violence and displacement are stretching aid groups to
their limits. Funds, meanwhile, are tight. What’s
a humanitarian to do? One option is to open up for business.
It’s an overcast afternoon in traffic-clogged Nairobi
as the ambulance navigates among the vehicles, sometimes
taking to the wrong side of the road with its horn blaring
to warn oncoming cars. Time is precious: the team is responding
to an emergency call from a school where an 8-year-old has
fractured her arm in the playground.
Arriving at the scene, paramedic Mable Nakweya cradles the
young girl in her arms and gently puts her on the stretcher
in the ambulance. It is one of many calls that Nakweya and
her colleague Jamal Abdi receive every day in their work
for Emergency Plus (E-Plus) Medical Services, an independent
ambulance company owned by the Kenya Red Cross Society.
It’s a for-profit enterprise with a humanitarian purpose.
In a country where access to health care is limited, it was
conceived as a way to provide a local, sustainable source
of income while building on the National Society’s
competence and reputation as a leading provider of first
aid and medical assistance. In this case, people subscribe
to the service like buying into an insurance policy.
“We work in teams of two,” explains Abdi. “At
the scene, one of us tends to the patient and the other checks
that the finances are in order.”
On today’s visit to the school where Nyakio has broken
her arm, there’s no need to deal with finances. The
school is a member of the insurance scheme. Sometimes, however,
the paramedics have to assess on the spot if a patient can
pay or contribute to the cost of medical treatment and transport.
That assessment does not affect the care, however. It often
happens that they forgo payment altogether or the patient
makes a contribution once he or she has recovered.
Nakweya and Abdi stress that the patient’s health
always comes first and that the service’s financial
arrangement does not mean they avoid poor areas or shy away
from the most vulnerable during catastrophe.
Indeed, E-Plus crews are often side-by-side with volunteers
as first responders on everything from car crashes in central
Nairobi to inter-communal violence in rural provinces. They
also work among the refugees in and around the Dadaab refugee
camps, where two ambulances are permanently stationed. Those
ambulances were critical in saving lives after an attack
on a church in Garissa in July 2012 and during recent clashes
in the Tana River region.
“We never turn anyone away,” stresses Nakweya. “At
the end of the day, we [Red Cross] are all about saving lives.”
The road to sustainability
For many in the Red Cross Red Crescent Movement, the idea that first responders
are checking bank accounts along with vital signs seems anathema to the humanitarian
mission of unconditional assistance to the most vulnerable.
But it is important to note that in Kenya, the E-Plus ambulances
are offering a service that would otherwise not exist. There
are no state ambulance services and few private ones. Health
insurance policies are not widely used. So whatever services
are provided often come at a cost to the patient.
In the case of E-Plus, each member pays 2,500 Kenyan shillings
(US$ 30) a year to be part of the service. According to a
May 2011 report, some 7,800 people were members and that
number is increasing. E-Plus aims to provide 80 per cent
of its services to paying members and offer 20 per cent as
a free service to people who cannot afford to pay.
Now, with 29 ambulances equipped with advanced life-saving
equipment and highly qualified paramedics, E-Plus is Kenya’s
foremost ambulance service provider. But, after two years
of existence, it is not yet making a profit.
The company’s managing director, Yusuf Nyakinda, is
confident, however, that the lack of state-run services and
other private providers means that E-Plus has considerable
business potential. The idea is that over time, the company
will turn a profit and a portion of the proceeds will provide
some financial stability to the core operating budget of
the Kenya Red Cross.
The main sources of funding for the Kenya Red Cross come
from local and international donors and participating Red
Cross Red Crescent National Societies. Given the current
economic situation and greater competition from non-governmental
organizations (NGOs), contributions are on the decline.
At the same time, the National Society and its volunteers
are dealing with a number of chronic issues and complex emergencies
in which vulnerable people and aid projects are reliant on
external funding from international donors.
The Kenya Red Cross’s E-Plus ambulance service was
established as a way to generate revenue for National Society
operations while also providing desperately needed emergency
medical services. Here paramedics attend to victims of a
road crash in Nairobi.
Photo: ©Kenya Red Cross Society
The time is ripe
Known as an innovator in trying to change that paradigm,
the Kenya Red Cross is engaged in a variety of income-generating
and food security activities that use donor funding as
seed money for home-grown agrarian enterprise rather than
simply delivering food aid or supporting a short-term emergency
response (see Red Cross Red Crescent magazine, Issue 2-2012).
