Non-profit organisations – from local charities to big international NGOs – face the growing challenge of how to secure sustainable funding for their activities. There are, in parallel, an increasing number of impact-driven for-profit enterprises that in some cases compete with traditional non-profits. One result is that the fundraising landscape for non-profits has become more competitive with growing pressure from donors and the public for these organisations to become more business-like and prove their impact, notably through developing effective business models.
A business model simply describes the way an organisation plans to create, deliver and capture value, whether this is economic, social, environmental or cultural. In general, every organisation – be it a corporate venture, public sector body or non-profit entity – faces similar operational needs and challenges including long-term financial viability. A key challenge for non-profits then, as well as for impact-driven enterprises, is to decide and deliver on measurable impact that is not merely financial, and adequately report this to donors and investors. This challenge is compounded by the fact that many non-profits lack the relevant expertise or awareness of the opportunities that exist.
With the lines blurring between business and the non-profit sector, many new approaches are emerging in the areas of sustainable financing – including social enterprise and impact investing. The Luc Hoffmann Institute is working with partners to explore new kinds of business model that can allow non-profits to deliver sustained impact.
A first step was to convene, in November 2018, a diverse group of representatives from national and international NGOs, the banking and finance sectors, business, think-tanks, philanthropic organisations and UN agencies to share experiences and ideas.
Until now there has been very little research in the area of non-profit business models and there are many avenues to explore such as mobilising the relevant financing mechanisms – from philanthropy to impact investing – towards the non-profit sector. The project aims to build new networks that can guide nature conservation organisations, including the Luc Hoffmann Institute and others with a sustainability mission as they develop their strategies, as well as contribute to new, effective business models for non-profits and impact-driven enterprises.