Preface

Non-governmental organizations (NGOs) operate at the international, national, and regional levels and are indispensable at the local level. At these levels, they realize or satisfy the interests and needs of the residents, unite, draw attention to irregularities, and in other different ways, improve the quality of life in the environment where they operate. Thus, throughout their existence, NGOs have proven to be essential providers of (public) services in social, cultural, sports, environmental, health, youth, and other areas of life.

Cooperation between NGOs and the local community is mutually beneficial. Above all, it is valuable and vital for citizens who satisfy their needs and interests through the activities that NGOs carry out and that municipalities co-finance or otherwise support. Only cooperation between NGOs and the municipality can make the local environment and community stronger and better.

Of course, this is not or should not be a closed partnership. The economy, the public institution, and the media can be equal partners in building the quality of the local environment. That is why broader integration and cooperation are even more critical.

Globally, there is currently no uniform definition of what an NGO is. An NGO can mean an association, institute, or institution. An NGO is an organization with a certain degree of formality (as a difference from other interest-based, informal associations of residents), founded on the initiative of natural or legal persons. The foundation's purpose is to pursue beneficial goals and improve the quality of life of its members, users, and all residents. NGOs are considered non-profit and independent organizations (from the public sector).

Modern international trends in the development of the non-governmental sector show that its importance and role are recognized by practically all developed countries, which is why in the last two decades of the 20th century we have recorded a genuine flourishing of NGOs and an accelerated strengthening of the partnership between them and the state. This is reflected in the involvement of NGOs in decision-making processes and their ever-widening involvement in the network of service providers operating in the public interest (public networks). In EU countries, NGOs are strongly involved in the functioning of the state, especially in the fields of education (Belgium, Ireland), health (Netherlands), social welfare (Austria, France, Germany, Spain), and culture and sports (Czech Republic, Hungary, Slovakia). As a result, they employ on average as much as 5.42% of the active population. Their close cooperation with the state is also reflected in the share of revenues from public sources. In EU countries this amounts to as much as 58% of all NGO revenues on average. The state, for its programs, which are carried out for the public benefit, allocates 2.20% of the national GDP on average. In the field of volunteering, trends are reflected in social responsibility and the development of corporate volunteering and other innovative forms of volunteering that follow rapid societal changes.

NGOs address social problems, and to do this work, the government grants them special rights and privileges and financial support, while citizens contribute their time and money. Therefore, these organizations have an even greater duty and responsibility to realize their mission and achieve their goals responsibly and ethically. The work of managers in NGOs and other organizations is similar. Their fundamental task is to manage the organization, which includes planning, organizing, implementing, and controlling activities. It is essential to plan goals following the mission and to set strategies for achieving goals. Differences between the activities of NGOs are generally more significant between NGOs than between non-profit and for-profit organizations.

However, even NGOs must deal with competition to achieve their goals and acquire enough resources to fulfill them. They must determine their goals, have an overview of the competition and the market, and monitor consumer habits and trends in the environment. Non-profit organizations already use business techniques common to the for-profit sector. They are increasingly exposed to pressures typical of for-profit organizations, such as competition for resources and the need to make money to fulfill the mission. The task of the non-profit manager is to turn the mission into specific tasks.

NGO strategies must connect users with the organization's mission. In NGOs, the final product is often a service that has some effect on users. This effect is conditioned by a particular social relationship between the performer and the user. In this way, we evaluate the service mainly by the effects of its activity on the user. Users in the public eye often receive the services of NGOs due to their hardships and position in society. NGOs provide funds from stakeholders who expect economic, efficient, and purposeful use of donated goods. Therefore, the operation of these organizations and their users have constantly affected the critical view of the public.

The challenge of managing NGOs is always that it is harder to sell the mission than the product. The target group is often addressed to change their outlook and behavior completely. In the for-profit sector, the marketing department tries to get the consumer to use their product over a competitor's product or to use it more often. It rarely has the task of converting the user. How to convince the elderly population to finally admit that they need assistance and overweight people to adopt a healthy lifestyle? NGOs are constantly faced with these types of challenges.

This book provides a comprehensive overview of NGOs. It is organized into two sections.

In the first section, "Management Aspects of NGOs in the Area of Development, Marketing and Sourcing," chapters examine the changing roles of NGOs in development. Chapter 1 presents a case study of South Africa, suggesting some avenues to explore for enhancing the role of NGOs in development in this country. Chapter 2 investigates the extent to which healthcare sector NGOs employ marketing strategies to achieve sustainability, thus benefiting NGOs, donors, and stakeholders who support the operations of NGOs. Chapter 3 discusses the knock-on effect the COVID-19 outbreak has had on the humanitarian supply chain. The findings are instrumental for decision-makers to develop potential interventions based on the identified priorities.

The second section, "Case Studies of NGOs," examines NGOs in different countries. Chapter 4 deals with the rise and fall of NGOs in Bangladesh. Recently, NGOs have faced challenges that tend to diminish their role due to donors' declining funds and growing government restrictions. This, this chapter suggests that NGOs, in their engagement with a leadership position, can survive the present economic and political challenges and continue to help the people left behind and exploited through social enterprises and more commitment. Chapter 5 assesses the early intervention practices of Ethiopia's vision community-based rehabilitation association. Chapter 6 examines the role of NGOs in protecting and preserving cultural heritage in the European Union in the Slovenia–Austria Cross-Border Program. Cultural heritage plays a vital role as an identity factor as well as a tourism factor. The European Year of Cultural Heritage 2018 and the 2003 UNESCO Convention for the Safeguarding of Intangible Cultural Heritage illustrate this on a high policy level. Rural regions facing territorial challenges like unemployment and depopulation can especially benefit from cultural heritage. These regions are often also the last resort for endangered traditional handicrafts and their related artifacts. The core part of this chapter is an analysis of the cultural heritage present in the EU Policies and the Slovenia–Austria Interreg V Program in the previous and present multi-annual financial framework (2014-2020 and 2021-2027). Finally, Chapter 7 traces the roots of anti-Chinese sentiments in US history. To understand and confront the ongoing Asian/Chinese hate in the United States as another pandemic virus, this chapter delves into the root cause in history, as anti-Chinese sentiments are nothing new but are now appearing in a new context and with a new trigger.

We would like to thank IntechOpen for the opportunity to edit this book. We appreciate that they believed we could provide the necessary knowledge and technical assistance. We also thank each of the authors for their valuable contributions.

> **Dr. Vito Bobek** Institute of Int'l Management and Entrepreneurship, University of Applied Sciences FH Joanneum, Graz, Austria

> > **Dr. Tatjana Horvat** Faculty of Management, University of Primorska, Koper, Slovenia

**1**

Section 1

Management Aspects of NGOs

in the Area of Development,

Marketing and Sourcing

### Section 1

## Management Aspects of NGOs in the Area of Development, Marketing and Sourcing

#### **Chapter 1**

## The Changing Roles of Non-Governmental Organizations in Development in South Africa: Challenges and Opportunities

*Michel Tshiyoyo*

#### **Abstract**

Given the changing environment of public administration, the roles played by nongovernmental organizations (NGOs) will continuously evolve. NGOs are considered to be major role players in this era of governance as; in some instances, they fill the vacuum created by governments' inability to honor the social contract, particularly in developing countries. However, the role of NGOs in the development process does not come easily, as they are faced with a number of challenges and opportunities. The purpose of this chapter is to examine the changing roles of NGOs in development, focusing on the case of a country like South Africa. Using a qualitative method, the chapter relies on a review of the available literature on the roles of NGOs in developing countries with a specific reference to South Africa. Explanatory case studies are considered to ascertain the role NGOs play in development. Specific cases of NGOs operating in local government in South Africa are examined with the aim of highlighting their contribution to the development and also identifying some of the challenges and opportunities available to them. The chapter concludes by suggesting some avenues that could be explored to enhance the role of NGOs in development in South Africa.

**Keywords:** non-profit organizations, non-governmental organizations, development, governance era

#### **1. Introduction**

Governance has different means for different people. Broadly, governance refers to the conscious management regimes, which intend to enhance political authority's effectiveness [1]. Governance can also refer to the establishment of a new process of governing or a transformed condition of the well-ordered rule. Further, governance may also be about the new way of governing a society. From public administration and public policy perspectives, one can rely on definitions of governance as provided by [2, 3]. These authors view governance as:

1.Interdependence between organizations. In this context, governance is considered to be broader than government, as it includes non-state actors. Therefore, altering the borders of the state referred to shifting the boundaries between public, private, and voluntary sectors, which were becoming opaque.


In light of the above, one can conclude that governance can broadly mean governing with and through networks [4].

In recent years, the discourse on the roles played by public and private institutions in the provision of public services, commonly known as collective goods, has shifted tremendously. In the past, the delivery of public services was the result of interactions between governmental functions and markets, but now, the debate goes beyond to also look at a third component represented by the non-profit sector (NPS). There are numerous factors that account for the shift that has taken place. The limits of the state capabilities coupled with the market failure are among the key factors that triggered the shift. As a result, governments started considering the NPS as an alternative to the provision of public services. Important to note is the fact in many countries due to the pressure they faced to adjust that faced declining public treasuries were declining resulting in public sectors being required to reduce their span of activity as they faced demands from their electorates to preserve established benefits and entitlement. In this context, the NPS is considered to be a sector that could alleviate the governments burden to deliver social services and above all, a sector that could reduce or avoid the risk of the complete termination of certain programs that were meant to benefit communities [5, 6]. To this end, it becomes clear that the provision of public services is now dependent on two tasks that are complementary in nature. Firstly, non-state actors are increasingly involved in global governance. This is because governments are increasingly facing challenges as the sole role-player in the design and implementation of public policies. Secondly, governments are required to ensure that the involvement of non-state actors is well structured and coordinated in order to avoid the dangers of special-interest politics. If provisions are not made to ensure the participation of non-state actors occurs in a well-structured manner, there is a possibility that chaos might erupt since decisions made may become favorable to one group over another leading to a persistence of a holdup in the system [7]. Given the negative effects of the existence of gridlock in the system, it is in the government's best interest that a smooth collaboration between the public sector, the private sector, and the non-profit sector should be maintained for the effective provision of collective goods.

The chapter uses the term "non-governmental organizations" in its title, but it should be noted that the concept falls under the umbrella of the NPS and nonprofit organizations (NPOs). Throughout this chapter, those concepts will be used

#### *The Changing Roles of Non-Governmental Organizations in Development in South Africa... DOI: http://dx.doi.org/10.5772/intechopen.107015*

interchangeably. NGOs exist as a result of two important paradigm shift. Firstly, the dawn of the New Public Management has made it possible for governments across the globe to no longer be considered as the only providers of collective goods. Secondly, the advent of globalization has altered the extent to which governments are able to meet the expectations of their respective citizens and it is becoming quite difficult for governments to provide citizens with public services that meet the required standards, particularly in the context of developing countries. Therefore, NGOs play and will continue to play roles that are of significance to the attainment of the social contract. These roles can be categorized into two groups. On the one hand, the era of governance has made NGOs to be major role players alongside governments. On the other hand, NGOs are filling the vacuum created by governments' inability to honor the social contract, particularly in the context of developing countries. Ref. [6] argues that depending on circumstances, NPOs can play three different roles: complementary, supplementary, and adversarial roles. Firstly, NPOs play a complementary role when they contribute to the creation of an environment that establishes the reign of legitimacy, accountability, and transparency. Secondly, NPOs play a supplementary role when they fill the gap that exists in government operations when they, for instance, militate for the consolidation of democracy, assist in checking and exposing the abuses of state power, avert instances, whereby authoritarian governments resume power, and encourage broader citizen participation and promote public scrutiny of the state. Finally, NPOs do also play an adversarial role. This happens in countries that are plugged by authoritarian rules or those that are going through democratic transitions. In this instance, NPOs play an interesting role in becoming the voice of the people since they are able to rally efforts for the much-needed pressure seeking political change or renewal. Besides the traditional environment in which NPOs operate, one must acknowledge that the outbreak of the Covid-19 pandemic has called for a rethink of the roles NGOs should play or continue to play in the development process in developing countries. The ever-changing environment of public administration conditions NPOs to face numerous challenges, but it also offers them a number of opportunities as well. The question that remains is, how could NGOs maximize opportunities that are available in order to overcome the challenges that cripple their operations and contributions.

This chapter examines the changing roles that NGOs play in the process of development focusing particularly on the challenges that confront these organizations. The chapter also highlights some of the opportunities that could be tapped into in order to improve NGOs contribution to development. A qualitative methodology is used and it is supplemented by secondary data. A review of available literature was conducted based on keywords that include governance, NGOs, development, and developing countries. After searching and selecting the relevant sources, the literature review was divided into two categories, namely, normative and empirical research. The review was guided by the following research questions:


To answer the above questions, explanatory case studies were used to ascertain the role NGOs play in development. Specific cases of NGOs operating in local government in South Africa were examined with the aim of highlighting their contributions, identifying some of the challenges they are faced with, and outlining opportunities that are available to them.

