5 Tips For Building a Sustainable Business Model for Nonprofit Organizations

NGOs can focus on their mission with a constant flow of funds. This guide shares how to build a good business model for nonprofit organizations.
business model for nonprofit organizations

Are you unsure of the viability and sustainability of your nonprofit organization? In these uncertain times, this is a valid concern. But you can put your mind at ease by following our 5 tips for building a sustainable business model for nonprofit organizations.

Understand Your Mission

Nonprofit organizations are mission-driven rather than profit-driven. And yet they are still businesses in their own right and should be managed as such. It means you need a sustainable business model for your charitable organization, just like any other company.

Do you seek a balance between serving the community, fighting for your cause, and satisfying your valued sponsors/donors? That is where future social work practice may be advantageous.

Never lose sight of why you have started/are starting an NPO. An understanding of social structures, norms, and values will go a long way to helping you formulate your mission statement.

Keep your mission at the forefront of all that you do.

Analyze The Existing Model

Unless your NPO is still in the planning stages, you probably have a basic business model in place. If it isn’t serving you, ask yourself why. Make a list of ideas to change that. Be realistic about the time frame in which to implement changes.

Even if you’re starting a new NPO, you may be (albeit subconsciously) basing it on a business model that worked for other organizations. All businesses, whether profit or nonprofit, are unique. They have their own mission and their own dynamics.

What worked for other NPOs in your region or field of interest may not necessarily work for you. You don’t have the same premises, staff, skillset, or funding. Be realistic about what you have to work with.

That brings us to the next tip; the funding you need to operate your organization.

Get Funding From More Than One Source

Nonprofit organizations need funding. It’s necessary for the day-to-day business admin, your paid staff (unless all are volunteers), and your campaign costs. What sort of funding are you relying on?

It’s crucial to have more than one source of funding. No nonprofit organization will be sustainable on public funding alone. At some point, you’ll need a significant financial injection through government funding, corporate sponsorship, or both.

That doesn’t mean that public funding is of no value. Donations or monthly donation payments from members of the public are important revenue sources. But as your NPO grows and your campaign ideals become more comprehensive, your funds need to grow, too.

Diversify your revenue streams, and you’ll be able to do more for the cause, even in the face of donor apathy.

Be Flexible

Learn to adapt to new trends, both socially and in business. Many NPOs have failed. Not because they weren’t motivated by their cause or driven to succeed. But due to a failure to adapt.

Sweeping social changes may affect how the public responds to your campaigns. Financial downturns may reduce your funding. To continue on your mission path, you need to be flexible. Learn how to do things differently or do more with less.

The migration of the world’s organizations from paper-based models to digital ones is perhaps the biggest change in the last few decades. More and more businesses are switching to digital, and you should too if you want to stay relevant.

The right software will simplify your daily admin, salaries for your paid staff, recruitment of volunteers, and even your campaigns. And cloud storage will keep your data safe and secure. If you don’t have the tech skills, get someone on board who can teach everyone how to use these platforms.

Learn to adapt to new ways of doing things.

Recruit The Right People

A solid plan, a sound mission, adequate funding, and the right software will only get you so far. And they all hinge on this last tip – recruit the right people. Without the right skill set, your plan won’t get off the ground, your mission will seem impossible, and your software won’t have anyone to run it.

Perhaps most importantly, the right people will get you the financial backing you need to succeed. A sustainable business model will take this into account. Although you’re not operating for a profit or to please shareholders, you do need to satisfy your sponsors.

Do you or your staff have a degree in social science or psychology? Or qualifications in the field you’re working towards helping through your NPO? No matter if your funding comes from the state or the private sector, credentials matter.

Do you have a qualified accountant on board? How about a financial advisor or legal consultant? If not, can you handle the finance and accounting yourselves? The funds you raise can cover the expense of retaining such expert counsel.

When you have the right advice, tools, and people, your NPO will make an even bigger difference than you dreamed.

Like this? Share it with your network:

I need help with:

Got a Question?

Get personalized expert answers to your business questions – free.

Affiliate Disclosure: This post may contain affiliate links, meaning we get a commission if you decide to purchase something using one of our links at no extra cost to you.