Joao Teixeira Pires
Paulo da Rocha Ferreira Borba
Rosa María Fischer
FEA-USP Sao Paulo
Brazil’s Consumer Defense Institute (IDEC) is a civil society organization created in 1987 by a group of volunteers to promote consumer rights and awareness, primarily with collective, preventive initiatives involving information and education.
IDEC was created amidst Brazil’s return to democracy, when citizenship concerns were raised in the civil society’s agenda, including consumer rights. IDEC’s early operations relied largely on volunteers, prioritizing a financial sustainability strategy based on raising funds from national and international foundations and cooperation agencies. However, this resource seizing approach proved insufficient, and the organization started to explore new ways to produce revenues, especially through associates’ contributions.
At the same time, IDEC continued to capture resources from funding agencies. Thus, it was able to undergo the necessary training to diversify its operations into comparative product testing, publishing books and manuals, and collective consumer interest representation. IDEC’s specializations also became broader, encompassing quality and safety assurance for consumer products, banking services, medical insurance plans, public and privatized utilities, including telephone service, electricity and water.
IDEC’s growth was supported by its organizational structure formalization and the increasing professionalization of its staff, consisting of 58 paid professionals when this case was written. However, IDEC did not pursue any sustainability strategies, becoming increasingly dependent on project resources, which accounted for 40% of its revenues, with a dwindling trend that jeopardized the organization’s survival. To remedy this problem, in late 2003, a business plan was elaborated to render IDEC self-sustainable by means of a revenue boost driven by membership, product and service sales.
IDEC officials must decide whether or not to execute its new business plan, whose guidelines point to a strategy that could lead the organization to become a service provider for paying customers –an outcome that would go against its foundational mission. The discussion of this dilemma hinges on the search for a balance between economic and social value creation.
This case may be used in courses and seminars on social entrepreneurship and third-sector organization management. It may prove particularly helpful in courses dealing with its two focal themes: third-sector organizations’ sustainability and the tension between opposing roles: private service supply and public good production.