The argument made in this chapter is supported by two theoretical underpinnings, namely, global public goods theory and the principal-agency theory. Firstly, the theory of global public goods contributed to both the evolution of various development theories and to the role of played by NGOs at advanced levels. These comprise, for instance, debt relief, anticorruption movements, human rights, gender equality, and climate change issues [8]. Elinor Ostrom pioneered a work that proved communities' capacity to be self-organized and able to share common-pool resources (CPRs). This was done beyond the commonly known pathways of solely public or exclusively private management solutions. In today's times, one can stress that the commons do, on the one hand, refer to small-scale institutions for the management of shared resources at the local level. On the other hand, the commons do also designate a broader variety of struggles that occur as a result of self-government thus against the existing upsurge of enclosures [9–11]. Secondly, the principal–agent theory is considered as it deals with circumstances in which one person, the principal, would like to persuade another, the agent, to achieve some duty that is aligned to the principal's interest, but this is not necessarily in the interest of the agent. Mostly, the principal accomplishes this by either using moral persuasion (in effect, the principal will try to influence the agent's calculated states in order to make the agent to be more predisposed to perform the task at hand). The principal can also rely on dishing out some incentives in order to motivate the agent to attain a task that is in the best interest of the principal. Though most literature relating to economics have a tendency of focusing on the provision of incentives, one should note that this is not a feature that is inherent to the model [12, 13]. These two theories do provide the basis that motivates the consideration of the various roles played by NGOs to play in the process of development globally and particularly in developing countries.

The main contributions that this chapter intends to make are as follows. Section one explores the imperatives of the governance era. Section two discusses the relevance of the roles of non-governmental organizations in development. Section three analyzes the changing roles of NGOs in development. Section four highlights the cases of the contributions of NGOs to development in South Africa. Section five outlines the challenges facing NGOs before identifying the opportunities at their disposal. Section six suggests ways that could be explored to improve NGOs contribution to development before the chapter concludes.

#### **2. Imperatives of the governance era**

In the twentieth century, the hierarchical government bureaucracy was considered to be the major organizational model, which was used for the delivery of public

#### *The Changing Roles of Non-Governmental Organizations in Development in South Africa... DOI: http://dx.doi.org/10.5772/intechopen.107015*

services and also to achieve the agenda of public policy. This made it easy for public managers to win approval by instructing their subordinates to follow and complete highly monotonous–albeit professional–tasks with uniformity but without discretion. In the twenty-first century, things are different as societies are increasingly becoming complex and they require public officials to come up with governance models that are new and adapted [14]. For instance, during the period of managerialism and rationalization (between 1980s and 1990s), governments were expected to exclusively use competition and initiate collaboration with market players to carry out their essential business operations and activities [15]. As a result, governments became interested in engaging in higher levels of collaboration. This practice became common particularly in vertical and horizontal collaboration, in whole-of-government amalgamation, shared solutions as well as in numerous dynamic partnerships. This paved a way for governments to consider themselves more like facilitators engaged in value chains just to allow other actors to thrive and they also considered themselves as working through markets, rather than autarkic "doers" who owned, operated, and produced things themselves. Governments ended up realizing and accepting that they should rely on other sectors (private and non-profit) represented by role players who contribute to the delivery of effective outcomes. The two actors outside the confine of the public sector have the means to provide improved services as they have at their disposal the necessary knowledge and skills, they have access to the market or are specialized or they concentrate their efforts on crucial aspects of public services delivery networks. There are four apparent types of collaborative relations that should exist between actors, namely [16], collaboration within government, which involves the participation of various agencies and players; collaboration between governments, which includes agencies that fall under different jurisdictions; collaboration between governments and external third-party actors that are involved in the provision of goods and services; and collaboration that exists between diverse government institutions and citizens or clients considered individually.

Ref. [6] cites the works of some prominent writers, such as [17–20] who argue that the disadvantages of bureaucracy as an apparatus of rational action, such as rigidity, red tape, and logrolling, contributed to the development of western states into a new stage characterized by the post-bureaucratic stage. This stage consisted of a delegation or dissemination of authority as well as the reduction of control. In this stage, policies' implementation was no longer the sole mandate of core government agencies. This is to say that the governance era opened up the restrictions on the value-chains of the delivery of public services to accommodate other role players to collaborate with governments and be part of providers of collective goods. This is, for instance, evidenced by the various roles NPOs play in developed and developing countries. Relying on a poll organized by GlobeScan experts [21], it is reported that business plays a leading role in the attainment of sustainability (35%). Interestingly, NGOs follow (30%) and governments come in the last position (24%). Given the results of this poll, it becomes clear that governments are now forced to engage in partnerships with businesses and the non-profit sectors.

#### **3. Relevance of the roles of non-governmental organizations in development**

According to ref. [22] NGOs are described as organizations that are designed from within civil society by allowing individuals who share some common purpose to come together. Ref. [23] notes that NGOs' existence stems from both internal and external factors. Internally, the governments steady withdrawal in the process of public service delivery has created a vacuum that can be filled by NGOs. Today, governments are becoming unable to provide high-quality public services to citizens. Externally, the formation and growth of the civic space are influenced by the political and socio-economic milieu within which actors operate. The third wave of democratization has primarily defined this milieu in a way that it so dramatically culminated in the collapse of the Berlin Wall in 1989. While it is evidently impossible to come up with an accurate timeline of developments that took place in the aftermath of historical events that constituted the drivers of the third wave of democracies, the main effect of these was the combination of democracy with neo-liberal economic prescriptions. This vision was supported by Western powers and international financial institutions, and it was also promoted by the mainstream academy in both the developed and developing world [24, 25]. However, a significant element that characterizes civil society's new responsibilities consists of the move made to step into the domain that delivers social services, partly abandoned by the state in terms of the standard brought by neo-liberal budgetary and fiscal directives. The logic maintained by neo-liberals started mainly with the efficiency argument as they insisted that NGOs could provide better, more efficient, and cost-effective services than government departments, thus because of their proximity with communities that are beneficiaries of collective goods. In order to do this, government departments partner with NGOs to deliver public services or foreign donors directly collaborate with NGOs and fund them to rollout certain programs on behalf of the state [25].

The wave of globalization has challenged the effectiveness of the state and its bureaucratic systems, especially centralized political, administrative, economic, and fiscal systems. NGOs in developing countries play an important development role. They advocate for policy change and are often the vehicle for community participation in policy and political processes. NGOs have played a critical role, including providing social services, advocacy, and institutional capacity building and development work. NGOs were celebrated for their critical role in serving the poor and providing services in areas where the government could not serve. In the era of new public management, NGOs hold increasing responsibility for social, political, and economic development. To succeed, southern NGOs must help the community implement its own vision. They must become responsible agents of change. And northern NGOs must help them succeed. **Table 1** gives a synopsis of the phases NGOs have gone through up-t0-date.

In light of the above table, Era 5 clearly depicts the phase under which NGOs are currently operating. In this context, the performance of NGOs will mainly depend on the stage of development recorded in various countries. For instance, in developed countries' governments were able to move with time as they followed the sequence of the above-mentioned eras. In developing countries, there are mixed results since some countries made considerable progress, whereas other lagged behind. As a result, the contributions made by NGOs were tremendously affected by the weaknesses of government structures and social changes. In this context, the effectiveness of NGOs was hampered as they had to catch up with the shortfalls and exigences of previous eras while the global governance is acting as per Era 5 expectations. It is for this reason that this chapter examines the changing roles NGOs should play in the process of development, particularly in developing countries.

*The Changing Roles of Non-Governmental Organizations in Development in South Africa... DOI: http://dx.doi.org/10.5772/intechopen.107015*


**Table 1.**

*Eras of NGOs emphases.*

#### **4. The changing roles of NGOs in development**

NGOs have played and will continue to play a vital role in the shaping and implementation of participatory democracy. Their reliability lies in the significant role they play in society. For instance, NGOs are known to serve a host of functions that can include, among other things the provision of basic services and enhancing access by using local accountability mechanisms, and they usually play advocacy functions for the poor and marginalized [26, 27]. For NGOs to attain their full potential in terms of the contribution they bring to the table, there is a need to promote effective communication and cooperation between all the actors involved in the networks of public services delivery, namely, international organizations, national and local governments, and NGOs. However, given the change in public administration and the outbreak of the pandemic of Covid-19, NGOs will be required to devise new ways that would allow them to collaborate and cooperate with other actors in a meaningful way. Above all, NGOs should adapt and come up with a communication strategy that can assist them in communicating well among themselves and initiate fruitful collaboration with other actors. The following roles were identified as critical for NGOs to remain relevant despite of the changing environment in which they operate [28]:


#### **5. Cases of the contributions of NGOs to development in South Africa**

According to ref. [6] NPOs play an indispensable role in bridging the gap between governments and citizens, particularly in the provision of basic services, such as health, water, sanitation, and education, to name but a few. For instance, Radebe and Nkonyeni interviewed by the *Mail & Guardian* on 5 March 2020, explained that currently in South Africa, there are close to 200,000 NGOs, whereas they were about 140,000 registered NGOs in 2015. Kagiso Trust reports that the rising number of NGOs represents an increase of over 200% over the past 10 years. Nazeema Mohamed, the executive director of Inyathelo, explains that this increase is influenced by many factors, such as the economic recession, unemployment, and failed service delivery. The persistence of a poor economic outlook in South Africa accounts for a decline in public expenditure across critical sectors. This means that NGOs play and will be required to play an important role in closing the gap created by governments' inability services to fully attain their social contract [29]. The following cases are selected in order to highlight the various roles played by different NGOs in South Africa.

#### **5.1 AIDS foundation of South Africa**

The AIDS Foundation of South Africa (AFSA) was established in 1988 with a mandate to combat the spread of AIDS in South Africa. This NGO's mission is to support regional, local, and national efforts that aimed to reduce the expansion of HIV, STIs, and TB infections. Throughout its operations, AFSA aims to contribute to addressing some of the structural and social drivers of the spread of HIV. The organization works toward educating citizens and raising consciousness about sexually transmitted diseases and helping communities to be resilient. AFSA is of the view that, in South Africa, the HIV epidemic is mainly entrenched in environmental, cultural, socioeconomic, and political conditions that prevail in the country. AFSA is cognizant of the fact various communities are affected differently, therefore, it uses a variety of strategies in its quest for solutions. It integrates interventions into a larger sexual and reproductive health framework. Through its programs and strategies, AFSA has helped people suffering from HIV and AIDS all throughout South Africa.

*The Changing Roles of Non-Governmental Organizations in Development in South Africa... DOI: http://dx.doi.org/10.5772/intechopen.107015*

#### **5.2 World vision South Africa**

World Vision South Africa is a branch of an international organization operating on a global scale. This NGO strives to build an environment that provides children with protection, health, education and/or employment (once they are of age). This organization starts first by identifying communities that are fragile and impoverished due to a lack of access to basic services. After the identification, the NGO proceeds with the assessment before it can design a program that is specific and suited to the circumstances faced by that region. Then it puts all the resources together in order to implement that program and address the challenges facing the children and the community. To date, the actions of the South African branch of World Vision have benefited close to 320,000 lives in the country.

#### **5.3 The viva foundation of South Africa**

Viva endeavors to play a significant role in transforming the realities of certain areas that are crippled by high-priority poverty. The NGO aims to intervene in informal settlements and work toward transforming these areas into viable, stable, and economically sustainable communities by providing residents with education, employment, business, and recreation opportunities. The foundation is committed to providing services to these areas and above all, it strives to address the community's needs by creating a hub for its services [30].

#### **6. Challenges and opportunities**

In the global south, the existence of non-governmental organizations (NGOs) has been a result of two important factors. Firstly, the government is no longer a sole provider of public service delivery, and secondly, governments have proved to be incapable to meet citizens' expectations and provide public services that are of high quality to their citizens. This specific situation has paved a way for NGOs to play a significant role in terms of service delivery. But the role of NGOs in the development process in developing countries is confronted by challenges and opportunities.

#### **6.1 Challenges facing NGOs**

Here are some of the challenges confronting NGOs:

#### *6.1.1 Social impact*

With a decrease in funding, NGOs are placed under significant pressure to deliver high social impact whilst dealing with expectations from funders, work within the confines of restricted funding grants, and illustrate positive outcomes. Part of the challenge is that NGOs are operating in a starvation-cycle context; NGOs with limited funding are forced to underinvest in critical organizational operations, such as financial systems, human resources, and fundraising. Some funding grants explicitly only cover programmatic costs and not the indirect costs associated with delivering an intervention or program. This often means NGOs are not capacitated to deliver high social impact and this can, in some instances, lead to the mismanagement of organizations. In addition, the unequal power dynamic between NGOs and funders

also means that NGOs are not positioned to challenge the rationale for underfunding indirect costs, which would allow NGOs to invest in the organization and be sustainable. A consequence and contradiction presented to NGOs are that the pressure to illustrate the impact, in order to secure funding, sometimes undermines the core mission of the organization.

#### **6.2 Focus**

NGOs will be required to devote a substantial part of their resources to the collection of data on selected indicators and targets as opposed to what most of them are currently doing. The results of such studies will assist NGOs in identifying the critical needs of various communities and come up with timely interventions. This will lead to most NGOs discovering areas or sectors they should be focusing on rather than duplicating activities that might not benefit communities [29].

