I’ve been building open source software technology for NGOs for over a decade, and I have a confession: we’ve been living a lie.
For years, I firmly believed that open source was the moral imperative that would democratize technology for the Global South. I championed platforms that could be freely downloaded, customized, and deployed by anyone. I evangelized the virtues of collaborative development and shared knowledge.
Today, as I watch our sector implode under the weight of USAID’s near-total elimination, I realize we’ve built a movement that’s structurally impossible to sustain.
Our open source revolution in global development just hit the brick wall of economic reality.
Our obsession with open-everything has created organizations that are fundamentally incompatible with financial sustainability. We’ve spent decades perfecting the art of giving away our intellectual property while simultaneously begging donors for the money to keep the lights on.
The recent cuts of US foreign aid dollars are a reckoning for an entire sector that chose ideological purity over business sense.
The Perfect Storm We Created
I’m currently watching talented technologists at organizations across our sector update their LinkedIn profiles with “Open to Work” badges. These are people who’ve dedicated their careers to building solutions for the world’s most vulnerable populations
Meanwhile, the health information systems they spent years developing sit unused because there’s no funding to maintain them, no staff to support implementations, and no sustainable way forward. Or they just fall over, like a recent system did in Kenya.
The math is devastatingly simple. USAID alone provided about $12-15 billion annually for global health programs out of roughly $70-80 billion in total foreign assistance. When you eliminate the majority of that funding overnight, organizations built entirely on grant dependency slowly decline in public and collapse behind closed doors.
The organization I work for, like many others, is scrambling to figure out which core staff we can retain and which projects we can salvage. We’re not alone. I’ve lost count of the number of notifications I’ve received over the past few months: “Team, due to funding cuts, we’re suspending operations…”
7 Deadly Sins of NGO Business Models
Here’s what I’ve learned from watching our sector’s business model implode: we’ve systematically created organizations that cannot survive without continuous donor subsidy. Let me break down the structural problems that got us here:
1. We Gave Away Our Competitive Advantage
For years, donors demanded that we open-source everything. Grant agreements explicitly required it. We complied enthusiastically, believing this was the moral high ground. But here’s what we didn’t anticipate: when your intellectual property is freely available to everyone, you have nothing left to monetize when the grant money disappears.
I’ve watched organizations spend millions developing sophisticated health information systems, only to see commercial companies take that open source code, add a few features, and sell it back to the same governments we were trying to serve. We built the foundation; they built the business.
2. We Optimized for Impact, Not Revenue
This sounds noble, and it is. But it’s also financially suicidal. We designed solutions for the most vulnerable populations in the hardest-to-reach communities. Precisely the populations with the least ability to pay for services. When your entire value proposition is serving people who can’t afford your solution, you’re creating a dependency on philanthropic funding that can disappear overnight.
3. We Became Subsidy Addicts
The development sector has trained NGOs to be professional grant writers rather than sustainable businesses. We got really good at writing compelling proposals and reporting on impact metrics, but we never developed the skills to price services, acquire paying customers, or generate revenue.
Now that the Trump administration is radically reducing international programs spending, we’re discovering that “sustainability plans” written for donors are meaningless when those same donors disappear.
4. We Confused Markets with Needs
I loved Joanne Peter’s quote, “just because there is a gap in the market, doesn’t mean there is a market in the gap.” I can’t tell you how many meetings I’ve sat through where we assumed that obvious need would translate to demand. But need without purchasing power isn’t a market. It’s a humanitarian crisis that requires ongoing subsidy.
5. We Built Organizations for Grant Cycles, Not Business Cycles
NGO operations are designed around 3-5 year grant cycles, not the continuous revenue generation that businesses require. Our financial planning, staffing models, and strategic thinking all assume predictable donor funding. When that funding gets cut by 90%, we don’t have the systems, skills, or runway to pivot to commercial models.
6. We Created a Culture Allergic to Profit
There’s an institutional resistance to anything that looks commercial. Board members get nervous about “mission drift” if you start talking about revenue generation. Staff worry that pursuing sustainability will compromise our values. Meanwhile, vital and lifesaving work around the world has ground to a halt because we were too pure to build financially sustainable organizations.
7. We Have No Access to Growth Capital
Non-profits can’t raise equity investment. Most don’t have the financial runway to test new business models. Banks won’t lend to organizations with unpredictable grant-based revenue. We’re stuck in a funding model that made sense when donors were reliable, but becomes a death trap when they’re not.
The Geopolitical Reality Check
The massive cuts to foreign aid aren’t about government efficiency. They’re about America’s changing role in the world. While foreign aid is being eliminated, Congress is pushing for as much as $200 billion in additional Pentagon spending. The message is clear: America is shifting from soft power through development assistance to hard power through military dominance.
Meanwhile, China is providing billions of dollars in development funding to countries across Asia, Africa, and the Middle East as part of its Belt and Road Initiative. We are losing funding and geopolitical relevance.
For NGOs built on foundation and government grants, this is an existential threat that requires completely rethinking how we operate.
The Path Forward for Us
I don’t have easy answers, but I do have clarity about what needs to change:
1. We need to abandon the myth of pure open source.
Organizations that survive this crisis will find ways to protect and monetize their intellectual property while still advancing their mission. This might mean offering open source community editions alongside paid enterprise versions, or developing proprietary tools that integrate with open platforms.
2. We must develop hybrid business models.
The organizations that will survive are those that can generate revenue from paying customers while still serving vulnerable populations through grant-funded programs. This requires developing products and services that governments, larger NGOs, or private sector clients will pay for.
3. We need capacity for commercial thinking.
This means hiring people with business experience, developing financial planning capabilities beyond grant management, and creating organizational cultures that see sustainable revenue generation as a moral imperative, not a necessary evil.
What I’m Doing About It
We can’t go back to the old model of unlimited donor funding for purely philanthropic organizations. The geopolitical landscape has shifted, and we need to shift with it. The question isn’t whether NGOs should become more commercially minded. It’s whether they can do it fast enough to survive.
At my organization, we’re trying to change our mental model to meet the moment. We’re changing how we think about our mission. Instead of seeing commercial sustainability as potentially compromising our impact, we’re recognizing that organizations that can’t sustain themselves ultimately serve no one.
We are just starting on this journey. You probably are too. What advice do you have for all of us?
