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?
This is an important and very complex issue, and I really commend the author for putting it on the table. My concern, however, is that this article gives the initial impression that free-and-open-source models themselves are the problem – and I don’t think they are. On the contrary, on the few occasions when I’ve seen donors foolishly support proprietary solutions in low-resource settings, they have imploded much more quickly and spectacularly than open-source systems when the donor leaves. And there are many other well-established solutions out there that show this model can be successful – Linux, MySQL and WordPress are good examples. So free-and-open-source itself is not the problem – the problem is how we fund it in our sector.
I therefore tend to disagree with points 1 and 2, but I think the rest of your article (particularly points 3, 5 and 6) does a great job of highlighting the real problems, and I strongly agree that we need to adapt to new funding realities with hybrid funding models. At the same time, we shouldn’t be turning away from free-and-open-source models, and we also shouldn’t be abandoning donor-funded approaches – they have successfully delivered, at huge scale, transformative tools that wouldn’t have been possible otherwise (DHIS2 is a great example). So rather than simply shifting from donor-funded to hybrid/commercial models, we should diversify into a flexible combination of both, which also means becoming much more adaptive/agile in how we plan our work (point 5 above). It’s quite possible that in four years time there will be another surge in donor funding, and we need to be just as prepared for that as we should have been for the current funding cuts.
Nadia, this was the very conversation we were having last week with a large consortium of partners working on agricultural digital advisory services—reflecting on Grameen Foundation’s own development of open-source technology and the lack of business models underpinning their sustainability. We also take away the point of the importance of any technology solution requiring a hybrid model (where it is grant funded and funded by commercial licenses or other revenue streams from entities willing to pay) or enterprise models that were initially built on private sector businesses. And while I think the closure of USAID has highlighted this vulnerability, I think this risk was always there given donors always shift their interests which can result in anyone developing technology solutions being distracted by new directions that might not have been in their development/revenue generation plan.
A quick thought is that we might take inspiration of new delayed open source license like the Business Source License (BSL) which is a “source-available” license that eventually converts to an open-source license (like Apache 2.0) after a specified “Change Date.”
This might prevent lock in to a private company while still allowing such a company to make a profit that makes the maintenance of the software sustainable.
There might me downside to this that I’m missing, but I thought it was worth sharing. I don’t think full closed source is a reasonable solution for government systems designed to potentially last for decades, even outside of Global South.
As the maintainer of OpenSPP, an open-source social protection and agriculture platform, I see similar issues. Where my perspective differs slightly is on the cause. I don’t believe the open-source license is the flaw; in fact, I think it’s our most important asset. The main value of open source, in our domain and any other, is not that it’s ‘free’, but the digital sovereignty and independence it allows. The real failure has been in building business models that can capture the value of that sovereignty through services, support, and contributions.
I think this is missing a critical flip-side to the value of open source and open content – the work that remains. We have thousands of resources, guides, and tools still available because the copyrights and licenses are open; we have the tools to re-invigorate thousands more projects if the time comes. Other mission-aligned organizations around the world can continue to operate specifically because these tools did not evaporate overnight.
Were we doing this work to advance our organization, to drive profits, or even to compete? Sure, the grant-funded world forced a level of competition, but the goal should have never been “winning”, but doing good by solving hard problems.
My focus throughout my time was driving more and more transparency across all our work – not just open source tools, but open training curricula, and process guides to show not only the “output” but even the “how” our team did the work. Did others take without giving back? Definitely. Did we ever lack for funding because of that? Never.
We did find that licensing matters. The right licenses prohibit or strongly shape the ability of other actors to commercialize your work. We released most of our content under a non-commercial license to prevent – and enable us to go after – this specific kind of abuse. We also found that partners who were resistant to being transparent and committing to open licensing were almost always not reliable, high-performing partners.
Which is not to say that selling a service is a bad idea – I think some of the other concepts here about being allergic to profit, or purely focused on grant cycles – are valid. It’s not easy to straddle between grant-driven work and selling commercial services, but the organizations who have managed that have given themselves a ton of flexibility historically, and a lifeboat currently. Expert implementation / consultation is another path here that I’ve seen provide a funding stream to many software-focused teams.
There will never be – and in many cases should never be – an attempt to commercialize and make a profit from humanitarian crises. The disruption in international aid caused by the Trump administration is a horrific undermining of absolutely critical work. That there isn’t a market for aid isn’t a failing of the work or the organizations – it’s a failing as a human species to build a better world for us all. With luck we will get back to that.