#### *6.2.1 Funding model*

The current funding model used should be revisited. There is a need to develop a system that assists NGOs to be supported adequately so that they can have welldesigned outcomes because impact measurements could help funders, government, and communities to identify where change is needed and how they could assist NGOs to do what they are supposed to do [29].

#### *6.2.2. Unpredictable landscape*

The environment in which NGOs operate plays a significant role in the extent to which they will achieve their mandates. It is therefore essential for NGOs to enhance their capacity to innovate and reinvent themselves. In this context, NGOs should tap into the opportunity they have to collaborate among themselves and with other actors that are part of the networks. NGOs must avoid working in silos and competing with one another [29].

#### **6.3 Opportunities at NGOs disposal**

Despite numerous challenges NGOs are facing, there are opportunities that could be considered to overcome those challenges. Here are some of the opportunities:

#### *6.3.1 Collaboration*

Collaboration can be considered to be an opportunity that could offer pool of resources to NGOs and allow them to invest in greater mission-led initiatives that could ultimately reinforce the societal impact that NGOs have on communities. This is critical, as funding and social impact are key components within the sector [29].

#### *6.3.2 Increased responsibilities*

Due to the changing nature of public service in modern days, governments across the globe have embarked on a journey to decentralize their functions and operations. This is particularly visible in developing countries where, because of a lack of capacities or weaknesses in delivering public services, governments endeavor to empower

*The Changing Roles of Non-Governmental Organizations in Development in South Africa... DOI: http://dx.doi.org/10.5772/intechopen.107015*

other actors to deliver on their mandates. As a result, NGOs are presented with numerous opportunities and they are granted considerable space by governments in order for them to fill the gaps.

#### *6.3.3 Promotion of transparency and accountability*

Maximizing accountability tools, such as social audits could improve municipal accountability and it will improve communities' knowledge about government policies and programs. It can also provide a platform for residents to articulate their needs. NGOs could play an important role in the coproduction of knowledge as this is a critical intervention that would help communities to become more active participants in local government and this will provide a compelling basis for residents to adequately engage with municipalities [31].

It is important to note that the demand for transparency requires local authorities to account for the running of programs and delivery of basic services to their communities. This will not happen in a vacuum. Municipal officials should therefore partner with communities through NGOs and community-based organizations (CBOs) in order to positively affect the lives of citizens. As a result, NGOs can play a significant role in strengthening local communities capacity to monitor the implementation of programs intended to better the lives of the people. In most cases, politicians do give empty promises to communities, hence, the involvement of NGOs would be critical in empowering communities to closely follow up on the rollout of programs and service delivery projects.

#### **7. Ways to improve NGOs contribution to development**

Based on the description of challenges and opportunities, one would like to suggest the following as avenues that could be considered in the process of enhancing the contributions of NGOs to development:

#### **7.1 Extraordinary leadership is needed**

The success or failure of collaboration does not lie in the emergence of governance network structures or in the growing systems by which influence is exerted. The collaboration will surely require new forms of leadership behavior, particularly on the part of the public servants. Despite the changes that have occurred in the way the public sector operates; the role of public officials remains central to most deliberations of public policy and administration. Effective administrative leadership is required as it will assist public servants to negotiate and not imposing public policy agendas. In this context, the need to collaborate with other actors requires public servants to understand their partners and build trust. Collaboration can also be boosted by a clear indication that public servants will steer the collective decisions of the group using their disproportionate power on behalf of the collaborative venture [32].

#### **7.2 Partnership and collaboration**

Society, governments and international bodies should develop mechanisms to allow non-governmental organizations to play their partnership role responsibly and effectively in the process of environmentally sound and sustainable development.

With a view to strengthening the role of non-governmental organizations as social partners, the United Nations system and governments should initiate a process, in consultation with non-governmental organizations, to review formal procedures and mechanisms for the involvement of these organizations at all levels from policymaking and decision-making to implementation.

#### **7.3 Sustainable funding**

True collaboration and partnerships NGOs should find sustainable ways of raising funds and delivering on their mandates. Instead of heavily relying on external funding, they will be required to also explore internal or local means of funding their operations and projects.

#### **7.4 Refocus**

Given the competition that prevails because of so many NGOs that are registered, it is essential that NGOs strive for the same goals and decide to unite and consist of a united and strong front. This will assist in having strengthened NGOs that focus on key socio-economic issues that communities face.

#### **7.5 Co-create/−production**

Closely linked to collaboration, coproduction processes move from jointly implementing action to generating new knowledge from numerous knowledge sources. These latter offer ways to link local, indigenous and technical knowledge sitting at different scales and contexts in ways that expand the range of possibilities of what individual tools or approaches may offer [33].

#### **8. Conclusion**

This work examined the changing roles of NGOs in development, focusing on the case of a country like South Africa. Given the changing environment of public administration, the roles played by NGOs will continuously change given the circumstances at hand. From public administration and public policy perspectives, governance was defined as interdependence between organizations; continuing interactions between network members, caused by the need to exchange resources and negotiate shared purposes; game-like interactions, rooted in trust and regulated by rules of the game negotiated and agreed by network participants; and a significant degree of autonomy from the state. Governance was therefore referred to as governing with and through networks. Throughout the chapter, it was made clear that the successful provision of global public goods in the twenty-first century rests on two complementary tasks. Firstly, increasing the involvement of non-state actors in global governance secondly, ensuring that non-state involvement is structured to avoid the dangers of specialinterest politics, because otherwise decisions may favor one group over another or lead to gridlock in the system. In this context, NGOs are expected to smoothly navigate throughout the network constituting organizations that serve the public interest. However, the contributions of NGOs to the development process do not occur easily, as they are faced with a number of challenges and opportunities. Despite the challenges NGOs are faced with, one acknowledges that there are a number of

*The Changing Roles of Non-Governmental Organizations in Development in South Africa... DOI: http://dx.doi.org/10.5772/intechopen.107015*

opportunities available to assist these organizations in adding value to modern public administration. In this context, NGOs will be required to re-engineer themselves by working toward fostering collaboration and partnerships that would assist them to share responsibilities and lean on other strengths. Reinventing themselves and adapting to the changing environment will be critical to NGOs survival and effectiveness in the attainment of their mandates in the development process.

#### **Conflict of interest**

The author declares that there is no conflict of interest.

### **Author details**

Michel Tshiyoyo School of Public Management and Administration at the University of Pretoria, South Africa

\*Address all correspondence to: michel.tshiyoyo@up.ac.za

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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#### **Chapter 2**

## Marketing for Improved Sustainability in Nonprofit Organizations

*Prominent Choto, Rhodrick Nyasha Musakuro, Chux Gervase Iwu and Robertson Khan Tengeh*

#### **Abstract**

Competition for funding has prompted nonprofit Organizations (NPOs) to adopt marketing and other business-oriented practices to survive. Although certain NPOs have begun to implement marketing strategies, long-term sustainability continues to be a problem. This paper explores the degree to which NPOs in the healthcare industry use marketing strategies to attain sustainability. The data collection and analysis were carried out qualitatively. Data gathering methods included a literature study, in-depth interviews, and focus group discussions. Thematic and content analysis were used to analyze the data. According to the findings, nonprofits cannot successfully implement marketing strategies and business methods due to a lack of marketing know-how, expertise, and donor funding. This paper may benefit NPOs, donors, and stakeholders who support the operations of NPOs. Nonprofit organizations will, for instance, have a better understanding of the significant and positive impact marketing strategies have on their organizations' growth and sustainability. Furthermore, the paper recommends measures that NPOs can take to address the limiting factors and improve sustainability. The article ends by outlining further research options that will assist other academics engaged in this field.

**Keywords:** nonprofit organization, sustainability, marketing, strategies, South Africa

#### **1. Introduction**

Nonprofit organizations (NPOs) are continuously competing for funding in order to fulfill their obligations [1]. As a result, nonprofit organizations must devise long-term solutions [2–4]. More crucially, the 2008 global financial crisis forced many nonprofit organizations to reconsider their social responsibility programs since traditional charity revenue sources have become very unreliable [5–9]. To Weerawardena et al. [1], the climate in which nongovernmental organizations operate has worsened, exacerbated by fierce competition for funds. Therefore, sustainability has become significant for NPOs [10].

The growing demand for sustainability has compelled NPOs to develop novel approaches to sustaining their programs while maintaining viability [1]. According to Omura and Forster [10], the major shortcoming of sustainability for most NPOs is providing noncommercial products. Among other things, marketing and management strategies to attract and retain donors are required to maintain survival and continuity in a changing environment. The increasing size and complexity of the nonprofit sector have led many scholars to conclude that the nonprofit sector is becoming more business-oriented, incorporating tools, strategies, and best practices for the organization [11–14]. In support of this view, Chad et al. [15] and Collins [16] assert that marketing or specific brand management is the most crucial approach that NPOs should adopt to promote their mission. Many researchers recommend transferring marketing expertise from the profit-making industry to the nonprofit sector ([17, 18] in [19]).

Though various businesses may approach marketing differently, it is becoming more important to its success. Applying marketing to NPOs enables them to know the demands of their beneficiaries and funders completely. According to Gainer and Padanyi [20], although understanding and satisfying consumers' needs increases their happiness, meeting donors' expectations, and adhering to them increases the donor's resource commitment [21, 22]. However, the full advantages of successful marketing adoption are not realized by NPOs [23] due to a lack of understanding, significance, and application of the marketing concept [19]. For our primary inquiry, we looked into whether or not nonprofits working in the healthcare industry use marketing strategies to increase their long-term sustainability.

In reality, many NPOs view marketing as only sporadic promotion and advertising [24, 25]. Authors, such as Álvarez-González et al. [26] argue that the utilization of marketing in NPOs is favorably related to the volume of funding, the scope of operation, and the success of the organization's purpose. Hence, marketing improves an NPO's financial and operational success.

The importance of an NPO in any economy is invaluable. They are agencies that extend crucial support to communities that cannot access most government services and products [1, 27]. In South Africa, NPOs play a vital role in the national economy, enhancing economic data and assisting policymakers, corporations, and civic leaders in making decisions [28].

The healthcare sector, for instance, has a substantial economic influence. It promotes wellness, offers health services, and creates jobs, training, and capacity development opportunities [29]. They offer free or reduced-cost healthcare and education to their communities, therefore, decreasing illness burdens and contributing to community empowerment and economic growth. Neither the government nor the health care institutions in South Africa can treat everyone who needs them because most people cannot afford private health care. Therefore, nonprofit organizations are necessary to serve a population that continues to be underserved by both the public and private healthcare systems. Nonprofit organizations offer free or cheap services to people who are not being served, have low incomes, are sick, or do not have health insurance [30].

For these reasons, it is necessary to ensure that NPOs in general, specifically health sector NPOs continue to carry out these noble roles. Therefore, research into how marketing and management strategies are currently being adopted in NPOs to improve the survival and sustainability of these organizations become necessary. After all, the continued survival of these nonprofits ensures the continuation of their services to impoverished and vulnerable areas.

Several research papers on NPOs have addressed various elements of NPOs. Weerawardena et al. [1] investigated the relationship between NPO sustainability

#### *Marketing for Improved Sustainability in Nonprofit Organizations DOI: http://dx.doi.org/10.5772/intechopen.105642*

and NPO strategy emphasis. Iwu et al. [31] assessed the factors that influence sustainability and organizational effectiveness. Omura and Forster [10] investigated the nature of private contribution rivalry in NPOs, considering that they offer noncommercially viable products. Morrison [32] examined the governance and performance of nonprofit organizations. In 2014, Helmig, Ingerfurth, and Pinz reported on the success and failure of nonprofit organizations, while in 2013, Hendrickse reported on the governance and financial sustainability of nonprofit organizations. Bezuidenhout [33] examined various important marketing concepts for NPOs, including the absence of marketing competence and management abilities in NPOs, and further suggested a more innovative business model for NPOs to improve sustainability. Even though these studies emphasize the importance of marketing, there is a lack of consensus on how nonprofit organizations (NPOs) should handle marketing [34]. This study, therefore, aims to establish the extent to which NPOs employ marketing strategies to achieve sustainability. This is to assist NPOs to remain in operation for longer.

In the remainder of the chapter, a literature review will be used to identify the research gap. Following this section will be the research methodology, findings, discussion, recommendations, and future directions for research.

#### **2. Literature review**

#### **2.1 What is sustainability?**

The term "sustainability" has a wide range of meanings depending on the context in which it is used [35]. An understanding of concepts is best achieved by looking at their relationship to a more extensive system or hierarchy, according to Constanza and Patten [36]. Sustainability may pertain to an organization's financial strength and uniqueness (economic well-being), environmental protection (environmental integrity), and processes that guarantee social health and well-being (social sustainability) [37–40]. The term "sustainability" refers to the ability to withstand or persevere [36].

