In the health care world when for-profit hospitals buy a nonproft hospital they normally are required to create a nonprofit foundation to hold and distribute the nonprofit's assets to the community. These "conversion" entitites are created because the nonprofit hospital assets, or at least those assets created via philanthropy, must by law continue to be used for philanthropic purposes.
The nonprofit Jumo, an on-line intermediary to promote and support philanthropic transactions, has just been acquired by GOOD, a for-profit that has similar but a deeper and wider offering than Jumo.
One unanswered question: what happens to the philanthropically acquired assets?
But the bigger questions for me:
- What exactly was the business model for these folks that they should operate for only a year and be ready to sell?
- Why were foundations and others willing to invest when there were stronger for-profits in the market place?
- How much work had Jumo done to fully project where the market was going and understand the gap that it would fill (for-profit or nonprofit, I believe that institutional success is reliant on finding a market).
If nothing else Jumo is a "funder's beware" lesson. But Jumo is also a lesson for those developing and executing their business plans. Know your market. Know what the right solution is to serve that market and then manage your delivery to ensure success. It appears that Jumo may have only failed in the management category because GOOD appears to believe there is a market demand for Jumo's offerings. But how correct GOOD is remains to be seen.
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