The time may be ripe for such an approach. Kenya’s
economy is booming in some sectors and a burgeoning high-tech
sector is opening new ways for people to do business, share
ideas and respond to emergencies. In Kenya, some 70 per cent
of the adult population uses cell phones for banking, paying
bills and borrowing cash — a phenomenon that many economists
say is increasing local investment and savings, as well as
offering a safe and fast way to make humanitarian contributions.
A case in point is the National Society’s ‘Kenya
for Kenyans’ appeal, which raised US$ 10 million over
five weeks at the height of the Horn of Africa drought in
2011. The donations came from individuals and the corporate
sector — mainly from individual bank accounts via cell
Kenya Red Cross Secretary General Abbas Gullet cautions this
was a one-off due to the extreme nature of the emergency.
But the response was an indication of Kenya’s growing
interest and capability in finding local contributors and
“We are aiming for sustainability but our immediate
goal is to cover our core costs, which donors are reluctant
to pay,” says Gullet. “That is why we are investing
heavily in business ventures so that we generate enough profit
to pay our operational costs at the end of every year.”
It is also a question of freedom — of raising funds
that do not come with restrictions. Donors often earmark
funds to specific projects and they often put a cap on the
percentage of their grants that can be used cover basic administrative
overhead. The challenge for humanitarian organizations, therefore,
is to avoid being overstretched or becoming mere implementers
of the donors’ agendas.
Could enterprises such as E-Plus be part of the solution?
If so, what does this mean for the humanitarian mission?
Does the need to turn a profit compromise the humanitarian
imperative to help the most vulnerable? If so, is this any
worse than over-reliance on donors or governments who may
also have agendas other than humanitarian? These are just
some of the questions facing National Societies as they look
to diversify revenue streams in a tough economic climate.
These questions are not new to Red Cross and Red Crescent
National Societies: revenue-generating operations — from
small retail shops to major nationwide contracts with government
or even manufacturing plans — have been part of the
humanitarian landscape for decades.
The Turkish Red Crescent Society, for example, has been
producing and selling bottled water since 1926, when the
founder of modern Turkey, Mustafa Kemal Atatürk, offered
the National Society a bottled water factory provided that
revenues are spent on humanitarian aid activities. Today,
the plant’s assembly line produces up to 160,000 bottles
per hour and the product line includes not only plain natural
mineral water but also water with aromas or natural fruit
juice mixed in.
Indeed, the types of businesses found among National Societies
are as diverse as they are colourful. A factory run by the
Thai Red Cross Society raises snakes to produce and market
anti-venom treatment; a snack bar run by the Belize Red Cross
Society offers breakfast and lunch next door to the capital’s
central hospital; a chic vintage clothing store run by the
Swedish Red Cross is attracting a hip crowd interested in
Sometimes one National Society will be engaged in diverse
markets. Redmo Holdings, the commercial arm of the Sri Lanka
Red Cross Society, is a major construction contractor that
also leases heavy machinery, offers water filtration systems,
as well as travel and tourism services and insurance plans.
It even operates fuel stations.
Many Red Cross and Red Crescent enterprises have little
or no direct connection with their humanitarian mission other
than offering affordable goods or services to the public — and
raising money for the National Society. Others are more directly
linked to the humanitarian mission: swimming lessons, first-aid
courses, blood collection or contractual arrangements with
governments to run hospitals, ambulances or home health care
are a few examples.
Combined, these fee-based services or enterprises are the
largest source of non-emergency National Society income globally,
accounting for 51 per cent of revenue (see chart right),
according to the IFRC’s 2011 Federation-Wide Resource
”Some of these businesses raise significant funds
for the National Society,” says Andrew Rizk, IFRC’s
chief financial officer and head of its Finance Department. “Others
are essentially subsidized by the National Society but because
it is mission-related — for example, fee-based blood
services — it is viewed as worth the investment.”
Sometimes, the income provided does not make up a great
percentage of overall revenue, but it does provide a financial
buffer. “The more streams of income you have, the less
of a shock it will be if one of these streams dries up,” Rizk
The IFRC has supported these operations in various ways
over the years. The ambulances used by the Kenya Red Cross
and some other National Societies, for example, are leased
from the IFRC as part of a deal with the auto manufacturer
Toyota. After being outfitted with medical equipment in Dubai,
the ambulances are leased to National Societies for periods
of five years.
