PDF The business model canvas of NGOs

The business model canvas of NGOs

Judith Sanderse

837572403

Open Universiteit Faculteit Managementwetenschappen Eindscriptie voor de wo-masteropleiding Management

Begeleider/examinator: Medebeoordelaars:

Dhr. Dr. F. de Langen Dhr. Drs. M. Van Luik, Dhr. W. Ooms Msc, Dhr. Prof. Dr. J. Semeijn

3 Maart 2014

The business model canvas of NGOs J. Sanderse

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The business model canvas of NGOs J. Sanderse

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Preface

This research is conducted as part of the Master of Science in Management degree at the Open University in the Netherlands. Having started my career in the corporate sector and now having spent the last eight years in the Non-Governmental Organisations (NGO) sector, I wanted to conduct a research that combines my business background with the reality of the NGO sector to produce something that would be of practical benefit to NGOs and the academic world, something that would not be another report gathering dusk, but a tool that NGOs could use in their daily work.

After having developed a conceptual model, it was tested with several Foundations and International NGOs. During this testing phase two of the organisations started using the tool straight away, one for communication purposes and the other for internal discussions. This was very motivating. There are a lot of people and organisations who I would like to thank for their contribution, support and time.

First, I would like to thank Dr Frank de Langen, who was my supervisor during this research. He has great in-depth knowledge on the subject of business models and that in combination with his communication skills and approachable as well as supportive mentoring style, made it both a pleasure and a great learning experience working for him.

Second, I would also like to thank all the people and organisations whom I have interviewed for their time, insight and comments on the conceptual business model canvas.

And finally I would like to thank my husband Devendra Rana for all his support and patience.

The business model canvas of NGOs J. Sanderse

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Executive Summary

In 1999 the global non-profit sector had a turnover of over $1 trillion with 19 million fully paid employees. It was the equivalent of the eighth largest economy (Sustainability 2003). Despite this, it was poorly understood. In 2008 Lambell, Ramia, Nyland and Michelotti concluded that non- governmental organisations (NGO) are still relatively absent from the mainstream scholarly management and broader business studies literature. On the other hand, business models and business model canvas is a subject that has been discussed and much researched since the publication of Osterwalder's dissertation in 2004.

The importance of the NGO sector and a desire to better understand their business models was the inspiration for this research - the creation of a tool useful for NGOs, academics and practitioners. Hence, the main objective is the development of a specialized business model canvas for NGOs. The central research question of this study is defined as `how is a NGO business model canvas structured?'

A business model canvas for NGOs was conceptualised utilising Osterwalder and Pigneur's (2010) third party funded model as the foundation. The building blocks and definitions were initially based on literature review sources (business, social business and NGO management literature). Following interview responses and analysis of annual reports of NGOs both the building blocks and definitions were adapted to align better to NGO terminology. These are presented below.

This conceptual business model canvas for NGOs was tested through interviews with four NGO experts and leaders of two Foundations and five International NGOs (INGO) using the case study method. This testing led to the development of two separate business model canvases. The canvas for Foundations is a slight adaption from Osterwalder and Pigneur's third party funding business model (2010). The other canvas is applicable for INGOs with multiple streams of income. This is made up of two sections, one for programmatic and the other for fundraising/ marketing and financing activities. This division is the result of a desire to maintain clarity and hence the usability of the business model canvas as a tool for communications, visualization of business models and analysis. The interviewees confirmed the practical relevance and utility of the business model canvas. In addition, it has academic relevance due to the business model canvas's specific usage for NGOs. This provides a basis for further research, such as, comparative analysis and historical analysis of NGO business models and so forth.

Business model canvas for Foundations

Vision:

Key Partners

Key Activities

Key Resources

Expenditure

Value proposition Mission Main

Programmes Brand

Relationships

Programme delivery methods

Income

Ultimate Beneficiaries

Impact

The business model canvas of NGOs J. Sanderse

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Business model canvas for INGOs Vision:

Key Partners

Key Activities Key Resources

Value Proposition o Mission o Key

Programmes o Brand

Relationships

Programme delivery methods

Programmatic

Ultimate Beneficiaries

Impact

Key Partners

Key Activities

Key Resources

Relationships

Fundraising/Marketing & Financing

Customer/Donor Segments

Channels

Expenditure

Income

Impact

The business model canvas of NGOs J. Sanderse

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