Navigating Change in South Africa's Non-Profit Sector

It has been a little over a year since I started Charting Paths. The focus of Charting Paths is supporting for-impact organisations, including non-profit organisations, and I’ve had the privilege of working closely with several NPOs while engaging with many more. This has been a shift from my previous corporate intelligence and deal advisory work, and the past year has provided new insights into the challenges and opportunities facing South Africa’s NPO sector. Several key trends have emerged as common challenges across many NPOs.

Decreasing Funding

Many NPOs are grappling with a decrease in available funding. This is largely due to shifts in the broader fundraising landscape—likely to be exacerbated by USAID developments—along with organisation-specific challenges such as an ageing donor base or the loss of key funders. As a result, NPOs increasingly recognise the need to diversify their donor base and expand their geographical funding sources.

Shifting Donor Expectations

Much like investors seeking return on investment, donors increasingly expect measurable and verifiable impact. Aligned with this is the growing emphasis on governance and risk management. In response, donors are demanding more comprehensive reporting, similar to what has traditionally been seen in the private equity space. Perhaps the most pressing example is that NPOs must now integrate clear, verifiable impact metrics with their traditional storytelling approach while also providing more detailed financial reports.

The Catch-22 Facing Many NPOs

Despite shifting donor expectations, many donors remain reluctant to fund an organisation’s central costs. This limits the resources available for investment in governance, risk management, and monitoring and evaluation. As a result, many NPOs find themselves trapped in a cycle—needing to develop these areas to secure additional funding but lacking the internal expertise to do so and unable to access external resources due to financial constraints.

Revenue-generating activities and social enterprises are often presented as a solution. However, while they offer the potential for unrestricted funding, they also require upfront investment, expertise, and time to become sustainable.

Breaking the Cycle

Despite these challenges, I believe these shifts will ultimately benefit the sector, leading to more efficient and accountable organisations. Those that navigate this transition strategically can position themselves for long-term sustainability. There is no one-size-fits-all approach, but for NPOs—particularly smaller ones—several key principles stand out:

Clarify Your Impact & Strategy

A concise, well-articulated strategy can make a significant difference in donor conversations and is essential for long-term sustainability. The strategy should include clarity on how your organisation creates impact. Many NPOs operate reactively, but maintaining strategic clarity throughout the operating model can help break this pattern.

This requires linking your strategy to your current operations and clearly understanding how your activities contribute to your long-term goals and vision. The Theory of Change is a valuable tool for this. While specialist guidance can help develop and apply a comprehensive Theory of Change, there are readily available free resources for NPOs with limited funding.

Adopt an Iterative Approach

Entrepreneurs often operate within financially constrained environments, and a key principle for lean organisations is to implement quickly and maintain a short feedback loop (a topic I will explore in a future post). A simple yet effective process to follow is: 

Plan → Implement → Measure → Learn → Communicate.

Organisations should continuously move through this cycle as efficiently as possible. This enables them to implement without significant upfront resources while quickly adapting if assumptions are proven incorrect.

Impact measurement should be integrated into this process, focusing on metrics that both enhance operational effectiveness and showcase impact. A common-sense approach works best—keeping it simple and easy to integrate into daily operations.

Focus on Partnerships, Not Just Donors

Organisations should assess their funding sources and channels with a focus on diversification. However, the starting point should be leveraging existing networks and relationships. Re-evaluating donor relationships can reveal opportunities for deeper collaboration. Even one or two key partners who support the organisation’s broader goals—beyond project-specific funding—can have a transformative impact.

Final Thoughts for NPOs and Donors

Many of South Africa’s non-profits are at a crossroads. While the challenges are significant, so are the opportunities. With a sound strategy, a clear impact framework, and strong partnerships, NPOs can position themselves for long-term sustainability.

If your NPO is exploring its next steps, I’m always happy to have a conversation to exchange ideas and insights. 

For donors, consider shifting your approach to partnering with an NPO. Understanding their strategy and supporting short-term changes can drive long-term success. You might even consider joining an NPO’s board, giving you a platform to shape strategy and strengthen governance for lasting impact.