This arrangement helped the Kenya Red Cross keep the up-front
start-up costs low. Indeed, many National Societies that
have launched major businesses were able to do so because
land, buildings or services were donated, reducing the amount
of capital that had to be raised or borrowed.
To better understand the potential and risks involved in
these businesses, the IFRC has engaged the global accounting
firm KPMG to conduct a study of National Society commercial
and contracted ventures in 20 to 25 countries. The
idea of the study, to be done by KPMG on a probono basis,
is to share insight that could help National Societies make
sound decisions, avoid pitfalls, share innovations, and minimise
the risks associated with operating a business. The study
is intended to highlight this important yet often misunderstood
aspect of National Society financing.
Managing risk is critical for any business. In the case
of contracted services for government, some of the financial
and legal liability is sometimes taken on by the state. But
that does not leave National Societies invulnerable. In strictly
private ventures, National Societies in some cases establish
limited liability partnerships or holding companies that
shield them from financial and legal risks. It could be argued,
therefore, that these ventures are no more risky than placing
National Society funds in a high-yield investment portfolio.
A manageable risk?
Perhaps the greatest risk has to do with reputation. Because
many of these businesses carry the Red Cross or Red Crescent
brand, any problems with the business might not only affect
the reputation of one National Society, but of a global,
When the IFRC announced it was considering a hotel and conference
centre on part of the ground it had bought in the Haitian
capital Port-au-Prince following the January 2010 earthquake,
there was considerable debate about whether a humanitarian
organization associated with first aid, shelter and food
distribution should be going into the hotel business.
The idea was that the hotel would provide revenue for Haiti
Red Cross Society operations as well as new operating facilities
for the National Society, which had its headquarters and
many of its facilities destroyed by the quake.
But according to Daniel Borochoff, president of Charity
Watch, an organization that evaluates non-profit organizations,
the plan is controversial as it raises the question of whether
land, purchased with disaster-relief funds, should be used
for a commercial venture that caters to NGOs and tourists
in a city where thousands are still living in makeshift tents.
This is why communication about these ventures is vital,
says Danya Brown from CDA Collaborative Learning Projects,
a US-based non profit that conducts research and offers advice
for improving humanitarian response. Brown cites a survey
CDA conducted of 600 aid beneficiaries in 20 countries that
showed most people were extremely suspicious of aid agencies
and how they used the money. It is crucial, she says, that
organizations listen to users and donors and explain how
the money being spent is to their benefit.
Similarly, an independent study by Global Humanitarian Assistance
on the Kenya Red Cross Society’s resource flows advised
that high-profile, income-generating schemes such as hotels
could create the perception that the National Society is
wealthy and therefore doesn’t need support. That could
result in reluctance among some to make contributions, be
they financial, material or volunteer labour.
That said, there is ample precedent for National Societies
running hotels without compromising the brand or their reputation.
The Palestine Red Crescent Society has run a hotel near Ramallah
in the West Bank for many years and the Red Cross Society
of China owns a three-star business hotel in Beijing.
However, others have opted out of hotels and conference
centres. The Swedish Red Cross closed its conference centre
in 2010 as it had failed to turn a profit and survive in
a very competitive market. “We could see no end to
the continual deficits we were running up,” says Tord
Pettersson, senior adviser on business development at the
Swedish Red Cross. “Many also felt that we should not
be running a business we didn’t know enough about.”
Open for business
Given the risks of the events and hospitality sector, no
wonder then that retail shops, mostly second-hand clothing
stores, are viewed by National Societies as a profitable
and low-risk option. While not strictly in line with the
Red Cross Red Crescent mission, they do offer low-price
goods to people with low incomes and the proceeds serve
a good cause.
“We don’t see ourselves running hotels and conference
centres in the UK market,” says Rebecca Mauger, head
of high-value giving and events at the British Red Cross. “But
retail shops work well for us.”
Income from the British Red Cross’s 60 second-hand
shops across the United Kingdom topped £26 million
in 2011 with a £5.6 million profit. “This is
a respectable margin compared to commercial retailers,” she
While retail shops account for just 12 per cent of the British
Red Cross fund-raising income, it is more than double in
Sweden where selling second-hand clothes in its 274 shops
is big business.
