Watch: Setting an NGO business strategy for 2022

The last two years have been tricky for organizations working in development. The funding impact of the pandemic has been considerable, affecting both public giving and funding from institutional donors. At the same time, many organizations have seen a rising need as the pandemic affects their service users. Against this backdrop, Devex Business Editor David Ainsworth was joined by Dominic Brain, global head of program funding at Christian Aid, and Chris Meyer zu Nautrup, director of MzN International, to discuss how to set a long-term strategy for your organization in challenging times. Keep reading for a glance at some of the key takeaways from the discussion. If you’d prefer to watch the event, catch up on the recording. How Christian Aid cut spending by 15% Christian Aid recently went through a restructuring process to cut down on costs, which concluded just as the pandemic struck. Meanwhile, MzN International has been working with a number of NGOs and other organizations in Europe to help plan sustainable financial strategies. Brain said that over the two years up to May 2020, Christian Aid successfully cut its costs by around 15%, which involved cuts to around 10 country programs. “We changed from a country model to a regional model in the Latin American [and] Caribbean area,” he explained. The cuts also involved restructuring within core functions of the organization such as finance and IT. “That was at the start of COVID … [meaning] we were possibly ahead of other organizations who were faced with a very significant shock to all parts of their operating model.” How to think about increasing your revenue Panelists covered a number of ways in which it was possible to increase revenue in an organization, such as by focusing on social enterprise and developing retail operations, as well as identifying new groups of institutional funders that your organization has not recently targeted. Meyer zu Nautrup said that organizations that want to successfully develop a strategy should accept the need for rapid change. It is no longer possible to foretell the future, and organizations instead need to position themselves to be able to adapt to unexpected changes. “The funding landscape is changing faster and more fundamentally than ever,” he said. Meyer zu Nautrup added that successful organizations put an emphasis on data and measurement, challenging themselves to look at the metrics and reconsider their behaviors. They are driven by both an understanding of their service users and a focus on meeting their needs. “We should start by listening to those we serve,” he said. “Are we doing our best and accepting what we hear humbly, and then delivering towards this analysis?” When to think about changing strategy Meyer zu Nautrup said that regular analysis of the data should lead an organization to decide when a change is necessary. The big question is whether your funding is right to achieve your purpose. “If the funding doesn’t allow you to deliver your impact, you have the wrong funding,” he said. “Just because you’ve always built yourself around grants doesn’t mean that has to be true next year.” “The funding landscape is changing faster and more fundamentally than ever.” --— Chris Meyer zu Nautrup, director, MzN International If one funder has become too dominant in your work, this leaves your organization with too much risk of failure if that funder changes their approach, he advised, so this could be a warning sign for when you need to change your strategy. It is also important to recognize when a donor has placed too many restrictions on what your organization needs to do. “Ask if the amount or the nature of funding is limiting your activity too much,” he said. How to engage with localization A question from the audience asked how NGOs could develop business models that transfer more power and resources to local partners. Brain said that Christian Aid had taken practical steps to do this, such as sharing the overheads on grants with local partners to help them build reserves and capacity. “We invite others across the sector to share that sacrifice,” he said. He said they had also worked on ways to enable their partners to bid for contracts as primes, where previously Christian Aid would have bid as the prime with a local partner as the sub. “Effectively, we’re becoming technical consultants,” he said.