It has always been a source of angst for ambitious not-for-profit organizations: how to ensure they can sustain and scale up impact while also building resilience to weather financial or other shocks. Often the focus is on increasing core or unrestricted funding and covering general operating costs through grant overhead.

The COVID-19 pandemic and national responses to it have exacerbated this challenge and, in doing so, have brought into stark relief important structural problems within the not-for-profit sector. What have been perennial issues for many not-for-profits — sustaining impact, financial resilience — are now existential ones.

In recent years, even prior to the pandemic, governments, private foundations, and other donors have openly recognized the need to cover a greater portion of not-for-profit organizations' general operating costs through grant funding. That in itself is a good thing. But I do not believe this approach, on its own, will lead to the long-term resilience of ambitious not-for-profits, nor will it enable them to effectively scale impact.

What will ensure more resilience and the ability to scale up not-for-profit organizations is the pursuit of new and creative business models that fit with their missions and activities.

In this article, I draw on my and colleagues' experiences of growing Conflict Dynamics International, a sixteen-year young not-for-profit working to prevent and resolve violent conflict and alleviate human suffering arising from conflicts.

In our sixteen years of working in some of the most challenging conflict situations in the world, we have learned that the Contribution-Based Business Model is not sufficient to scale the impact of our organization and ensure its resilience. Perhaps it is better suited to not-for-profit organizations working in less-volatile situations, or those that deliver predictable program services, or have reached a higher level of annual revenue.

Read the full article about business models for organizations by Gerard McHugh at PhilanTopic.