NGOs must embrace commercial strategies to boost impact. Start by emphasizing the connection between income generation and tangible outcomes, and adopting more commercial communication approaches.
By Lukasz Bochenek // 12 February 2025
Some people credit the Greek philosopher Heraclitus with the saying “Change is the only constant in life.” The pace of change might ebb and flow but the fact of change is always present.
And so it is for the NGO sector. The Trump administration’s stop-work order for USAID has caused a shock throughout the whole ecosystem. Organizations that rely on U.S. funding are scrambling to figure out the new rules, and how they can carve out their own special needs and interests from U.S. President Donald Trump’s blanket edict.
But Trump’s actions should not be so surprising. His administration’s focus on NGO accountability and efficiency is really an acceleration of recent trends rather than the creation of something new.
In reality, the NGO world has been trending toward these changes for several years. Donor funding is down, forcing an increased trend toward earmarking funds for specific projects. Development agencies are increasingly requiring closer alignment between their own priorities and how aid money is used, putting more emphasis on delivering real-world results and value for money. High spending on executive-level salaries and administrative overheads is no longer acceptable. Nor are cookie-cutter approaches.
Make it simple for donors to understand what they will get for their money, as with any investment or purchase. Put a value on the impact, and show exactly what that value is and how it is being delivered.
So the potential shift in U.S. funding policies may not be as disruptive as portrayed. It may be the wake-up call the sector needs, and reflects a movement across the NGO world that is already taking place.
The reality is that it’s a call for actionable key performance indicators, or KPIs, tied into measurement and accountability. The money needs to be spent wisely and humbly, delivering real change for the people who need it most.
Becoming more commercial
The opportunity arising out of this apparent crisis is to have a major reset. And the start point of that is for each organization to reexamine its unique value proposition — its North Star. This requires a hard and critical look at what you want to achieve, to ensure the organization is fit for purpose.
The assumption should be that funding will increasingly come from a range of fragmented sources. That can mean more independence. It also means incorporating more agility into fundraising activities and operations, and meeting the requirement for hard results while operating leaner structures.
A central part of this shift is articulating the purpose clearly and consistently. It has to come from leadership. It has to be simple and easily comprehensible. It has to show your ambitions for real change. And it needs to be viable for the medium term, to deliver consistency.
In short, NGOs need to start operating more like commercial businesses.
Make it simple for donors to understand what they will get for their money, as with any investment or purchase. Put a value on the impact, and show exactly what that value is and how it is being delivered. Package the programs and work as products and services, with price and the expected results.
This blurs the line between fundraising activities and the project work. But that is a good idea, because it creates an inextricable link between the two, making it much easier for donors to see the direct line between their money and the impact it is having on people’s lives.
Organizations also need to know who they want and need to attract. That involves using marketing techniques to profile a diverse set of potential buyers, going outside the current pool and building an understanding of their priorities.
I have been talking about the importance of concrete results from projects. So what are the concrete actions required? Here are five areas to consider.
1. Organizational North Star and leadership alignment
The foundation of any successful organization lies in defining its North Star and unique selling proposition. This begins with an intensive focus on purpose and real-world impacts, while identifying key differentiators that complement rather than compete with other organizations.
Success in this area requires full board support, which serves two crucial functions: encouraging the vital connection between fundraising and activities, and providing senior-level guidance. Seamless collaboration between the board and the execution team is essential to this foundation.
2. Income generation and results-focused business models
Organizations must adapt their business models to emphasize the connection between income generation and tangible outcomes. This transformation requires NGOs to reframe their work within the context of products and services.
Organizations should explore new revenue streams based on outcome-driven compensation, while maintaining relationships with traditional funders. A critical aspect of this approach is establishing clear connections between resource utilization and results, serving both to optimize resource efficiency and demonstrate value proposition.
3. Structural resilience and human capital development
Building organizational resilience requires creating lean structures while maximizing human capital potential. As organizations grow, they must actively resist bureaucratic expansion and prevent processes from overshadowing action. Excessive administration can stifle innovation and limit growth opportunities.
Organizations should prioritize staff members who directly contribute to impactful programs. Given the sector’s reputation for employment instability, particularly during uncertain times, organizations must also invest significantly in positive employee engagement initiatives.
4. Strategic partnership development
Organizations need to forge partnerships that serve both commercial interests and strengthen operational resilience. This involves expanding beyond traditional donor relationships to include private sector entities, which can provide valuable support in achieving specific mission objectives and program goals. A diversified funding base incorporating various types of funders both promotes innovation and enhances financial stability.
5. Effective impact communication
Organizations must master the art of communicating their story and impact through clear, accessible language supported by concrete metrics and compelling case studies. This requires adopting more commercial communication approaches while avoiding sector-specific jargon that often characterizes NGO communications.
Terms such as “mitigate, catalyze, and convene” create uniformity across organizations and potentially alienate new stakeholders. Instead, organizations should employ straightforward language combined with powerful human narratives to distinguish themselves and attract diverse supporters.