From an economic perspective, this research examines an organization's financial expansion and competitiveness due to numerous strategies (for example, quality products, price, and services). Consequently, it facilitates the development of several economic conceptions of sustainability. A company's long-term viability is ensured by its ability to maintain its current state of well-being [41] and by its leadership's ability to keep the organization going in the long run [42, 43]. Sustainability is defined by Boudreau and Ramstad [44] as a company's ability to thrive without compromising future needs. Dyllick and Hockerts [45] define sustainability as an organization's ability to meet its primary and secondary stakeholders' needs without compromising its ability to meet the needs of prospective stakeholders. In Chigwedere [46], sustainability is defined as the ongoing evaluation of the need to continue a cause, the determination of whether it is still viable, and the exploration of financial options for supporting such a cause. Naido [47] reckons that sustainably run NPOs will be able to raise enough money to continue their programs if their donors fund them.

The above definitions suggest that an organization is sustainable when it remains in operation for a more extended period. Hence, this paper adopts the World Commission on Environment and Development [48], definition of sustainability,

which is an organization's capacity to fulfill its current and future demands over an extended period without jeopardizing its ability to meet future needs.

#### **2.2 What is marketing**

According to Kotler and Keller [49], marketing is identifying and economically addressing societal and human needs. According to Drucker [50], the goal of marketing is to understand people such that the product or service provided satisfies their desires. As a result, it is the activity made to elicit desired responses from a specific population [51]. According to The Chartered Institute of Marketing (CIM) [52], marketing is more than just selling and promoting; it is a critical management function that assists an organization in interpreting customers' requirements and matching them with service and product offers.

Marketing, according to Drucker [50] can be viewed in terms of social and managerial roles. According to the social definition, marketing is a societal process in which people fulfill their needs and desires by freely creating, giving, and exchanging valued goods and services [50]. Marketers, according to the American Marketing Association [53], create, communicate, deliver, and exchange value-adding offers for partners, customers, and society as a whole through a variety of marketing-related activities.

Based on the definitions provided above, many researchers concur that marketing entails selling, exchanging products and services, generating a desire for services, and developing long-term connections, all of which contribute to achieving organizational goals.

#### **2.3 Importance of marketing**

Whether a company is for-profit or nonprofit, marketing is critical to its growth. However, different companies may place different values on marketing. Some people may believe that NPOs do not need to spend money on marketing. However, it is advantageous since it promotes growth, attracts funding, and ensures the NPO's sustainability. The NPO's ultimate purpose will suffer if the factors are not there [54]. According to Spector [55], nonprofit marketing helps clarify and support an organization's position and brings it closer to realizing its purpose. According to Tabaku and Mersini [56], embracing marketing in NPOs guarantees that the NPO gets adequate finances to deliver services per their purpose. According to Mahea [57], marketing is essential for organizations to survive intense competition and lure target customers to their products and services. Adapting marketing in nonprofits also provides for a better understanding of the requirements of the NPO's consumer interests, beneficiaries, and funders. According to Gainer and Padanyi [20], recognizing and addressing consumers' requirements in order to enhance their experience is a key purpose of marketing. Meeting donors' expectations and staying responsible to them, on the other hand, attracts the donor's commitment to resources [21, 22]. Marketing, according to Sargeant [58], attracts resources, enhances the experience of both customers and donors, helps an organization define its capabilities, and advises the NPO on the structure of market analysis. Marketing effectively encourages funders to donate and volunteers to participate [56]. According to Mahea [57], a company's success is not solely determined by the resources it has at its disposal but also by the relationships it builds with its customers through marketing. However, the potential benefits that

NPOs may receive from successful marketing implementation are not being realized as they should be [23].

#### **2.4 NPO marketing**

As with any other company, NPOs compete in a highly competitive market, exacerbated by the sector's growing number of participants and dwindling financing [59]. Bezuidenhout [33] feels that marketing is critical for an organization's success and sustainability, whether nonprofit or for-profit. Salamon [60] asserts that the nonprofit sector's marketing philosophy has become more robust as some organizations have embraced commercial management techniques of administration. Mirabella and Wish [61], Andreason et al. [17], Smith et al. [62], and Shani [14] stated that this change toward business-oriented approaches is a result of the huge increase in the number of nongovernmental organizations (NPOs) and the increasingly competitive environment in which they operate.

As in the rest of the world, nonprofit organizations in South Africa face funding difficulties and are attempting to adapt to the decline in financial resources and the increase in competition [33]. The number of NPOs in South Africa has increased rapidly [63, 64]. There has been a steady rise in the number of nonprofit organizations (NPOs) in recent years, which has led to an increase in competition for funds. This is why nonprofits, according to Wymer and Mottner [65], must stand out from the competition, raise public awareness of their brand and mission, and utilize institutional public relations to accomplish these goals.

Sabo [66], Sagawa [67], Burnett [68], and concur that in order to thrive, nonprofit organizations must prioritize cultivating and sustaining relationships with current donors. To do so, MacMillan et al. [69] argue that nonprofit organizations should utilize relationship marketing. According to Sargeant [59] and Burnett [68], relationship marketing activities are best suited for the nonprofit sector. According to Gainer and Moyer [70], NPO managers should identify potential donors and manage sponsor relations (also known as "target marketing" or "relationship marketing") in order to maximize donations. Unlike traditional marketing, relationship marketing emphasizes developing long-term supportive relationships with current supporters and suggests that an organization will benefit more from focusing resources on these specific relationships than on emerging ones [69]. The success or failure of a company competing in a market is primarily determined by the strategy it develops and implements.

This study examines how nonprofit organizations can adopt effective marketing and management strategies to ensure continued viability. According to the literature, marketing is essential for nonprofits to remain competitive and draw in their target audience. Additionally, adapting marketing in nonprofits can help the NPO better understand its customers, donors, and beneficiaries.

#### **2.5 Marketing strategies for NPOs**

Rust et al. [71] argue that marketing strategies should focus on adding value to an organization via the management and measurement of marketing performance, including service quality and client satisfaction. Hassay and Peloza [72] noted that Nonprofit organizations have begun to use marketing ideas such as market orientation, customer relationship marketing, market segmentation, loyalty, and branding. Several scholars (such as [32, 73, 74]) advocate that NPOs market their organizations through the adoption of the following:

#### *2.5.1 Ansoff matrix*

Ansoff Matrix provides different business expansion strategies, namely market penetration, product development, market development, and diversification [32, 73], to assist companies in making strategic decisions about the development and expansion of their products, services, and markets. Using it, executives and marketers can devise strategies to ensure their long-term growth and success [73].


#### *2.5.2 Market penetration*

Market penetration is a revenue-generating approach in which an organization focuses on selling existing goods or services to existing consumers or markets [74, 75]. NPOs are service-oriented organizations, not product-oriented. While for-profit businesses often utilize this strategy and are seldom explored by nonprofit organizations, the latter may offer their existing core goods to their present beneficiaries and generate cash to fund its expansion and sustainability [76]. This means that selling existing products and services could favor market dominance by an NPO. By attaining market dominance, an organization demonstrates a preference for its product, allowing clients to instantly identify with the organization, assisting in endorsing and developing a positive brand image. According to Custodio [77], creating a strong brand is critical for an NPO because it establishes its distinctiveness, fosters confidence in the organization, and demonstrates awareness in customers' eyes. Establishing a positive reputation and brand image might assist an NPO by providing a competitive edge over other sector competitors. According to Ansoff [75], this technique may not benefit the NPO since more service offering necessitates increased funding.

#### *2.5.3 Market development*

Market development happens when a business makes concerted efforts to expand its current market. As defined by Mwiti (2011), market penetration is the process of pursuing more market categories or geographical regions. According to Coetzee [76], NPOs are good at and are content with fundraising. They remain inside their fundraising comfort zone, even though business-like methods of revenue creation

#### *Marketing for Improved Sustainability in Nonprofit Organizations DOI: http://dx.doi.org/10.5772/intechopen.105642*

are required. By implementing a market development plan, nonprofit organizations may provide services to new markets, communities, or target groups with comparable needs that align with the organization's cause and goal. They could segment the market and provide certain services for free while charging a fee for others. For instance, as Coetzee [78] described, how a national rehabilitation organization used a system of price differentiation in which some services were provided for free to low-income clients but paid to those who could afford them. This implies that the NPO may earn income from the segments that pay for the NPO's services. Therefore, an NPO can extend its services and possibly attract new donors [79, 80].

#### *2.5.4 Product development*

Product development entails the creation of new or enhanced goods or services aimed at existing or new markets in order to ensure the continued success of a company [81]. NPOs advocate for certain causes and provide various free services to society. By pursuing this strategy, the NPO may benefit financially by providing new products or services. Apart from donations, an NPO may generate money via the sale of items, such as instructional materials, books, and consumables, and through the provision of services, such as technical assistance to other organizations, outsourcing personnel, consulting, and project management. An organization's earnings can either be reinvested or put aside as a financial reserve to ensure its long-term viability and use. The Sunflower Foundation, for example, pioneered the sale of bandanas [82]. The fear of losing money and clients is real, even though a few nonprofits are using this strategy [83].

#### *2.5.5 Diversification*

In order to grow and increase revenue, a company must diversify by creating new products and entering new markets. Chirani and Effatdoost [84] assert that a company's ability to grow and thrive will be determined by its ability to diversify. NPOs could adopt this marketing strategy to achieve growth and sustainability. Apart from providing the services demanded by donors, which they are expected to do in order to sustain and establish long-term existence, NPOs may begin to be creative and imaginative, developing new goods that they can sell profitably to an altogether new market. This will boost the organization's income. Diversifying and pursuing commercial activities strengthen and create a competitive advantage for NPOs [26]. Several South African NPOs have begun to diversify their revenue streams and revenue strategies beyond the not-for-profit sector, rather than relying solely on donations. Coetzee [76] concurs that nongovernmental organizations should cultivate additional revenue streams through side businesses and social enterprise activities. For example, in Cape Town, several nongovernmental organizations have established car wash businesses, coffee or cafe shops, bookshops, training facilities, and social enterprise hubs.

NPOs might use the strategies outlined above to expand, generate revenue, and ultimately attain organizational sustainability. However, implementing this technique in an NPO may be challenging because when donors donate funds, they often define the geographic regions in which the funds must be used and whether the service should be provided for free or not [85]. Coetzee [78] further noted that certain funders, leaders, and government agencies are uneasy with nonprofit organizations generating a profit and want them to work at a discounted rate without profit.

Coetzee [78] found that contributions are only one source of revenue and that there is no issue with NPOs making money as long as beneficiaries are not harmed, ignored, or abused and revenues and surpluses are reinvested in promoting the organization's objective.

#### *2.5.6 Boston matrix*

The Boston Matrix is a mechanism for rating items or services in order to determine the potential monetary contribution and demand for each [86]. The matrix categorizes products based on their performance: cash cows, dogs, stars, and question marks – based on their growth rate, cash flow, and market share [87]. As part of brand marketing and product management, the technique is used to select new products or services and expand existing ones. The method aids organizations in avoiding some of the negative elements that might affect market share and industry growth when balancing market share and industry growth [86]. Boston Matrix's theoretical applicability in nonprofit organizations is based on the fact that it enables businesses to make decisions about how to manage a wide range of businesses and products as well as the marketing portfolio of nonprofit organizations, expressed in terms of the organization's financial resources [88].

*2.5.7 Other marketing strategies*

Nonprofit organizations (NPOs) can implement various marketing strategies and approaches without changing their mission [56]. These methods, according to MacMillan et al. [69], include:


#### **3. Methodology**

To gather and analyze data, a qualitative technique was used, combined with in-depth semi-structured interviews. This technique was chosen as the best fit for this research since it allowed the researchers to compile a full report on the participants' thoughts, opinions, and understandings pertaining to the research [89]. The qualitative technique also helped the researchers to obtain more in-depth knowledge [90]about NPO marketing and sustainability through interaction with study participants [91].

The study population included all NPOs in the healthcare sector in the Cape Metropolitan region of South Africa's Western Cape. It was impossible to contact all of the individuals in the research due to time restrictions and inadequate resources. As a result, a sample was chosen to reflect the population using the purposive sampling method. Purposive sampling involves selecting a sample based on the author's judgment and experience that the identified individuals will fulfill the study objectives [92]. This strategy was chosen because it was considered that it would be more effective as it provides greater access to the relevant research participants [93]. As a result, it enabled the identification of professionals who were well-versed in the issue under investigation [94].

The study's sample was chosen from 960 Western Cape healthcare NPOs [95]. The following factors influenced sample selection: First, the NPO must be in the healthcare sector and have received donor support. Second, the NPO must have been in existence for at least three years. However, not all identified NPOs consented to participate in the study since they did not engage in any form of marketing, limiting the participation to seven (7) NPOs.

The inclusion criteria for the individual participants were defined as follows: the participant must be part of the marketing, operations, and financial management functions of the selected NPOs. These significant members were chosen because of their critical responsibilities within the organization. Their portfolios include responsibilities in production/operations, marketing, and finance because they are closely related to organizational performance [96], which the researchers considered valuable participants to inform the study.

