Overseeing an International NGO business model in uncertain times

When thinking about the topic of business models, several questions come to mind, some of the more immediate being: 

• How do you get to grips with the business model and its inherent risks? 
• How do you get the balance right between business-as-usual versus strategic change? 
• How do you ensure you get the right information from the executive and make difficult decisions about changing strategic direction? 

Following the launch of “Governance: a guide for International NGOs”, Buzzacott and Bond have launched a programme of events designed to take trustees through the key challenges boards of international development organisations face. This event was the second in the series. 

This event focused on business models, with guest speakers Jasmina Haynes, CEO at Integrity Action, and Zoe Abrahamson, Sector Transformation Manager at Bond. Jasmina shared her experience of the merger between Integrity Action and Crown Agents, while Zoe focused on funding and new ways to generate income. 

From a governance perspective, trustees have a duty, as a key component of their responsibility, to fulfil the International NGO’s charitable objectives and ensure that the business model is relevant and financially viable. Trustees need to understand the business model and have a firm grasp of the potential risks and access to the right information to determine if a change in direction is needed. 

It starts at the beginning. 

Understanding the organisation begins with the induction of new trustees. It’s very important for new trustees to learn how the organisation has evolved over the years, as this is intrinsically tied to how the business model has changed. Ask questions and research the history, then ask to meet staff to help fill the gaps. It’s a self-help process as it takes time to get under the organisation’s skin when only meeting quarterly. 

The executive and Chair also need to take responsibility to make sure the interview process includes details of the organisation’s history and that the induction process is robust. Having a ‘buddy’ system where new trustees are individually supported by a staff member is a good way to help them to get to know the organisation and ask the questions they need to gain confidence in their new role. The crossover between the executive and board can be a difficult balance. 

Business as usual versus strategic 

‘Business as usual’ can be seen as something that sits with the finance committee of the board, but it’s important to make sure the whole of the trustee board understands the business model as it’s in the whole board’s interest and isn’t just a tick box exercise. There are risks with business as usual, just as there are with changing strategy, and everyone needs to be on board. The approach to business models will depend on the size of the organisation. Small organisations require a different depth of operational knowledge, and by their nature, trustees may get more involved, and the lines between the executive and board may be more blurred. Whereas there tends to be a greater degree of separation in larger organisations. 

Finding the time to consider the future can be challenging when there’s so much going on, but it’s the board’s responsibility to look to the future. To help with meaningful horizon-scanning, boards may want to consider having a board retreat to dedicate time to in-depth discussion and to draw expertise from trustees. Experts could be brought in for the day to fill any missing skills gaps. The key to a good retreat or awayday is managing time to allow trustees to have good conversations and ensure the questions that need addressing are framed well from the outset.  

When considering a new approach to the business model, whether something relatively small such as bidding for a new funding stream or something more fundamental like a merger, the most important thing is to create the space to have the right conversation – and to make sure that the conversation is approached in the right way. The crux of this is building trust. Trust must exist to enable complex, challenging conversations, and then, if something is challenged by the executive, this trust will be rewarded because the ground is laid for a frank conversation. 

Learnings from a merger process 

Earlier this year, the international development NGO Integrity Action merged with Crown Agents. While not unprecedented, this is certainly a unique occurrence and involved a key shift in the business model. 

You can read more about the merger in the 1+1=3 blog, written by Integrity Action and published on Bond’s website.

Learnings from changing the funding model and new ways to generate income.

Bond has put together a collection of case studies to help international NGOs consider alternatives to the traditional grant funding model to generate their own income and avoid funder restrictions while shifting both income and power to local communities. 

NGOs are traditionally funded through a mix of institutional grants and public fundraising, but the tide is changing. Cuts to the UK Aid budget, increased competition for funding, and restrictions placed on grantees by funders combined with the cost-of-living crisis, mean that International NGOs need to think differently about how they finance their work.

Bond has been working with Access – the foundation for social investment – to identify different ways that International NGOs can generate income and, importantly, whether they support a shift in power to local communities. We identified 3 categories of how organisations can generate income outside grant funding and developed case studies to reflect them:

1. Monetising expertise and networks: such as consulting models where INGOs can sell their expertise.
2. Monetising organisational assets: This encompasses brand, so includes charity shops and T-shirt sales, which use the charity’s brand name to generate income, or it could mean generating income by renting out space if they own a building or other assets.
3. Trading models that deliver targeted outcomes. This includes social enterprises, enterprise-led development, development impact bonds and other income-generating activities that help organisations achieve their charitable objectives.

You can read more about this work and find resources for your organisation on Bond’s website.

If you’re a trustee of an international NGO, why not join our governance working group and join in the conversation? Conducted under Chatham House Rules, the group meets quarterly to share advice and the latest sector guidance on how to navigate the ever-changing landscape of running an international development charity.

Simply complete the form below, and we’ll be in touch with more information.