The case for convergence: Here are the mutual learnings for social enterprises and NGOs today

By Rutendo Nyaku

Social enterprises have long been celebrated as hybrid innovators—entities that blend business models with a social mission. Like NGOs, they exist to fill critical gaps where governments fall short, whether in health, education, or community infrastructure. Both are anchored in values and driven by purpose; both aim to create social impact where neither the market nor the state can fully deliver. What sets them apart is not what they seek to achieve, but how they go about it. Social enterprises pursue these goals mainly through market mechanisms; NGOs often rely on grants, advocacy, and community mobilisation. However, with the global economy projected to slow to just 2.3% growth in 2025, dragged down by policy uncertainty, high interest rates, and declining trade (UNCTAD, 2025), hybridity alone is no longer enough to keep these organisations afloat. For many African countries, these macro pressures have translated into rising debt burdens, shrinking public finances, and deep cuts to Official Development Assistance (ODA). Consequently, these macro-pressures will see public finances tighten as African governments increasingly find it difficult to adequately deliver public services. As a result, NGOs and social enterprises alike find themselves on the frontlines, expected to fill gaps without adequate structural support. In turn, this places social enterprises and NGOs on the frontlines without adequate structural support.

Social enterprises in particular face an uphill struggle rooted in the very model they are celebrated for. These enterprises face an impact paradox: asked to deliver transformative change, but evaluated by short-term metrics. They struggle to attract risk-tolerant capital in sectors with low margins but high public benefits like education, health, and care work. This pressure, combined with shallow policy support and unclear pathways to scale, has left many social ventures stuck between ambition and execution. If they are to survive and scale in Africa’s volatile environment, they should also internalise hard-won lessons from the nonprofit sector.

Trust before scale
Too often, social enterprises chase rapid growth to appease investors. This is a trend similar to the non-profit sector, where donor appeasement has often been the subject of great debate. Within the constraints of donor expectations, the mission of non-profits is strengthened by a focus on building community trust. Programmes like Liberia’s post-conflict teacher training initiative, or South Sudan’s early civil service partnerships, succeeded not by being fast but by being embedded within the communities they serve (UNDP, 2018). For social enterprises, the key takeaway is to focus on building relational capital with communities through listening and co-creation, whilst sequencing and incorporating growth strategies.

Rethinking impact measurement
Real change is messy. However, impact measurement frameworks often confine non-profits and social enterprises to linear impact metrics for systemic problems. The State of Social Enterprise 2024 report, for instance, acknowledges that standard GDP-based metrics fail to capture the spillover benefits of social enterprises, particularly in health, climate, and justice sectors (WEF, 2024). This poses a challenge for how social enterprises can continue looking at impact holistically. In the non-profit sector, however, we have seen the growth and adoption of innovative evaluation methods that blend qualitative storytelling, participatory assessments and longitudinal data. These methods provide a pathway for social enterprises looking to avoid mission drift by providing evaluation frameworks that prioritise learning and inclusion.

Collaboration as an operating principle
The challenge of operating in silos is a great pain point for both the non-profit and social enterprise sectors. NGOs, for example, have historically struggled with fragmentation, often competing for funding, duplicating efforts, or failing to align with broader systems. But over time, necessity has fostered innovation. Many nonprofits have developed cooperative frameworks and consortia models that emphasise pooled resources, joint delivery, and shared learning. For social enterprises, the lesson is not that collaboration is easy, but that it is essential.

There is promising evidence of collaborative spaces emerging in the social enterprise sector. For instance, networks such as Catalyst 2030 and AACOSE are beginning to map out collective infrastructure and cross-sector dialogue. Drawing on non-profit experience, social enterprises can adopt best practices such as co-developed monitoring frameworks, shared services platforms, and sector-level advocacy bodies. These practices help de-risk partnerships and institutionalise cooperation. In resource-constrained environments like Africa, such collaborative infrastructure is not just a governance issue—it’s a survival strategy.

Capital structure matters

The funding terrain remains uneven—and increasingly unstable—for both NGOs and social enterprises. While the global impact investing market exceeds $1 trillion, only a small proportion of this capital reaches African-led social enterprises, especially those operating outside fintech and climate tech verticals. The Global Innovation Index notes that investors continue to favour ventures with clear and rapid returns, leaving mission-driven enterprises in health, education, or care work with limited pathways to scale. At the same time, NGOs are facing a new funding reality. As traditional aid flows shrink—including recent cuts from USAID and other bilateral donors—many non-profits are being pushed to explore enterprise-based models to sustain their impact.

This moment of constraint is also a moment of opportunity. On one hand, NGOs offer social enterprises a long history of structuring capital around mission—through grants, patient philanthropy, and risk-absorbing finance. On the other hand, social enterprises bring to NGOs tested models of revenue generation, cost recovery, and investment readiness. Both sectors are beginning to converge around blended finance—mechanisms like outcome-based grants, social impact bonds, and catalytic capital—that combine the rigour of enterprise with the resilience of purpose. In this shared space, neither side holds all the answers. But together, they offer a more durable blueprint for building capital models that serve mission, scale, and sustainability.

Public sector as a stakeholder
Finally, no social enterprise can go the distance without engaging with the state. Studies show that programmes like Kenya’s Huduma Centres and Ethiopia’s decentralised health services show that when governments enable innovation through infrastructure, policy, or co-delivery, the outcomes improve across the board. For social enterprises, this means moving beyond transactional MoUs to building strategic alliances that shape policy, co-design solutions, and jointly scale impact.

The road ahead is not easy. But social enterprises do not need to reinvent the wheel. In fact, they cannot afford to. The NGO sector, while imperfect, has decades of accumulated wisdom in navigating resource scarcity, building community trust and influencing policy under constraint. These are the very capacities social enterprises can draw on if they are to endure the headwinds of 2025 and beyond.