The participating NPOs were approached for permission to conduct the study. The fieldwork started after obtaining the required consent from each participating company. A pilot study was then conducted to validate the interview questions. Faceto-face, in-depth interviews were undertaken with 15 participants from the 7 NPOs reached. All interview responses were recorded and transcribed during the interview process. In addition, 3 focus groups were conducted, which comprised five (5) people each. Because many of the investigated organizations did not have enough staff to cover the essential functions under study, the individuals contacted during the focus

groups were only from 3 NPOs that represented marketing, finance, and operations responsibilities.

The appropriate number of participants reached through interviews and focus groups were guided by data saturation. Data saturation occurs when there is enough data to replicate the investigation and the ability to get more fresh data has been exhausted [97, 98]. The study included thirty (30) participants: 15 participants in in-depth interviews and 15 focus group participants. Content and thematic analysis approaches were used for data analysis.

#### **4. Results**

To make sense of the data acquired, the researchers kept the study aim in mind and classified the data into different themes according to the study's objective. The results are presented in themes emerging from the literature, followed by the relevant verbal responses and a summary discussion of the findings in relation to the study objective and literature.

#### **4.1 The role of study participants**

From the 15 interviews conducted, 13% performed the marketing function, 47% finance function, 33% operations management, and 7% performed other business development functions.

Although operations, finance, and marketing are essential functions for achieving sustainability, it is evident that some of the surveyed nonprofits lack these essential functions. Based on the findings, one can observe a lack of staffing capacity, as the majority of surveyed nonprofit organizations had one person performing multiple roles, and some lacked the key positions. Marketing and management strategies for long-term success can be hampered if these essential functions are missing.

Bettley and Burnley [99] and Sanders [100] argue that operations management substantially impacts sustainability and that the operations function must embrace sustainability. However, it is impossible to separate the financial function from others, such as marketing [101]. Similarly, Parthasarathy [102] concludes that nonprofits require good governance, fiscal prudence, and brand building (marketing) to continue attracting funding.

Given the preceding, nonprofits must be equipped to embrace sustainability. According to Batti [103], a lack of staff in nonprofits has resulted in many being unable to take advantage of the many opportunities out there for them because they lack the knowledge and resources to do so.

#### **4.2 Years in operation**

To determine whether the number of years an organization has been in operation is a determinant of its viability, the study included a question about the number of years each NGO had been in operation. From the seven organizations contacted, the majority of organizations interviewed had been in operation for more than 10 years, with 57 percent (4), 29 percent (2), and 14 percent (1) having been in operation for more than 20 years, respectively.

Even though most NPOs had been around for a long time, none had demonstrated that they had become autonomous or self-sufficient, as they were still reliant *Marketing for Improved Sustainability in Nonprofit Organizations DOI: http://dx.doi.org/10.5772/intechopen.105642*

on donations, particularly from outside the country. To achieve long-term viability, it may be necessary to implement effective marketing and management strategies. Coetzee [76] asserts that nonprofit organizations excel at fundraising and are happy to do so. Despite the fact that they must use business-like methods for generating income and ensuring long-term viability, they remain in their fundraising comfort zone.

Could this be why they had been in operation for several years? Can this be considered a sustainable practice?

#### **4.3 Theme 1: marketing knowledge and management expertise**

The main objective of this study was to establish the extent to which NPOs employ marketing strategies to achieve sustainability. The researchers use the following subthemes in order to achieve this specific goal:

#### *4.3.1 Marketing expertise within NPOs*

Examining the current implementation of marketing strategies in nonprofit organizations, the study assessed the marketing expertise possessed by the surveyed nonprofits to adapt marketing strategies for sustainability effectively. Only two out of fifteen nonprofit interviewees (or 13% of the total) confirmed having a marketing department. The rest of the participants viewed marketing as a function that could be performed by any member of the organization at any given time. The study found that nonprofit organizations lacked marketing expertise, which hindered their ability to adopt these strategies for sustainability. As a result, nonprofits may find it difficult to implement sustainable marketing strategies due to a lack of marketing expertise. Concurring, one of the participants (**Participant 1)** notes that *marketing expertise in the nonprofit sector was never considered necessary. The sector is completely devoid of market insight, which has a negative impact on their ability to sustain themselves because there is no strategic directive guiding the expansion or incorporation of programs or the ability to influence this decision.*

In addition, most participants acknowledged that their organizations lacked the financial resources necessary to attract marketing specialists, which prevented nonprofits from fully embracing business opportunities and establishing brand visibility. Several participants provide the following explanations:

**Participant 4:** *If you examine the trends regarding the attraction of marketing talent to the nonprofit sector, you will likely discover that it is exceedingly difficult to find true strategic marketing talents, such as chief marketing officers and marketing specialists. In the nonprofit sector, these salary trends are unaffordable.*

**Participant 8:** *We do not have a marketing person within our organization due to a lack of funding. However, marketing is crucial to ensuring that your brand is visible and well-known, but it is expensive for me. I am battling on the ground to hire a marketing professional. It is pricey. I believe that one of the reasons nonprofit organizations are struggling is that we cannot afford to have a marketer who is capable of pushing the organization toward sustainability.*

According to another participant, the donors impose strict rules and regulations on their funding, which are not conducive to marketing efforts.

**Participant 13:** *Without a marketing expert, one of the difficulties we face as an organization is generating interest in what we do. Our donors do not even cover the cost of hiring marketing personnel. If we employ them, it will be with funds from a source other than donors.*

According to other participants, marketing is not a requirement but rather an ad hoc function that can be performed as needed by any member of the organization, even if they lack marketing experience or expertise. In a summary of the findings, one of the participants stated:

**Participant 6:** *When the need arises, the organization occasionally contracts individuals to perform these specialized functions.*

It is evident from the participants' opinions that nonprofits lacked marketing expertise, even though this function was deemed essential for these organizations. It is clear from these findings that nonprofit organizations lack the marketing expertise to implement and adopt sustainable marketing strategies. This could indicate that nonprofit organizations are not using effective marketing strategies because they lack the necessary expertise. Even though some claim this is due to a lack of funding and resources, these findings back up the claim made by Othman et al. [104] that NPOs have lost out in critical areas like financial health enhancement and expansion because of a lack of experience and skills.

The participants' perspectives are also somewhat congruent with those of Drucker [105], Dolnicar and Lazarevski [23], and Williamson [106], who found that despite the shift to adopting marketing strategies in nonprofit organizations, marketing is frequently not prioritized. There is a dearth of marketing education among nonprofit workers [23, 33, 34]. An investigation conducted by Proust et al. [107] found that marketing tasks are frequently delegated or assigned to untrained volunteers or overburdened employees. This could also be a reason why nonprofits are not reaping the full benefits of the effective adoption of marketing strategies.

Based on these findings, we believe that the availability of marketing expertise in the NPO sector will positively impact the organization's competitive positioning, which will attract the necessary funds for sustainability.

#### *4.3.2 Marketing activities in NPOs*

Since the study focused on nonprofit organizations (NPOs) adopting marketing strategies to achieve sustainability, information about NPOs' marketing activities had to be gathered. Participants agreed that marketing is crucial for nonprofits; however, their activities aim not necessarily to achieve sustainability but rather to increase the organization's visibility. As some of the participants explained:

**Participant 1:** *I must advance the organization's niche as well as our donor's reputation in a transparent, equitable, and fair manner. Despite this, I integrated marketing and communication across multiple channels, annual reports, digital channels, and brand activation within the community we serve.*

It is apparent from the above responses that the NPOs are engaged in various marketing strategies. Despite this, our view is that some participants are either not au fait *Marketing for Improved Sustainability in Nonprofit Organizations DOI: http://dx.doi.org/10.5772/intechopen.105642*

with what marketing is or believe that their attempts are improperly targeted and as such, they have not been able to attract meaningful funding avenues sufficiently. For instance, Participant 1 said: "…*marketing is very often misunderstood by non-marketers as promotion which it's not."* Almost consistent with this view is the expression of Participant 8, who said, "*If our marketing was correct, by now people would have known who we are in South Africa."*

Could those responses be linked to what Tabaku and Mersini [56] referred to as NPOs' lack of understanding of what and how marketing should be conducted? As extant literature suggests, confusion about effectively deploying marketing strategies in NPOs can result in depleted opportunities to remain sustainable. NPOs' lack of understanding and knowledge of marketing principles is consistent with the evidence in the literature (e.g., [33, 34]), which shows that NPOs are still lacking in the ability to effectively implement marketing strategies that will lead to long-term sustainability. Essentially, NPOs must prioritize marketing in order to remain in operation [34].

#### *4.3.3 The existence of a marketing budget and marketing strategy in NPOs*

According to the survey results, there was no marketing budget or marketing strategy in any of the participants' organizations. Hence, they believe that the latter is critical to implementing marketing strategies to grow and expand the organization. These, according to the participants, did exist because they did not have the necessary skills and resources. As one of the participants recounted:

**Participant 8:** *"We lack a marketing strategy; I want to develop a strategy with this organization. It's one thing we lack but we do not have the skills or someone with marketing knowledge within the organization to drive this."*

In relation to having a marketing budget, some of the participants said:

**Participant 1:** *"One of the challenges in the organization is not having a centralized marketing budget to advance the organizational objectives."*

**Participant 6:** *"We do not work with a marketing budget, [rather] we have to see whether there are any extra funds from the unrestricted funds."*

The participants remarked on the importance of a marketing strategy:

**Participant 3: "***No, we do not have a particular process to follow when it comes to marketing. There isn't a specifically defined strategy in place to follow. The process is rather conversational."*

**Participant 5:** *"No, we never had a proper plan of how do we progress or what are we doing in terms of marketing."*

If these organizations lack a marketing strategy and are unsure of how to go about marketing, it could explain their lack of success [34]. An organization's marketing strategy outlines its target markets—the market's value to the organization based on market analysis, as outlined by Kotler and Keller [49]. Therefore, nonprofit organizations must consider prioritizing marketing if they are to overcome challenges such as limited resources [23, 105, 106].

#### *4.3.4 The importance of marketing in NPOs*

The researchers wanted to know how marketing is perceived in nonprofit organizations and if it is necessary for them. Interestingly, all 15 participants (100 percent) agreed that marketing is critical for nonprofit organizations. Emphasizing the importance of marketing, some of the participants had this to say:

**Participant 1: "***I don't think it's an if, it's a must-do. I think with the current global trends with the number of NPOs that are out there, I think there is a huge amount of competition for a limited amount of resources and already speaking about that you realize that the ones that are most visible, market the best and has the best public relations."*

**Participant 3:** *"Marketing for me, yes, I think it's very important. It is the branding of the organization. How big marketing should be in any organization, I don't know, but I think it should be there."*

**Participant 8: "***Marketing, let me be honest, you need to have a competitive edge. That's what marketing is all about. In the current situation where NGOs are fighting for money, for the same bulk of funders, you need to come up with a competitive advantage in order to survive."*

Adding on, another respondent (Participant 10) indicated that: *"Marketing is everyone's job within an organization."*

It is evident that the adoption of marketing in nonprofit organizations helps their brands stand out and better position their organizations better positioned to competitively attract funding. Previous studies have found that marketing is beneficial, and these findings are consistent with them. It helps with growth, attracts funding [54], defines and defends the organization's position, and brings it closer to achieving its mission successfully [55]. It ensures that the nonprofit has enough money to carry out its stated goals and objectives [56]. Likewise, marketing allows nonprofit organizations to manage their brand and understand the needs of their donors, customers, and beneficiaries [20]. Thus, mission-related resources can be attracted [21, 22].

#### **4.4 NPO challenges**

#### *4.4.1 Funding and resources shortages*

Clearly, the NPO sector's funding situation is at the heart of most of the issues. When it comes to nonprofit organizations (NPOs), raising money is the biggest challenge they face. This is because NPOs are heavily dependent on donor funding [64, 108–110]. In relation to these findings, one of the participants said as follows:

**Participant 1:** *"We face a myriad of challenges. NPOs are, by definition, resourcepoor. There is always a funding challenge. There is always that macro force that exerts pressure on the organization's ability to sustain itself."*

Are these problems the result of NPOs' inability to attract and retain qualified staff or their failure to effectively adapt their marketing strategies for sustainability? The following is what one of the attendees said:

*Marketing for Improved Sustainability in Nonprofit Organizations DOI: http://dx.doi.org/10.5772/intechopen.105642*

> **Participant 12:** *"…NPOs are sometimes not able to attract the correct skillset at the right price, and they substitute that with lesser equivalent. I think it's a major barrier to sustainability going forward".*

According to this investigation, funding for nonprofit organizations was also found to be inconsistent and discontinuous. This is consistent with Lombard's [111] assertion that a lack of system transparency results in significant inconsistencies in distributing funds to nonprofit organizations. There has been a decline in South Africa's support for nonprofit organizations [112]. It is clear from the following accounts that this is so.

**Participant 4:** *"Of course, the issue of funding, the challenge is that each year it is being cut. Also, changes in the government policies of our funders affect the funding."*

**Participant 15:** *"Access to funding. Donors push back when they no longer want to fund you by raising the standards, requirements or criteria of funding."*

According to Pope et al. [34], a lack of financial resources is linked to poor brand recognition, an unclear target market and competition, and an inability to use online marketing. This demonstrates the need for financial resources to support nonprofit organizations' marketing efforts in their quest for sustainability.

