ioannis Tsalavoutas
The Routledge Companion to Career Studies
Edited by Hugh Gunz, Mila Lazarova andWolfgang Mayrhofer
The Routledge Companion to Nonprofit Management
Edited by Helmut K. Anheier and Stefan Toepler
The Routledge Companion to Inclusive Leadership
Edited by Joan Marques
For more information about this series, please visit: www.routledge.com/Routledge-Companionsin-Business-Management-and-Accounting/book-series/RCBMA
THE ROUTLEDGE
COMPANION TO NONPROFIT
MANAGEMENT
Edited by Helmut K. Anheier and Stefan Toepler
First published 2020
by Routledge
2 Park Square, Milton Park,Abingdon, Oxon OX14 4RN
and by Routledge
52 Vanderbilt Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2020 selection and editorial matter, Helmut K. Anheier and Stefan Toepler;
individual chapters, the contributors
The right of Helmut K. Anheier and Stefan Toepler to be identified as the authors
of the editorial material, and of the authors for their individual chapters, has been
asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents
Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised
in any form or by any electronic, mechanical, or other means, now known or
hereafter invented, including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered
trademarks, and are used only for identification and explanation without intent
to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names:Anheier, Helmut K., 1954– editor. | Toepler, Stefan, editor.
Title:The Routledge companion to nonprofit management /
edited by Helmut K.Anheier and Stefan Toepler.
Description: First Edition. | New York : Routledge, 2020. |
Series: Routledge companions in business, management and accounting |
Includes bibliographical references and index. |
Identifiers: LCCN 2019046836 (print) | LCCN 2019046837 (ebook) |
ISBN 9781138744462 (hardback) | ISBN 9781315181011 (ebook)
Subjects: LCSH: Nonprofit organizations—Management.
Classification: LCC HD62.6 .R688 2020 (print) | LCC HD62.6 (ebook) |
DDC 658/.048—dc23
LC record available at https://lccn.loc.gov/2019046836
LC ebook record available at https://lccn.loc.gov/2019046837
ISBN: 978-1-138-74446-2 (hbk)
ISBN: 978-1-315-18101-1 (ebk)
Typeset in Bembo
by Apex CoVantage, LLC
Cover Art by Emilia Birlo.
CONTENTS
List of contributors
ix
1 Nonprofit management: Introduction and overview
Stefan Toepler and Helmut K. Anheier
1
PART I
Management context
9
2 A changing management context: The US, UK, Canada and Australia
Susan D. Phillips
11
3 Nonprofit management context: Continental Europe and Scandinavia
Georg von Schnurbein and Alice Hengevoss
28
4 Nonprofit management context: Central and Eastern Europe
Peter Vandor, Clara Moder, and Michaela Neumayr
44
5 Nonprofit management context: Russia and the FSU
Lev Jakobson, Irina Mersianova, and Natalya Ivanova
60
6 Nonprofit management in Asia
Tamaki Onishi and Naoto Yamauchi
73
7 Nonprofit management context: The Middle East and North Africa
Omar Bortolazzi
91
8 Nonprofit management context: Africa
Jacob Mwathi Mati
v
103
Contents
9 The Latin American context: The challenge of managing advocacy
and impact inclusion
Urs Jäger, Felipe Symmes, and Roberto Gutiérrez
119
PART II
Leading and planning
137
10 Composition of nonprofit boards: Summary of factors that
account for who governs nonprofits
William A. Brown
139
11 Leadership
Ruth Simsa
152
12 Beyond codes: Values, virtues, and nonprofit ethics
Ki Joo Choi and Roseanne Mirabella
165
13 Strategic management
Michael Meyer
177
PART III
Managing internally
195
14 Evaluation and performance measurement
Lehn M. Benjamin and David A. Campbell
197
15 Budgeting and financial management: A multi-year budgeting approach
Marcus Lam and Bob Beatty
213
16 The essential nature of internal controls
Nathan J. Grasse and Daniel Gordon Neely
234
17 Information and communications technology management
John McNutt
249
18 Nonprofit human resource management
Allison R. Russell, Marlene Walk, and Femida Handy
263
19 Volunteer management and the psychological contract
Mark A. Hager and Kathy T. Renfro
278
20 Co-production
Taco Brandsen,Trui Steen, and Bram Verschuere
291
vi
Contents
21 Association and membership management
Mary Tschirhart
301
PART IV
Managing externally
315
22 Collaborations and networks
David Suárez and Hokyu Hwang
317
23 Advocacy and lobbying
Jennifer E. Mosley,Tadeo Weiner-Davis, and Theresa Anasti
335
24 Nonprofits and political participation
Kelly LeRoux and Mary K. Feeney
349
25 Nonprofit marketing and branding
Jane Hudson
361
26 Relationship fundraising 2.0: Lessons from social psychology
Adrian Sargeant and Ian MacQuillin
377
PART V
Funding sources
389
27 Individual giving and philanthropy
Beth Breeze
391
28 The nonprofit sector’s ‘rich relations’? Foundations and their
grantmaking activities
Tobias Jung
410
29 Corporate philanthropy
Lonneke Roza and Lucas C.P.M. Meijs
426
30 Government funding
Michaela Neumayr and Astrid Pennerstorfer
438
PART VI
The social enterprise space
455
31 Social enterprise
Janelle A. Kerlin
457
vii
Contents
32 Social innovation: What it is, why it matters and how it can be studied
Gorgi Krlev and Georg Mildenberger
33 Social finance for nonprofits: Impact investing, social impact bonds,
and crowdfunding
Jun Han,Wendy Chen, and Stefan Toepler
467
482
34 Hybridity: Origins and effects
Gorgi Krlev and Helmut K. Anheier
494
35 New legal forms for hybrid organizations
Alan J. Abramson and Kara C. Billings
513
Index
531
viii
CONTRIBUTORS
Alan J. Abramson, Professor of Government and Politics, Schar School of Policy and Government, George Mason University, Arlington, VA, USA
Theresa Anasti, Assistant Professor, Department of Sociology, Anthropology, Social Work,
and Criminal Justice, Oakland University, Rochester, MI, USA
Helmut K. Anheier, Professor, Hertie School of Governance, Berlin, Germany, and Luskin
School of Public Affairs at UCLA, CA, USA
Bob Beatty, Adjunct Faculty, University of San Diego, School of Leadership and Education
Sciences, Department of Leadership Studies, San Diego, CA, USA
Lehn M. Benjamin, Associate Professor, The Lilly Family School of Philanthropy, Indiana
University-Purdue University-Indianapolis, Indianapolis, IN, USA
Kara C. Billings, Graduate Research Assistant, Schar School of Policy and Government,
George Mason University, Arlington, VA, USA
Omar Bortolazzi, Assistant Professor of International Studies, School of Arts & Sciences,
American University in Dubai, Dubai, United Arab Emirates
Taco Brandsen, Professor, Institute for Management Research,...
Purchase answer to see full
attachment