NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, December 19, 2012

In the last two years, the US Agency for International Development (USAID) has increasingly focused on supporting social entrepreneurship in the Middle East and North Africa region as a way of tackling the region’s socio-economic challenges that cause poverty. This approach has compelled Arab non-profits to reorient and present themselves as social enterprises based on U.S strategic interest rather than their own local needs. As one local activist notes, social entrepreneurship has become the latest “buzzword to attract funding projects” that are not actually oriented towards poverty alleviation in the region. He argues that local organizations increasingly promote themselves as social enterprises in the hope of procuring funding.

USAID’s latest poverty alleviation strategy problematizes the realities on the ground—inducing identity crises among local organizations and diluting their original missions as they prioritize short-term funding over long-term sustainability. Furthermore, the financial sustainability challenge illustrates how organizations become trapped between being a non-profit and a social enterprise because they have not incorporated a revenue-generating stream into their business models and therefore fail to operate as actual enterprises. In pursuing this approach, USAID fails to heed lessons from previously unsuccessful attempts to reduce poverty in the region and overstates its ability to develop sustainable, homegrown models by focusing more on the “social” aspect and less on the “entrepreneurship” of empowering self-sustainability.