Sustainability requires a solid business model

It may seem counter-intuitive, but the first step in addressing the funding model challenge is to stop worrying about the funding model altogether.

Philanthropy, rebranding and fundraising are all inherently short-term initiatives which can lead to myopic planning and potentially disastrous decision-making if undertaken in haste. Because the truth is, once the business model is right, the funding model becomes clear.

A not-for-profit’s (NFP) business model needs to create and deliver value. This value may be economic, social or cultural. Importantly, a business model focuses on value created and not dollars received. Get the value equation right and funding follows.

Considerations for developing a strategy

It’s necessary for any modern NFP planning activity to undergo an extensive ideation process that unpacks stakeholder value. Thinking outside the square can unlock channels to innovative funding streams such as impact investing – investments that have a positive socio-environmental impact – that bring more than monetary value.

In addition, a willingness to be open and explore strategic partnerships can provide new pathways to financial support.

Regardless of where and how value is created, leaders should be thinking about the following when planning for change:

• Prepare teams for the journey from funding recipient to surplus creator;
• Don’t put too much focus on minor costs – you need to invest to see growth;
• Embed business development and commercial skills, and,
• Plan for the long-term.