Any sector facing a sudden loss of funding would have to re-examine their business models.
That’s the situation confronting the global development sector as of early 2025. Leaders are rethinking how to keep fulfilling their mission while changing their operating model to fit not just the current situation, but the future.
In Humentum’s recent webinar, “Getting to a Fit-for-the-Future Operating Model: Asking the Right Questions,” sector leaders shared what works and what doesn’t in their own shift, and the questions every organization should be asking now.
The challenge: All paths look risky during uncertainty
Nonprofits and nongovernmental organizations (NGOs) are facing a complex landscape without a clear path forward. The sudden decrease in government funding is also leading to shifting donor priorities. And with uncertain international resources, the momentum to shift the entire sector model to one of local leadership and decision-making has an increased urgency.
In light of the instability and confusion, organizations are considering a full range of options, from mergers to partnerships to restructuring, or even sunsetting their own operations. As panelist Karl Hofmann, CEO of HealthX Partners, noted, “There isn’t an NGO out there not wrestling with these issues right now.”
The stakes are high. Without adapting, organizations risk becoming obsolete or failing the communities they serve. But if they adapt in the “wrong” way, they could lose staff, funders, and focus.
Asking the right questions and embracing new models
As Natasha Sakolsky, former Deputy Chief at Pathfinder International, explained, transformation isn’t just about maintaining the status quo. It’s about re-examining purpose, power dynamics, and how to truly serve communities. Successful transformation starts with asking the right questions.
(Download Humentum’s free Organizational Transformation Guide for practical tools, discussion questions, and checklists. It frames a wide range of options that include shared services, holding companies, decentralization, and sunsetting.)
Here are the key takeaways:
- Revisit mission and vision: Before making structural changes, organizations need to reflect on their core purpose.
Said Pauline Wambetti, Managing Director of Nuru Kenya, which transitioned from expatriate-led to locally led operations starting in 2015.
- Explore all options: Transformation isn’t just about mergers. HealthX Partners was co-created as a parent company. Instead of a full merger, the holding company structure allows both organizations (PSI and EGPAF) to maintain their brands, boards, and leadership while consolidating key functions like HR, IT, finance, and procurement. As Karl described it, that option helped them move past emotional barriers traditional mergers often hit, especially around identity and legacy.
- Prioritize active involvement: Pauline emphasized the importance of local involvement: “Relinquishing control was the hardest part—but it was essential for sustainability.” Communities initially were anxious about the transition but became more engaged when given real ownership versus passively receiving information.
- Engage all key stakeholders (including board and funders): Change requires alignment at the top, which means the board. Engage them rather than simply getting them to sign off on a plan. Panelists stressed the need for honest conversations about risk, culture, and the willingness to let go of control. Natasha also highlighted that organizations often incorrectly assume donors will resist change, and may not take action because of that fear, or may only involve them minimally. In practice, clear communication often leads to donor support—or at least donor neutrality.
Benefits, outcomes, and risks
Organizations that embrace these principles, rather than jumping quickly to a new model, or continuing with “business as usual” can realize significant benefits:
- Agility and Resilience: The process builds the internal capabilities for innovation, helping NGOs respond quickly to new challenges and opportunities. As Pauline explained, they had to work to establish “appropriate mechanisms and systems that will anchor the change” and be “ready to iterate” when plans weren’t working. That practice of building, learning, and adapting will serve any organization well in the future.
- Stronger Missions: As Carl mentioned, organizational transformation creates “a future that is arguably more rational” where the power dynamic is less dominated by donors, and “communities may be calling more shots.” Organizations can become “more efficient” with “more rationality in the system.”
- Better Community Engagement: Transformation that includes shifting control to communities creates future sustainability and greater trust. As Pauline explained, communities become “more involved” and “more receptive to change” when they “take responsibility and invest” rather than waiting for organizations to do everything.
But transformation is not without risks. Mergers can fail because of cultural clashes and loss of identity. Poorly managed transitions can alienate staff or communities. To help mitigate those risks, leadership has to be willing to commit to transparency, ongoing communication, and a willingness to adapt as lessons are learned.
If you’re working through options for your operating model, and you’d like a trusted guide to accompany you, Humentum’s experienced consultants can help with tools, perspective, and guidance along the way.
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