Nonprofit Enterprise

For someone who’s spent 20 years trying to right the wrongs created by our economic system, I’ve come to a startling discovery: Commerce can be used to create social change. Dozens of progressive nonprofits are developing and selling goods and services that support and extend their missions. In doing so, they are discovering new strategies for educating their communities, activating their constituents, and expanding their budgets.

If you’re thinking about starting a nonprofit venture, consider the following questions carefully:

What do you give away that someone might buy? What “assets” do you have – products, services, expertise, ideas? Start by making a list of the things your group does well, then consider what makes your organization unique. What do you have or do that no one else has or does?

Who are you trying to reach? List all current and potential audiences, customers, clients, and so on. Think as broadly as you can. The best paying customers may not be your primary audience.

Can you develop new products – and reach new customers – by repackaging your expertise? For example, individual home ownership workshops can be combined into a workshop series. Another option is to take the content from one format (a workshop) and re-create it in a different format (book, video, “toolkit”). A third option is to repackage the same content in a different format to reach new customers, such as a workshop in a second language, or a workshop geared to a specific profession or population.

The trick is to look at what you know and what you do, determine all the audiences that could benefit from your expertise, conduct market research, and package your knowledge to best meet their needs.

Can you sell to businesses, nonprofits, or the government? Most commerce is conducted among businesses and institutions, not by selling to individual consumers. Your best audience may be other nonprofits, businesses, or government agencies. As customers, they’re more reliable and predictable, they budget purchases in advance, and tend to buy in larger quantities.

Think creatively about how you can serve institutional customers. For example, the Resource Center of the Americas in Minneapolis provides Spanish lessons and cultural awareness programs to the local police department and newspaper. Our Community Bikes in Vancouver offers on-site bicycle commuter classes for local corporations and government agencies.

Do you have the infrastructure – financial systems, time management, database – to support a business? Commerce is based on a simple premise: The money you bring in must be of greater value than the time and money you spend. If we include the “second bottom line” of meeting your mission, the equation becomes: The money you bring in and the mission-related benefits you create must be of greater value than the time and money you spend.

If you don’t understand the numbers – both time and money – you can’t predict what it will take to earn a profit. Before you think seriously about starting a business, get control of the numbers.

Who’s in charge here? You’ll need an “enterprise advocate” with primary responsibility for managing the venture and sufficient time to do it. Hire someone with relevant business skills, or provide training for the passionate but inexperienced. Don’t dump this job on a staff member who already has full-time responsibilities – it won’t work.

Do you have the right team? You’ll need expertise in sales, customer service, marketing, financial management, business planning, and fundraising. Lacking these skills, you’ll need to know where to look for outside help. Furthermore, a resistant or uneducated board can sink your earned-income project. Recruit people with relevant business experience who also love your mission. While corporate contacts may prove helpful, don’t forget self-employed businesspeople, including artists and other cultural workers.

How many marketing strategies can you use at once? Novice entrepreneurs rarely budget enough time, money, or attention to marketing. Successful promotion is based on variety and repetition, employing several approaches simultaneously, and using them over and over. In the end, the most effective marketing strategy is a happy customer. Nothing beats word of mouth. Ask your best customers for testimonials for your marketing materials.

Can you work with your competitors to expand the market? Turn competitors into allies. Work with them on joint marketing programs that build awareness of your goods and services. Choose business partners who share your values.

What’s your bottom line? Nonprofit managers and activists often worry that their social goals will be corrupted by commerce. They fear that the “money tail” will start wagging the “mission dog,” and that they will risk the quality of their work or their reputations in pursuit of cash.

This legitimate concern is easily addressed by putting your mission first. If a prospective venture doesn’t fit your values, don’t do it. And if no one is passionate about the project, don’t do it. Without energy and commitment, even the most lucrative ideas will fail. Successful ventures are all about love, not money.

This article is adapted from Andy Robinson’s new book, Selling Social Change (Without Selling Out): Earned Income Strategies for Nonprofits, available from Jossey-Bass,(800)956-7739, www.josseybass.com/nonprofit. Andy can be reached at andyfund@earthlink.net.

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Jeff Anderson, of Oregon Community Foundation, says, “Don’t apply for a foundation grant unless you’re truly ready for the scrutiny of outsiders, regarding everything from your office’s appearance to the documentation of your organization’s impact to the accuracy of your accounting.”

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