On May 25 2006, Alexander Osterwalder posted a note about NGO Business Model on his blog Business Model Alchemist (see http://www.businessmodelalchemist.com/2005/05/ngo-business-models.html). But, I could not find more information posted later around this subject.

I am looking for some information in regard to Business Models for NGOs. I am starting an NGO that promotes urban reforestation. As global population shifts from rural areas to cities, urban trees and green areas become increasingly important.   

Does anyone have a suggestion in regard to NGO best business model structures?   Is there a Business Model Canvas for NGOs?  Are there a Business Model Patterns for NGOs?

Tags: Business, Canvas, Model, NGOs

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Sergio, personally, I apply the Canvas the same way to NGOs and to for-profit companies. The main difference is that in NGOs you often (not always) have donors and beneficiaries as the two main customer segments.

Hi Alex, thank you so much for your comments!  I appreciate the feedback!

Sergio

Hi Sergio:

I have been using the Business Model Canvas with tax-exempt organizations (mostly membership associations) for the last couple of years. This may be an area where I can help you. Let me know if you would like to chat. I'll be on business travel most of this week, so it may make sense to begin with an email exchange. You can reach me at jeff [at] principledinnovation [dot] com.

Thanks,

Jeff

Hi Jeff,

Thank you!  I will contact you by email. Looking forward to chat with you. Good luck with your travels,

Sergio

Hey Sergio

Like Alex, I deal with NGOs without modification to the canvas. I have found some patterns.

The first is, commonly, a third-party pay pattern, where party A, a funder (government, foundation etc.) is giving the organization money to deliver services or products to party B. Two things arise out of this. First, the founder has to be recognized as a separate client for whom you have to be clear on the value proposition - i.e. what is the value(s)you deliver that is important to the funder. Too many organizations forget this aspect of the client segments, treating the funder more as a partner. The second is the value captured back from the 'beneficial' client (the client receiving direct benefit of the service/product). Sometimes there may be a monetary value, most often you need to be able to capture proof of the impact your services/products are having. This is important to confirm to the funder you are accomplishing the value proposition for which they gave you the funds.

Another interesting discussion can happen around the nature of the client segments and the type of business. Are the various clients, e.g. Donors, individual segments or is this a multi-sided platform type, where the involvement of many sides is core to the success of the business. For example, one of my clients is Canadian Red Cross, and one of their programs (business lines) is safety education - first aid and swimming etc. This is a multi-sided business involving the participation of instructors, education organizations and businesses and the people taking the training. Since this is a platform, the Red Cross needs to focus on the core activities, or capabilities inherent in this type of business - managing how to connect the sides of the platform, identifying the specific services they deliver within the platform and managing the infrastructure necessary for the platform to work.

I am sure people like Jeff de Cagna, who has done considerably more work in this area, have a lot more insights to offer.

Hi Mike, 

Thank you!! For me, it is fascinating multi-sided and platform business models.

Many thanks again!

Sergio

Hello Sergio and all,

 

I've been using the Business Model Canvas this year and found it quite useful to innovate some line of business (programs) in the organisation (Habitat for Humanity) I work for.  I do totally agreed with Mike on all he said.  NOGs, in many cases, fall under the muti-sided business models.  Right now we are experiencing the discussion of treating funders and other third parties as clients or partners; boht have their pros and cons, but we are most inclined to see them as clients since value proposition is key.

 

Sergio, Mike, Jeff this is my email dbuenosaires@habitat.org in case you all want to have an alternative channes to communciate and share.

 

Please let me bother you now with the following question.  Where or how this business model exercise fits into the strategic planning process of an organisation?  Or Is this BM excercise just any other metodology that can substitute more traditional planning models?

 

Thank you all,

 

David

 

 

 

David

I would submit to you that understanding the business model of the organization is a critical component of any strategic planning exercise. That applies from an enterprise wide view to business lines to organizational units. I have worked with all of these levels.

There are very few instances where taking the time to understand and document the organization's business model would fail to bring value to the conversation. I believe it is an extraordinary tool that integrates into, and not necessarily substitutes for other strategic planning methods.

If you have an existing business and want to create new approaches, improve profitability or launch new products and services, understanding the current business model, and having a deep understanding of existing or potential customers is very important.

For not-for-profits / public sector, having a firm grasp of the values you bring to each side of the platform, in particular the funders (often a neglected component of N-F-P models) should be the starting point of the business design.

The BMG approach can be combined in many ways with other strategic tools, environmental analysis, SWOT, Balanced Score Card and Strategy Maps for implementation, or architectural approaches ( focus on putting the pieces together effectively). For startups and innovation the BMG approach is combined with customer development and lean/agile approaches to product and service development.

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