The problem statement which states that ProjekFabrik relies on external funding seeks to analyse the sustainability of this organisation based on its funding model by allowing one to consider the differences between a social enterprise and a charitable organisation.
It is clear that the funding model of ProjekFabrik is unstainable and therefore, we agree with the problem statement. Their funding has been solely external with 80% being given by the government and 20% private funds. This model of funding is highly unstainable because substantial reliance on externally generated funding can lead to the collapse of the business. This is due to the fact that, factors such as a change in government, can badly affect their main source of fund acquisition, for example, if the new government decides to stop funding them because of a misalignment of policies.
Furthermore, concerning the unsustainability of this funding model, the frequency of cash flow fluctuating is a consequence which cannot be avoided due to being at the mercy of their external funders. In turn, affecting productivity. An example is the economic crisis in 2008 which led to a reduction in government funding and also rise in unemployment rates (Kingsley, 2008). Though desperate to salvage the situation, they could not for the reason that they lacked the means. A situation which could have been avoided with internally generated funds. However, they obtained funding from JP. Morgan. All these highlights the unsustainability of their funding method.
This funding model correspondingly disqualifies ProjektFabrik from identifying itself as a social enterprise. Social entrepreneurship is used to qualify all entrepreneurial initiatives that serve a social and/or environmental mission and that reinvest a large part of their surpluses in support of their mission. (Petrella, 2014). A social entrepreneur “combines the passion of a social mission with an image of business-like discipline, innovation, and determination commonly associated with, for instance, the high-tech pioneers of Silicon Valley” (Dees, 1998). Though ProjekFabrik have a clear social mission, they lack the prerequisite of internal fund generation. Furthermore, we see no clear evidence in the case that they intend to make a profit that can be reinvested in their social mission. Showcasing, more of a non-governmental organisational structure than that of a social enterprise. Additionally, social enterprises autonomously of state running (Price, 2009) whereas, NGO rely profoundly on external funding in the form of donations, grants, gifts, contributions dues etc. nonetheless ProjektFabrik, a “social enterprise” are unable to be autonomous because majority of its funding comes from the state, giving the state a level of control over them further making their funding model that of an NGO who are at the mercy of those that donate. An example of an externally funded NGO is Doctors without Borders, who generate 90% of their funding from private donors while corporate donations provide the rest. (MSF) N.G.O.s are voluntarily formed by the individuals who want to effect positive change in their society or address a social issue, they are neither for public or private gain (Banks & Hulme, 2012). This is evident in ProjekFabrik’s.
A supported recommendation for ProjekFabrik to gain a more sustainable model and qualify as a social enterprise would be to, sell tickets at the concerts in varying locations or fundraising events like balls in a bid to generate funds. This is a great recommendation because SXSW music and arts festival, used fundraising to raise 83,000 pounds instead of the initially intended 7000pounds for the American red cross society to help victims of the Japanese tsunami back in 2011. Another evidence of this recommendation being a success is seen in Invisible children a non-profit that recovers abducted child soldiers, leveraged the power of YouTube in 2012 to raise 3.3 million pounds, making it one of the most successful non-profits online campaigns ever Another way of generating funds, is by selling souvenirs at these events.