#### *4.4.2 Education, lack of skills, and lack of knowledge*

According to Morris et al. [113], nonprofit organizations typically lack the skills and experience of for-profit organizations. Many argue that the lack of resources and funding is to blame for NPOs' poor performance in critical areas like financial health improvement and expansion. Still, Othman et al. [104] found that the lack of experience and skills has contributed to NPOs' poor performance. Only a small number of nonprofit marketing staff have received formal marketing training [23].

According to the study's findings, there is a strong correlation between the skills of nonprofit organizations and their capacity to implement marketing and management strategies effectively. In this regard, we found that the following participant responses indicate agreement with the premise that NPO marketing requires essential skills.

**Participant 1:** *"I think that education also plays a huge role because of the lack of resources, NPOs are sometimes not able to attract the correct skillset at the right price, and they substitute that with lesser equivalent. I think it's a major barrier to sustainability going forward."*

**Participant 8:** *"Marketing goes hand-in-hand with business principles. Not all organizations, especially small or community-based organizations, they do not have the knowledge. That is a massive gap."*

**Participant 15:** *"One of the biggest gaps when it comes to sustainability is that NPOs do not have the proper skills to market their product."*

Respondent 8's remarks reveal a lack of marketing expertise among nonprofits: "*Marketing the product to the wrong market and not to the relevant people like advertising youth programs in ECD."* A lack of understanding of the intended audience is evident in this account.

#### **5. Discussion**

This study confirms that NPOs lack sufficient marketing knowledge to adopt and implement marketing strategies. One can infer from these findings that NPOs have a harder time implementing long-term marketing strategies because they lack marketing expertise. We argue that marketing experts in the NPO sector should help the organization's position in the market and its ability to raise money, which allows the organization to become sustainable.

Secondly, NPOs' marketing activities were more focused on promoting their cause than on achieving long-term sustainability. NPOs, according to these findings, have a poor grasp of marketing and how to approach marketing in order to achieve sustainability. Nonprofits could benefit from a better grasp of marketing concepts and principles in order to develop and implement more sustainable strategies.

A third finding of the study was that nonprofit organizations lack a marketing strategy and a marketing budget, which are essential for successful marketing strategies. Nonprofit organizations may lack marketing prioritization due to a lack of marketing direction and a lack of funds to implement marketing strategies. According to Barone [114], nonprofit organizations must first have a proper marketing strategy to effectively implement marketing strategies for sustainability to reach customers and achieve organizational objectives.

Fourthly, the study uncovered a shortage of skills in the organization's core functions. From these findings, it is safe to say that the leadership of nonprofit organizations lacks the marketing expertise needed to implement strategies for long-term success. Because of this, we believe that an organization's marketing, operational and financial functions require the full attention of its management and board and cannot be implemented effectively if there are skillset gaps. For nonprofits to be sustainable, management must lead and spearhead the necessary change. Marketing and management are critical components of nonprofit organizations, so they must be prioritized within the organization and resources allocated to attract or hire marketing specialists.

Finally, the study found that funding is the most common challenge faced by nonprofits. Among other things, the participants discussed the importance of education, the sustainability gap, donor priorities, and political and economic challenges. These issues hinder these organizations' ability to pursue sustainable marketing and management strategies.

The majority of the study's findings indicate that marketing in nonprofit organizations is not prioritized, even though all participants stated that marketing was of the utmost importance. Marketing, according to Corak and Snajder [115], is the constant planning and conception of ideas or services that drive organizational change. A plan outlining how to implement the ideas must be in place to properly implement ideas that drive change.

#### **6. Conclusion and implications**

On the one hand, nonprofit organizations have been shown to benefit from effective marketing strategies that positively impact their growth and sustainability. Nonprofit organizations, on the other hand, rarely reap the full benefits of marketing *Marketing for Improved Sustainability in Nonprofit Organizations DOI: http://dx.doi.org/10.5772/intechopen.105642*

and management strategies because of a dearth of marketing expertise and a reliance on donor funding.

A growing number of nonprofit organizations are competing with each other, which has led to a decrease in funding sources [5, 6, 8, 9, 98]. South African NPOs must be able to continue delivering value and impacting disadvantaged groups in order to remain sustainable. These goals can only be achieved by enacting legislation that promotes nonprofit growth and development. This result is consistent with the current research, which promotes the development of a conducive environment for nonprofit organizations [116, 117].

Many studies have found that nonprofit organizations are hindered by a lack of business acumen that prevents them from effectively pursuing growth and sustainability strategies [23, 34, 103, 104, 113, 118]. Other studies indicate that NPOs have been compromised by entrusting these essential functions to unqualified personnel, resulting in a loss of ground in crucial areas, such as financial health enhancement and expansion [104, 107, 119]. To avoid this, the policies of nonprofit organizations should consider establishing certain criteria or standards that employees must meet prior to being entrusted with positions that are essential to the organization's survival. Nonprofit organizations should invest in qualified personnel for these crucial positions.

#### **7. Recommendations**

Based on the findings of the study, the researchers recommend the following:


#### **8. Limitations and upcoming studies**

Due to time and budget constraints, the study only included seven healthcare NPOs. More so, it excluded all NPOs outside the Cape Metropolitan Area and other regions of South Africa, thus limiting generalization. This study relied significantly on qualitative methodologies considering the nature of the research problem. As such, the data was not subjected to significant arduous statistical scrutiny that is often associated with quantitative methods.

Future research may consider adopting the quantitative approach with a more significant sample. Whereas this research mainly looked at marketing and management strategies for NPO sustainability, future research might explore other strategies for NPO sustainability, including creating a framework for how these marketing and management strategies might be effectively used in NPOs to ensure long-term sustainability. This would provide a resource for educating nonprofit organizations on how to execute these techniques.

### **Author details**

Prominent Choto1 , Rhodrick Nyasha Musakuro2 , Chux Gervase Iwu3 and Robertson Khan Tengeh4 \*

1 Department of Marketing, Cape Peninsula University of Technology, Cape Town, South Africa

2 Department of Human Resources Management, Cape Peninsula University of Technology, Cape Town, South Africa

3 School of Business and Finance, University of the Western Cape, Cape Town, South Africa

4 Department of Public Administration and Governance, Cape Peninsula University of Technology, Cape Town, South Africa

\*Address all correspondence to: tengehr@cput.ac.za

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

*Marketing for Improved Sustainability in Nonprofit Organizations DOI: http://dx.doi.org/10.5772/intechopen.105642*

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#### **Chapter 3**

## Evaluating the Sourcing Challenges Faced by Humanitarian Charities

*Hailan Guo*

#### **Abstract**

The COVID-19 outbreak has had a knock-on effect on the humanitarian supply chain. This research aims to identify the sourcing barriers in humanitarian charities' supply chains and evaluate the interrelationships between the identified barriers. The agency theory and institutional theory are employed as the theoretical rationales to comprehend the value chain and operations of the humanitarian charity. To identify sourcing barriers related to humanitarian charities, a literature review and focus group discussion are conducted. Following the fuzzy Delphi method (FDM), 10 key barriers are chosen for further investigation. Finally, total interpretive structural Modeling (TISM) and matrix of cross-impact multiplications applied to a classification (MICMAC) are applied to further investigate the interrelationships among barriers and rank their priority. The findings are highly useful for the decision-makers to develop potential interventions based on the identified priorities.

**Keywords:** humanitarian supply chain, supply chain management, humanitarian charity, sourcing barriers, total interpretive structural modeling

#### **1. Introduction**

The rate of disasters is expanding year by year around the world. The rate of death because of disasters is predicted to be growing over the next 50 years [1]. Humanitarian aid operations have therefore emerged as a new area of interest to researchers. In parallel to this, the increasing complexity of humanitarian aid activity creates a vital need for an efficient humanitarian supply chain (HSC) [2]. As humanitarian supply chains are increasingly disrupted by extreme weather, price volatility (e.g., grain, gas, oil), pandemics (such as COVID-19), and terrorism, humanitarian supply chain practices may no longer assume a stable operating environment [3, 4]. For example, the COVID-19 outbreak has caused ripple effects throughout the humanitarian supply chains (HSCs) [5]. Therefore, investigating the barriers that mitigate the effects of disruptive consequences is critical. To improve the resilience of the humanitarian charity supply chain and take advantage of the opportunities, this paper aims to identify the sourcing challenges in the humanitarian charity supply chain.

Although previous studies have illuminated the operations of humanitarian charities in various aspects, such as donor behavior [6, 7], charitable giving [8, 9], and logistics issues [10], relatively limited research has been conducted to date on the sourcing challenges faced by humanitarian charity supply chain. Since the late 1980s, the image of charities has shifted from poor secondary trading outlets to primary high street shops as a result of professional management skills [11, 12]. Today, the number of charities in the United Kingdom has risen to over 11,200 [13], making it difficult for charities to source high-quality items due to intense competition and an economic downturn [6]. Furthermore, because donations from individuals/organizations are highly stochastic in nature, charities face challenges in ensuring consistent high-quality donations. Thus, it is necessary to identify and evaluate the sourcing barriers that inhibit the resilience of humanitarian charity supply chain. Therefore, the purpose of this paper is to (1) comprehend the value chain and current operations of humanitarian charities, and (2) assess the barriers to sourcing in humanitarian charities. To achieve the research goal and fill research gaps, this study addresses the following research questions: Q1: What are the major sourcing barriers in humanitarian supply chains? Q2: How do these barriers interact with one another?

The rest of this chapter is structured as follows. Next section contains a review of the literature. Following that, the research methodology is presented. Ten key barriers are selected for further investigation after applying the fuzzy Delphi method (FDM). The total interpretive structural modeling (TISM) and matrix of cross-impact multiplications applied to a classification (MICMAC) are applied to further examine the interrelationship among barriers and rank these barriers by priority. The research findings, implications, and limitations are then presented. Finally, it concludes with a discussion of the future scope of research.

#### **2. Literature review**

This section employs the agency theory and institutional theory to comprehend the value chain and operations of humanitarian charities. The value chain assists in conceptualizing the sourcing process of charities. Then, it provides a literature review of related sourcing barriers.

#### **2.1 Agency theory and institutional theory**

Agency theory is a principle that is used to explain and resolve problems in the relationship between principles and agents [14]. Problems arise as a result of information asymmetry when the agent (for example, the humanitarian charities) represents the principal (for example, the donors), as it is difficult for the principal (donors) to track what the agent (humanitarian charities) is doing [6]. Principals may face risks as a result of this [15]; hence, to address the aforementioned principal-agent problems and ensure donation continuity, it is becoming increasingly important for the charities commission to establish strong governance and accountability [16]. Corporate governance within the charity sector may be referred to as the process of charities discharging accountability to their donors (how they spend funds to support the beneficiaries). In terms of accountability, charities act as a middleman, receiving donations from donors and selling them to raise funds to support the intended beneficiaries [6]. Understanding the process from sourcing donations to supporting the intended beneficiaries helps to capture the value chain and operations of humanitarian charities.

Furthermore, the institutional theory could be used to supplement the agency theory and provide a more comprehensive understanding of the role of the first-tier supplier in a multi-tier supply chain [17]. This expands on the concept of charity

#### *Evaluating the Sourcing Challenges Faced by Humanitarian Charities DOI: http://dx.doi.org/10.5772/intechopen.108016*

governance, which considers all issues related to charities to reduce risk and institutional pressure. Moreover, each charity is embedded in its own institutional environment, which may influence how charities respond to donor pressure [18]. Even if charities operate in the same institutional field, they may have different external constituents (for example, donors, beneficiaries, consumers, and regulators) who exert institutional pressure. This institutional pressure frequently results in the decoupling of adopted policies or actual practices by businesses [17, 19]. This is because charities, on the one hand, want to gain legitimacy to meet the demands of institutional stakeholders, such as converting donor donations into funds to support target beneficiaries. However, it is constrained by certain circumstances, such as the required expertise to deal with sourcing barriers [6]. Furthermore, natural disasters, diseases, terrorism, political turmoil, and other factors have all severely disrupted the normal day-to-day operations of humanitarian charities [5, 20]. For example, the recent COVID-19 outbreak revealed that unprecedented uncertainty had impacted normal supply patterns, potentially disrupting the sourcing systems of humanitarian charities. Hence, to understand the sourcing barriers, it is necessary to first comprehend the value chain of humanitarian charities under different institutional environments and pressures.

As illustrated in **Figure 1**, charities collect donations through several following channels: donors visiting charities to donate; donors dropping bags in collection points such as clothing banks, and book banks; donors using free pick-up services; charities acquiring stock from commercial retailers and warehouses. The high-quality items are

**Figure 1.**

*The value chain of humanitarian charities.*

then kept in the local charities after arriving at the storage facility. High-quality items are displayed for sale in shops after sorting. If items are unable to be sold during a specific period, some charities will circulate them between shops or transport them to the central warehouse. If a charity has no central warehouse, the low-quality and unsold items will be collected by the recycling company for other eco-friendly use. If a charity has a sorting warehouse, for example, Oxfam has their sorting warehouse in Batley, UK, poor quality items and unsold items will be transported to this sorting warehouse, where experts hand sort these items and decide where they should go next. Some items are typically resold in an online store, a festival store, or a high street store. If not, the items will be recycled for future use. Most charity's daily works are done by volunteers. Charities rely heavily on volunteers to keep their operations running smoothly and to provide a positive customer experience. Charities set donation prices according to head office policies, raise awareness through multi-channel advertising from headquarters, and promote loyalty programs to manage customer relationships.