In June, the Swedish Red Cross opened a vintage and designer
store in the centre of Stockholm as part of its strategy
to market clothing to different segments of the population.
According to Martina Bozic, the Swedish Red Cross business
development manager, clothes, shoes and handbags from the
store literally flew off the shelves in the first two weeks
of opening, making more than US$ 28,000.
The Colombian Red Cross Society, meanwhile, augments its
donations with revenue from renting ambulances, blood bank
services, training centres and gift shops. It has also ventured
into the construction business — winning government
funding to build homes last year.
Such contracts, says Walter Cotte, national executive director
of the Colombian Red Cross Society, are tricky because they
can put the National Society in competition with private
companies that may neither be able nor want to offer the
service for the same price.
“We never turn anyone
away. At the end of the day, we are all about saving
Emergency Plus Medical Services
National Society enterprises around the world take many shapes
and sizes. The Thai Red Cross Society, for example, raises
snakes to produce anti-venom for people bitten by poisonous
snakes. The snake farm is also a colourful attraction for
To read more about the Thai Red Cross snake farm and other National Society ventures,
please see our additional coverage at www.redcross.int.
Photo: ©The Thai Red Cross Society
“We are aiming for sustainability
but our immediate goal is to cover our core costs,
which donors are reluctant to pay. That is why we
are investing heavily in business ventures.”
secretary general of the Kenya Red Cross Society
E-Plus ambulance paramedics respond to all types of emergencies,
from natural disasters to urban fires, inter-communal violence
and everyday minor injuries. Here a young girl with a broken
arm is transported from a school that is part of E-Plus ambulance’s
Photo: ©Claire Doole/IFRC
“We are judged by
and that can be a
challenge as tradition-
ally we are used to
receiving donations and
not making money.”
director of the
Retail clothing stores are a time-honoured way for National
Societies to raise money. This trendy and profitable boutique
run by the Swedish Red Cross carries vintage clothing and
targets Stockholm’s youth market.
Photo: ©Peters Bilder/Swedish Red Cross
The new five-star Boma Hotel in Nairobi as it nears completion
in June 2012. Photo: Claire Doole/IFRC
with a conscience
When the five-star Boma Nairobi hotel opened its doors in
June 2012, the modern, glass-faced upscale hotel offered
businesspeople and tourists a menu of amenities: a rooftop
swimming pool, a spa and gym, as well as international cuisine,
individually designed rooms and a massive ballroom.
One in a growing chain of Boma hotels and conference centres
being built around the country, the 150-room hotel is part
of the Kenya Red Cross’s most ambitious business venture
“Our principal business is the humanitarian business,” says
Abbas Gullet, secretary general of the Kenya Red Cross,“but
the hotel business is purely commercial with its own board
and management who have hired some of the best hospitality
professionals in East Africa.”
Unlike the E-Plus Medical Services, the hotel venture is
purely business. Their sole function is to run a profit and
provide a stable funding source to the Kenya Red Cross.
Also unlike E-Plus ambulance service, which is still relatively
new and has not yet posted a profit, the National Society’s
hotel operations show a track record of earnings. The Kenya
Red Cross’s conference centre and three-star Red Court
hotel, built in Nairobi on land given to the National Society
by the government, began to generate profits 18 months after
opening in 2007. Revenues from the hotel currently cover
roughly 6 per cent of the National Society’s core costs.
The new Boma hotel, also built on land donated to
the Kenya Red Cross, required significant borrowing. The
Kenya Red Cross is confident, however, that income will rise
substantially not only from the Red Court, which has been
upgraded to a four-star hotel and re-branded as the Boma
Inn, but also as a result of its growing property portfolio.
Later this year, the four-star Boma Inn in Eldoret in western
Kenya will be completed and there are plans to add rooms
to a conference facility in Nyeri and to build hotels in
other towns such as Kisumu, Malindi and Nakuru.
The newly appointed managing director of the Boma chain,
Mugo Maringa, who has 30 years’ experience in the industry,
says that “hospitality with a conscience” is
a winning combination. “Guests at the Boma
can eat, drink and, at the end of the day, sleep well knowing
that they are supporting a good cause,” he says.