The Mission of the Glorious Cross, a Catholic organization affiliated with the Franciscan movement, has worked since 1992 to provide critical services and opportunities for the most vulnerable in Rwandan society. Motivated by the social, economic, and security gaps left by the Rwandan Genocide, the Mission has worked diligently to provide life-changing resources for thousands of women and children. The Mission oversees two core business units – The Glorious Development Group (GDG), a revenue-generating entity, and Sinapisi Rwanda NGO, a non-profit organization.
GDG manages:
St. Jacob, a primary school and nursery, which services nearly 500 Rwandan children, ages four through 12.
St. Philip, a technical secondary school, which services over 400 students ages 13 through 18 in the specialized subject matters of hospitality, tourism, accounting and computer science.
The Peace Village, a collection of seven small to medium sized buildings, that previously housed Rwandan orphans and is now largely unused and abandoned.
Sinapisi NGO provides critical support for:
Community savings and lending organizations, which organize on the microlocal level to provide financial support to fellow neighbors for daily needs and entrepreneurial ventures.
Women’s market, which organizes local women entrepreneurs to make and sell products in a secure, consistent, and supportive environment.
Foster families who adopted orphans who were previously raised at the Peace Village
Large in mission scope, the Mission of the Glorious Cross plays a key role in several industries to ensuring that Rwanda’s most vulnerable women and children have the tools and resources they need to pursue self-determined lives of dignity.
What was the problem?
From the team’s initial conversations, research, and analysis, we surmised that the Mission of the Glorious Cross was cash-poor and would run out of money for programming and basic operations within the next calendar year. Focusing on the profit-generating work of the Glorious Development Group, Business on the Frontlines was asked to formally assess and develop actionable, impactful recommendations to strengthen that development model for long-term sustainability. It became clearer throughout the duration of the project that the organization suffered in a few key areas. Firstly, the existing governance structure lacked critical internal controls, which led to difficulties in budget planning, financial reporting, and tax compliance. Further, the schools (St. Jacob and St. Philip) were the only true profit generating activity within the entire organization and financially support all other business units, including the Mission of the Glorious Cross. Within this, collection of tuition at the schools remains a challenge and hampers business forecasting, cash flow streams, and the short-term liquidity. Finally, the Mission of the Glorious Cross owes large, unpaid loans, which poses a significant immediate threat to financial sustainability, most importantly the access to external capital in the future.
What did we do?
Prior to our in-country experience, the team’s research focused on key areas the Mission could increase revenue within the existing scope of work and frameworks. The team initially hypothesized that the operating environment may have been a key constraint and that increasing capacity at the schools business and developing a sustainable competitive advantage in its savings and lending operation would be sufficient to sustain financial operations and be used as a platform for long term-strategic growth. With our initial hypothesis, the team spent hundreds of combined hours assessing the organization’s unique and privileged capabilities, assets, and relationships and the evaluation of market potential – specifically in evaluating the Rwandan school market and the microlending environment.
What was the turning point?
The team’s in-country experience proved invaluable. Over the course of more than two dozen interviews, we were able to adequately identify the specific financial leakages. Counter to our initial hypothesis, internal operating factors were a root problem, not an external one. We found that each business unit was conducting financial management in silos resulting in inconsistent, unhelpful information that did not produce reporting that helped leadership make informed business decisions. Additionally, money needed to sustain programming for the Mission of the Glorious Cross and the subsequent overhead costs was not subject to internal controls or any accountability, leading to large financial leakages. Further, tuition collection issues at the schools made it impossible to depend on short-term cash liquidity and accurately budget for business needs. From these discoveries, the team understood that efforts to increase revenue would need to be secondary – the Mission needed to prioritize decisions and a structure that would help stabilize operations immediately to ensure the organization could continue its work in the long term. The team had three objectives in country: listen, learn, and serve. Following those guiding principles, we were able to appropriately diagnose the root problem for our partner and ideate around how to best support them.
What was the recommendation?
While most of the preliminary research and work focused on revenue generation, our time in country reinforced the dire financial situation of the organization and its specific operational challenges. Our key recommendations coalesced around the three critical challenges: internal controls and governance, tuition collection at the two schools, and managing its debt for long-term success.
For internal controls and governance, the team created a new, integrated organizational chart with a profit-sharing agreement between business units, updated roles and responsibilities for employees, and a streamlined financial management process and decision-making process. The new system made it clearer to identify operating responsibilities, control movement of money, and make better business decisions.
For tuition collection, the team devised a schedule for tuition collection and corresponding incentives for early and on time payment and increasing penalties for late payments. The team further recommended updated forms of tuition payments and specific integrated software to aid the school staff in accounting during the once chaotic tuition collection process.
To best help the organization manage its debt and make payments to avoid insolvency, the team presented throughout recommendations for the organization to consider, which included partnering with an outside investor, renegotiating loan terms, and selling off assets.
What actually happened?
Team Rwanda’s recommendations were warmly welcomed by the Mission of the Glorious Cross’ senior leadership team. With all parties understanding that implementation would likely serve as a hurdle, our recommendations were developed with great attention to implementation. We supplemented each recommendation with specific tools and resources to aid our partners long after the BOTFL team returned home from our time in Kigali.