#### **2.2 Sourcing barriers**

With an expanding number of disasters disrupting people's lives, humanitarian charities assist those in need by providing clothing, food, and personal hygiene products. The increasing complexity of humanitarian aid activities necessitates the establishment of an effective humanitarian supply chain [21]. Based on their respective business models, charities collect donated items for sale to raise funds to support humanitarian aid activities [22]. Yet, the donations received are highly stochastic in nature. Due to the uncertainty regarding the quantity and quality of received donations, charities face significant sourcing barriers. Based on the literature review and focus group discussion, 14 related sourcing barriers (B1–B14) are summarized in the following section.

Sourcing barriers can arise as a result of a supplier's operational inefficiency, variations in product quality and quantity, logistics and transportation delays, or a lack of coordination between the supplier and the firm [23, 24]. Because COVID-19 infections are expected to spread in waves over the next few years, further disrupting supply chains [25], charities may face insufficient donations (B1) from donors as well as seasonal fluctuations in supply (seasonality) (B2). The increased emphasis on supply and demand risk has highlighted the importance of risk management in business. Firm profits may be reduced by both high supply and high demand risks [26]. Because charities have limited control over the input, it is unknown how many donations can be received at any given time. This may lead to supply fluctuations. Thus, charities may encounter specific issues such as excess inventory, stock-outs, and a mismatch between demand and supply at certain times.

The persistence of the emerging COVID-19 pandemic has heralded a new era in the world, even as we continue to grapple with the crippling effects on various aspects of our daily lives [27]. The high street retail sector is no exception, and it is in the spotlight, as evidenced by images of long lines forming in front of retail shops after they reopen, which have flooded social media. Despite the government's guarantee of price stability, COVID-19 has revealed inherent flaws in the resilience of UK charities. Another major obstacle is the location of the store/collection nodes (B3). The traditional method of determining the location of a charity shop is based on the potential customer base and the competition. There is a growing body of research focusing on the ability and availability of data sources for store location forecasting. Although these are not specifically for charity shops, they have been successfully implemented in a variety of retailing sectors. Location has a significant impact on charities'

#### *Evaluating the Sourcing Challenges Faced by Humanitarian Charities DOI: http://dx.doi.org/10.5772/intechopen.108016*

exposure [6]. Charities on main streets help to raise awareness [28], but they also pose challenges for donors who need to get rid of large items because it may be difficult to find parking to access shops. Meanwhile, those charities with limited collection methods (B4) may encounter difficulties in collecting large donations such as furniture. To encourage donations, some charities offer free pick-up services. Some charities hire third-party logistics companies to collect donations [20, 22, 23]. However, some charities may be unable to provide free pick-up services (B12) due to limited financial resources. Moreover, some charities may be able to afford to let donors choose suitable time slots. Most charities, on the other hand, usually post the donation bags and then pick them up at specific times. People who received donation bags may not have items to donate at that time. When they have items to donate, however, they may have already missed the time slots [6]. Furthermore, while some charities with their own logistics may be able to provide free pick-up service a few times per week, others with a limited budget may not be able to.

Another sourcing barrier is poor-quality donations from their suppliers (donors) (B5). The importance of quality sourcing in improving organizational performance has been acknowledged in the relevant management literature [29]. Firms would be able to reduce risks by improving sourcing quality and eliminating uncertainties, and a supplier's financial stability and ability have a significant impact on sourcing quality [29]. Charities used to report that up to 80% of donated items were rejected due to poor quality [22]. The high-quality donations demonstrate a high priority to some professionalized charities. Charities have become more professional over the last two decades, and they would rather recycle low-quality items than risk their reputation by selling them [30]. However, because of the current economic uncertainty, people may keep items for longer rather than donate them. Thus, charities may continue to struggle to secure high-quality items to sell.

Supply chain management involves making thousands of decisions daily, including decisions on prices, storage levels, operational schedules, etc. These decisions have an impact on the firm's profitability [21]. Many charity shops are located on the main street, where storage space is limited (B6). The inventory is difficult to manage due to the variety of donated items and the limited storage space. Furthermore, due to the limited pricing strategy (B8), items may not be sold at a reasonable price or may never be presented in the shop before being recycled. It may have an impact on the profitability and sustainability of charities. The following criteria are important in determining the price: the item's quality, the location of the charities, the brand name, the local competition, and the price as new [22]. Furthermore, some donors may want the best price for their items. The best price reflects the value they place on their donated items and is viewed as a reflection of the donors' socioeconomic status [22]. Hence, a dynamic pricing strategy may be needed for charities to meet the different needs of stakeholders.

Another sourcing barrier related to the supply chains of humanitarian charities is a lack of communication between donors and charities (B7). Humanitarian disasters are occurring at a higher rate than ever before, and the need for humanitarian assistance is expected to grow even more [31]. Humanitarian supply chains (HSCs) have become more transparent as information technology has advanced [21, 32]. However, improved HSC data have not yet resulted in a more efficient and effective response [3, 33]. Disasters disrupt established information and communication infrastructure, obstructing the channel for gathering real-time information from stakeholders and limiting the agility of humanitarian supply chains [21, 34]. This creates a chaotic and uncertain environment for charities, making it difficult for them to collect donations. Hence, humanitarian supply chains are plagued by a lack of real-time information

or communication, resulting in ineffective supply coordination [35]. Thus, there is tremendous value in improving communication between donors and charities, as it is expected to increase effectiveness.

The long process time (B9) and lack of volunteers (B11) may affect the sourcing process of charities. Because donated items are of varying quality, the selection and cleaning activities are critical before presenting them for resale in charity shops [11, 22, 36]. These activities are frequently performed by volunteers. The initial work includes opening bags; categorizing donated items into different types, such as clothing, shoes, accessories, toys, and so on; and raging unsaleable items. This preliminary work is considered strenuous, and some volunteers refuse to do the initial work because it usually involves the worst aspects of used items: dirt, disease, and death [22]. Charities rely heavily on volunteers. Volunteers help out in the day-to-day operations of charities. For example, currently, over 230,000 volunteers work in charities in the United Kingdom. Some charity shops are even entirely run by volunteers [13]. Due to a lack of volunteers, some charity shops may not be able to open every day. The collection, sorting, and displaying of items become highly uncertain and take a long time.

The negative effects of the COVID-19 pandemic lockdown affect outbound logistics and consequently deteriorate sourcing performance in terms of delivery time [25, 29]. Because of the closures of charity shops during the pandemic lockdown, problems with logistics and transportation, as well as a lack of coordination between donors and charities, have become significant. Due to the lack of own logistics (B10), some charity shops may outsource the transportation activity. Some charities could offer free pick-up services by collaborating with third-party logistics. Instead of investing in their own logistics, this helps charities save money while also providing donors with convenience. Though logistic outsourcing can reduce logistics costs and improve service quality [37], a previous study [38] indicated firm performance and logistics outsourcing are not positively related. Charities such as Oxfam and the British Heart Foundation create their logistics to increase supply chain flexibility. When charity has its logistics, it has more leeway in establishing more flexible routines for collecting donated items. For example, charities with own collection logistics are able to offer a convenient free pick-up service whenever donors have the need. This helps to increase the brand awareness and keep donors loyal. Because ultimate convenience is a significant factor in encouraging donors to donate [22], charity with own logistics could afford to let donors choose the time slots; this provides donors with convenience. Furthermore, some charities acquire stock from commercial retailers. However, the current economic downturn, as well as the knock-on effects of COVID-19, poses operational challenges for commercial retailers. This could jeopardize commercial retailer-charity collaborations (B13: lack of partnerships between commercial retailers and charities). The latest figure showed the economic downturn affects 59% of charity shops, and the total dollar value that charity shops receive decreased by 13% at the peak of the economic downturn in 2018 [39]. Moreover, based on the analysis of donors' intention to donate, a prior study [6] found that charity shops receive relatively fewer donations from young people (B14: lack of innovative ways to target younger donors). Thus, charity shops may need to innovate in their advertising to raise awareness of their mission and the impact of donations among young donors.

#### **3. Research methodology**

The 14 barriers identified through the literature review and focus group discussions are then accessed using the FDM method, yielding 10 selected barriers. Furthermore,

**Figure 2.** *Research procedure [6, 40].*

expert opinions generated by the TISM and MICMAC analyses are used to establish the relationships between the barriers. TISM is an interactive learning procedure used to investigate relationships between some distinct and directly related factors [40]. The goal of an MICMAC analysis is to calculate the driving and dependent power of factors [41]. The hybrid method, which combines TISM and MICMAC analysis, has been used to clarify the complexities of factor relationships [21, 40]. Hence, it is appropriate for investigating the complex interrelationships of sourcing barriers. The research procedure for this study is depicted in **Figures 2** and **3**.

#### **3.1 Fuzzy Delphi method**

We apply the FDM to evaluate and select barriers. The main advantage of the FDM technique is that it 1) considers and integrates every expert opinion; 2) allows expert opinions to be fully expressed and the inevitable ambiguity to be considered; and 3) builds consensus, determines the suitability of implementing instructional interventions, and interacts with research subjects without being limited by time and space [40, 42, 43]. In this study, 10 UK charity managers and four academics are invited to assess the listed barriers. The FDM process consists of four steps: 1) gather decision group opinions, 2) defuzzification, 3) screen evaluation indexes, and 4) set up triangular fuzzy numbers [44]. A minimum requirement of 65% agreement was adopted based on a majority vote of the experts, and the results yielded 10 of the 14 barriers for further investigation. The selected barriers, as determined by the FDM decisions, are shown in **Table 1** and are labeled B1–B10.

#### **3.2 Total interpretive structural modeling**

The TISM technique aims to depict direct and significant transitive relationships in a graph [45], which is useful for understanding contextual relationships among the

#### **Figure 3.**

*Total interpretive structural modeling (TISM) procedure [45].*

barriers. TISM uses experts' skills and experience to break down a complex system into elements and build a multi-level structural model [40]. The TISM procedure used in this study is depicted in **Figure 3**, which was adapted from previous studies. First, 10 barriers are selected for TISM after conducting the Fuzzy Delphi Method (FDM). Then, the opinions of 10 charity managers and four academics are collected to identify the contextual relationship of each barrier by examining the pairs of variables. In step 3, a pairwise comparison of barriers is made to develop the structural self-interaction matrix (SSIM) (**Table 1**). The following four symbols are used to define the relationships among the barriers (A: If """ is a predictor of "j"; B: If "j" is a predictor of "i"; C: If "I" and "j" predict each other. D: If none predict each other). In step 4, the experts are expected to describe the rationale behind such a relationship based on a pairwise comparison of these ten barriers. For example, they do not simply *Evaluating the Sourcing Challenges Faced by Humanitarian Charities DOI: http://dx.doi.org/10.5772/intechopen.108016*


#### **Table 1.**

*Structural self-interaction matrix.*

provide opinions on the potential of barrier 1 to influence/improve barrier 2, but rather provide a comprehensive description of how barrier 1 could influence/improve barrier 2. **Table 2** depicts an illustrative example of an interpretive logic-knowledge base. In step 5, the reachability matrix is created while taking transitive checks into account. Using the following rules, we create the initial reachability matrix: (i, j) is 1 if (i, j) in SSIM is A or C; (i, j) is 0 if (i, j) in SSIM is B or D; (j, i) is 1 if (i, j) in SSIM is B or C; (j, i) is 0 if (i, j) in SSIM is A or D. After that, the initial reachability matrix is checked for transitivity. If barrier 1 is related to barrier 2 and barrier 2 is related to barrier 3, the transitivity rule applies, implying that barrier 1 is related to barrier 3. Transitivity was deemed significant and was adopted when experts' opinions were in


#### **Table 2.**

*Sample interpretative logic-knowledge base.*


#### **Table 3.**

*Final reachability matrix.*

agreement or a majority agreed on the relationship. Following the transitivity check, the final reachability matrix is created, as shown in **Table 3**.

In step 6, the final reachability matrix is then partitioned based on the driving power and dependence of the barriers. The details of level partitioning are presented in **Table 4**. The reachability set for a selected barrier includes both the barrier and the barrier it influences. The antecedent set, on the other hand, includes the barrier itself as well as other barriers that may help achieve it. The intersection set displays the barriers found in both the reachability and antecedent sets [45]. When the intersection set and reachability matrix of a barrier are identical, it is ranked as the first level barrier. This iteration will be repeated until the levels of each barrier are determined. In this case, three iterations are performed to determine the level of each barrier. The three recognized levels contribute to the formation of the directed graph and, consequently, the TISM model. In step 7, a digraph is created that depicts the graphical structural relationship of the barriers, with the last level at the bottom and the first derived levels on top. The final digraph is then used to generate a binary interaction matrix in step 8, and the TISM model is created as the final step of the procedure (**Figure 4**).

#### **3.3 Classification of barriers: MICMAC analysis**

The TISM results are expanded further by employing the MICMAC method to calculate driving and dependence powers and classify barriers. The driver power dependence figure (**Figure 5**) provides some useful information about the relative importance and interdependence of the barriers. In the classification of barriers, the MICMAC method examines hidden and indirect relationships and assesses how much


#### *Evaluating the Sourcing Challenges Faced by Humanitarian Charities DOI: http://dx.doi.org/10.5772/intechopen.108016*

#### **Table 4.**

*Level partition of the reachability matrix.*

they influence each other [45]. The barriers are clustered based on their respective driving power and dependence, as presented in **Figure 5**. There are four types of clusters. Barriers with low driving power and low dependence are clustered as autonomous barriers. Barriers that have low driving power but high dependence, such as lack of sufficient donations or fluctuations in supply, are clustered as dependent barriers. The barriers such as the location of the store, limited collection methods, and lack of communication between donors and charities, which have high driving power but low dependence, are clustered as independent barriers. It is to be noted that the barriers with high driving power and high dependence are called linkage barriers. These barriers can make the entire system very volatile as a minor fluctuation in these barriers can have a significant impact on the entire system. It is found that none of the barriers is clustered as linkage.

**Figure 4.** *Final TISM model.*

**Figure 5.** *Classification of the barriers.*

#### **4. Results**

First, the TISM hierarchy (**Figure 4**) ranks the barriers that significantly affect the sourcing in humanitarian charities' supply chains. The lower-level barriers drive the barriers partitioned to upper levels. The TISM model shows that lack of own logistics for collection (B10), lack of communication between donors and charities (B7), location of the store/collection nodes (B3), and limited collection methods (B4) are at the bottom, indicating that they have a significant impact on the system. Furthermore, according to the barrier classification figure (**Figure 5**), these four barriers have very high driving power and are thus regarded as the most important barriers. Thus, charities should accord high priority to dealing with these barriers.

Second, the TISM model (**Figure 4**) shows that the middle-level barriers are fluctuations in supply (seasonality) (B2), long process time (B9), and limited storage space (B6). These three barriers complement one another. The classification of the barriers figure (**Figure 5**) also shows that long process time (B9) has a higher driver power and dependence than the other two drivers. Thus, this barrier has a greater impact on the charities' sourcing process. Hence, managers should pay closer attention to this barrier.

Third, it is observed that the lack of sufficient donations (B1), poor-quality donation (B5), and limited price strategy (B8) are the top-level barriers in the TISM hierarchy. In addition, the driver power dependence diagram (**Figure 5**) shows that poor-quality donation (B5) and limited price strategy (B8) are autonomous variables. These variables with weak drivers and weak dependents have little impact on the system. Charities should therefore accord low priority to dealing with these barriers.

#### **5. Discussions and implications**

This research contributes to both theory and practice. In terms of theory, this study extends the literature on the sourcing challenges that charities face. First, this study employs agency theory and institutional theory as theoretical foundations to comprehend the value chain and operations of the humanitarian charity. Thus, this study contributed to the literature by investigating the application of the aforementioned combined theories in the charity sector. Second, the sourcing barriers in the charity sector have yet to be comprehensively synthesized in a coherent model and empirically tested. There is also limited literature on using the combined techniques of the fuzzy Delphi method (FDM), total interpretive structural modeling (TISM), and matrix of cross-impact multiplications applied to a classification (MICMAC) in empirical research related to humanitarian charity. Using the abovementioned combined techniques, this study investigated charities' sourcing barriers as well as their interrelationships, filling a significant gap in the literature on the resilience of humanitarian charity supply chains.

In terms of real practice, this study offers valuable insight into assessing the sourcing barriers faced by humanitarian charities. The findings are highly useful for managers and decision-makers in developing potential interventions. First, as discussed in the previous section, when dealing with the above 10 sourcing barriers, the lack of own logistics for collection (B10), lack of communication between donors and charities (B7), location of the store/collection nodes (B3), and limited collection methods (B4) should be given the highest priority. In terms of the limited collection methods (B4), charities have traditionally relied on donors to donate unwanted

clothes voluntarily. Because of the increased competition, charities are finding it extremely difficult to obtain supplies; thus, they are looking for alternative options. Some charities, for example, may acquire stock from commercial retailers, circulate stock between charity shops, display donation banks, and distribute donation bags [11, 12, 20, 22, 46]. However, collection methods are still disorganized [47]. Providing the ultimate convenience is a significant factor in encouraging donors to donate. Donors appear to find free pick-up/door-to-door collection convenient. However, door-to-door collection may be complicated due to the following factors: charity loyalty, collection frequencies, collection time slots, and the time of year (charities may experience supply fluctuations during special holiday periods). Donors' lack of information makes it difficult for charities to determine collection frequencies and time slots efficiently. Furthermore, some charities advice donors to leave donation bags outside their homes during certain times of the year; however, these donated items are vulnerable to theft when left outside.

Furthermore, the location has a significant impact on the awareness and exposure of charities [6, 22]. Because high rents are associated with high street locations, charities may consider whether it is worthwhile to make such a significant investment in location. Some charities are located in high-traffic areas to attract donors and buyers. However, this may harm donations because donors may find it difficult to "park and drop" in these charities [6]. Another interesting point to investigate is whether or not buyers on the high street purchase from charity shops. Ideally, charity shops should be located in low-income areas close to the target customers [6, 12].

Furthermore, some charities have their logistics for collecting donations. It allows them to cover a large geographical area while also balancing their inventories [12]. However, some charities still rely on the donor to donate the items using their transportation. Some charities outsource logistics. Logistics activities are classified into four levels: packaging, transportation, transportation management, and distribution network management [37, 48]. Charities with own logistics have more freedom to circulate stock between shops and send oversupplies to nearby shops or central warehouses. Donated items are sent to Oxfam's central warehouse, for example, may be distributed to other Oxfam charity shops, Oxfam's Festival shops, Oxfam's online shop, and Oxfam's replying plant. This increases the chances of selling the donated items.

Second, as previously discussed, the barriers such as fluctuations in supply (seasonality) (B2), long process time (B9), and limited storage space (B6) should be given medium priority. In terms of long process time, charity operations necessitate processing time when collecting, sorting, and disposing of used items. Some charities provide free pick-up services. However, the time between receiving the phone call and picking up the donated item may be longer than donors anticipate. Donors may cancel their contributions due to the long lead time. Furthermore, charities have sourcing policies, and some items are not accepted. When securing stocks, charities should adhere to a few pieces of safety legislation as well as recycling and waste regulations. Before donating, donors are encouraged to review the list of donations that charities may accept. Some items, such as toys without the CE mark, second-hand children's shoes except wellington boots, jellies and flip flops, items made of fur, religious items, and golliwog-related items, cannot be accepted by charities due to hygiene and desirability [49]. People may want to get rid of the items and fail to check the list of donations that charity cannot accept. It may result in a lengthy sorting process for charities.

Furthermore, some charity shops are located on the main street. They would prefer a large display space to attract buyers, but to keep operating costs low, the overall space is kept to a minimum [50]. However, when stock levels are high, the limited

#### *Evaluating the Sourcing Challenges Faced by Humanitarian Charities DOI: http://dx.doi.org/10.5772/intechopen.108016*

storage space poses a problem for those charities without a central warehouse to deal with oversupplies. Moreover, some donations may not apply to the current season. Sorting and storing non-current season donations are a challenge for charities with limited storage space.

Additionally, there is a significant seasonality effect in donations, as donors see charities as a good way to get rid of unwanted items [6, 22]. Charities have limited control over the level and nature of the inputs. This causes significant supply fluctuations. Charities may benefit from seasonal clear-outs at certain times of the year. For example, people may have done a mass clean-up around Easter. However, when the demand for gifts spikes during the Christmas and New Year's holidays, some charities may lack sufficient donations. Researchers investigate how the nature of the disruption affects the firm's risk management strategies, and their results indicate firms' ability to recover from inadvertent disruption is dependent on their ability to return to the previous supply chain [51, 52]. Hence, when there aren't enough donations, charities may try to encourage more by, for example, distributing more donation bags. When inventory levels are high, charities may use an inventory-based dynamic pricing strategy to reduce inventory holding costs and stimulate demand.

Third, in comparison to the previous seven barriers, the findings indicate that the following three should be given the lowest priority: lack of sufficient donations (B1), poor-quality donation (B5), and limited price strategy (B8). Concerning the limited price strategy (B8), standard pricing guidelines for donated items must be followed for all donated items. The prices in charities are fairly fixed, with little room for discounts or bargains. It is because senior management believes that, unlike commercial retailers, charity shops should not sell goods at prices below a certain threshold [38]. However, the dynamic pricing strategy may be more effective in encouraging donation flows. If the product's inventory reaches a certain level, the price may be raised [53]. Furthermore, dynamic pricing is an effective profit-boosting strategy. It is most effective when combined with inventory replenishment decisions [54]. Previous research on joint inventory replenishment and pricing problems shows that a high inventory level provides the company with an incentive to lower the price to reduce inventory holding costs and stimulate demand [55]. Hence, to maximize profit, charities could use inventory-based dynamic pricing strategies. When there is an oversupply of donated items, charities may lower the price and raise the price when the inventory level is low. Furthermore, pricing donated items is often complicated due to the variety of donations of varying quality. Although there is a rough guideline in some online second-hand exchanging marketplaces that the price is 20% below the market value [56], this may not be appropriate for all items. Thus, the headoffice of charities should make strategic pricing guidelines.

Furthermore, the nature of the donations received is highly stochastic. The condition ranges from like new to unusable. The variations in quality can be attributed to a variety of factors, including natural wear and tear, mishandling, and so on [6]. Furthermore, some discount stores, such as Primark, pose a competitive threat to charity shops. Because they can afford new items at charity shop prices, this type of discount store detracts from the appeal of the charity shop. Purchases of low-cost, short-life items, on the other hand, may have an impact on subsequent consumption cycles. If this type of discount store becomes popular, it may have an impact on the quality of donated goods in the future. Hence, charities should raise consumer awareness of sustainability and promote reuse and recycling projects.

Furthermore, according to **Figure 5**, a lack of sufficient donations (B1) is a weak driver that is heavily reliant on other barriers. Thus, this barrier is critical, and managers must exert greater effort in dealing with it. Donations are becoming increasingly difficult for charities, especially as the number of charities increases. As charities become more commercial, they are looking into alternative ways to secure stocks. There is increased competition among charities to obtain high-quality items [6, 22, 41, 47]. Online marketplaces are another major competitive threat to charities. Gumtree, Vinted, Depop, and Shpock are a few examples of online marketplaces for selling second-hand items locally. These online marketplaces are simple and convenient to use. People who want to declutter their belongings only need to take a few photos of used items and publish them online in a matter of seconds. The growth of today's sharing economy has helped to reshape people's attitudes toward used items and increased demand for used goods. Gumtree, the UK's number one local community classifieds, is used by one in every three adults each month [56]. Hence, instead of donating items to charities, people can now swap used items through an online marketplace, or they can easily sell used items online for a small fee. Hence, to compete with the for-profit online marketplace and encourage more donations, charities may need to take practical steps. For example, charities may use online social media to increase brand awareness to attract the attention of these online marketplace users.

#### **6. Limitations**

Some limitations of this study could be addressed in future research. First, this study is limited to UK charities, limiting the generalizability of our findings to other countries and industries. Second, while the barriers were identified after a thorough review of the relevant literature and a combination of analysis techniques, it cannot be concluded that this research has identified all possible sourcing barriers. Furthermore, while there have been many studies on supply chain management, research on sourcing barriers in humanitarian charities' supply chains has been relatively limited. This study contributes significantly to ongoing studies on the resilience of the humanitarian charity supply chain by illustrating the value chain of charities, identifying the sourcing barriers and assessing the interrelationships among them. We hope that this study spurs researchers' interest in overcoming these barriers and improving the resilience of the humanitarian charity supply chain.

#### **7. Conclusion**

COVID-19 has caused significant disruptions in many industries' supply chains [57], including the charity sector. The operating environment of charities is marked by high levels of uncertainty and complexity, making them vulnerable to supply chain disruptions. This study investigated the barriers to sourcing in humanitarian charities' supply chains. Some barriers, such as extra space or own logistics, can be overcome by investing, but others, such as poor-quality donations, seasonal donations, and so on, will necessitate educating the population and changing their behavior, which will be extremely difficult. The findings are extremely useful for decisionmakers in developing potential interventions to address these barriers. Researchers may be inspired to look into other issues to improve the resilience of humanitarian charity supply chains if they further investigate and overcome these barriers.

*Evaluating the Sourcing Challenges Faced by Humanitarian Charities DOI: http://dx.doi.org/10.5772/intechopen.108016*

#### **Author details**

Hailan Guo Durham University, Durham, England

\*Address all correspondence to: helenyordan@gmail.com

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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Section 2
