Nonprofit Business Planning

Nonprofit Business Model

One critical element of a nonprofit business plan and the part most often referred to as the business model asks and answers the question: just how will you pay for doing what you are doing, sustainably?  Will your income be from fees for service; individual contributions; the grantmaking community; corporate contributions (good marketing for them); or,  interest from an endowment?

This question of business model is the challenge for every nonprofit and the word most important: sustainable -- can you do this forever until of course when you achieve mission.  That said, let's look at this nonprofit highlighted in the Christian Science Monitor.  The organization -- The 1%.  It's focus: mobilize architecture firms to give probono services to solve nonprofit's "accomodation" challenges.

Is the idea that corporations will support the work sustainable?  I'm not so sure.  And can't nonprofits contribute based perhaps on a % of the total value of the probono architecture work they receive?  Perhaps.  What's your thought?

Nonprofit Communications Strategy: Governance Decision

Chick-fill-A has decided to change its position about funding anti-gay groups and this change, according to the Christian Science Monitor, "highlights the risks companies and nonprofits take when they take public stances on divisive social issues".  The article then noted the impact on Komen for the Cure when the organization announced its plan not to support Planned Parenthood which then saw "participation in its annual breast cancer walks drop in some areas. In San Francisco, registration for this month’s walk was down 50 percent from last year."

Nonprofit values and the communications of these values (i.e. positions) are simultaneously governance and business planning issues.  It is the nonprofit Board that defines the core values of a nonprofit.  It is the business plan that identifies the communication strategy (among other strategies) that will promote these values.  Do I believe a nonprofit should flaunt its values high and low?  Absolutely!  Do I believe a nonprofit should fully evaluate the consequence of flaunting its values on funders and consumers? Absolutely. 

Chick-fill-A was clear about its values but perhaps not so clear about when to talk about these values.  The lesson (aside from not having values that are "ist" in any way): calculate the cost of when you talk about it -- it may achieve mission or then again, maybe not.  For Chick-fill-A...hm..

Nonprofit Business Planning and Price

A recently offered "free" event has me thinking about free as a nonprofit pricing strategy.  A lot of the services offered by nonprofits are offered as "free" to the consumer/beneficiary/client.  Free of course does not mean these services don't cost something to deliver (you of course have a strategy in place to cover actual costs e.g fee plus philanthropy).   And, free conveys different values or messages to consumers.

But free is a pricing strategy.  A nonprofit's pricing strategy is one of the components of it marketing plan which in turn is part of its business plan.  A pricing strategy is generally developed based on three points:

1. the cost to produce the offering/benefit (e.g. the direct and indirect and personnel and nonpersonnel resources used);

2. the comparative price/cost/value to the consumer or in the marketplace for similar offerings (features and benefits);

3. and the goal (e.g. break even, make a profit, attract users and lose money from "sales" but offset the loss through philanthropic sources). 

I believe nonprofits do well to review their pricing strategy regularly being sure that a) the pricing (or some sponsor, donor or profits from other offerings) covers the full costs to deliver a free service and b) being sure about the message "free" conveys.  Target consumers/beneficiaries will always compare the value of an offering (e.g. is the free offering (benefits and features) really as good as a similar offering you might pay for or might op just not to have)?

PS -- Pricing Thought for the Day: what do you think the costs are to the consumer to reading your print or electronic newsletter?  Alternatively, how much do you believe they value your newsletter? 

 

 

 

Nonprofits Using Capitalism Tools

Should nonprofits use the tools of capitalism?

 ABSOLUTELY!!!!  but I guess that not everyone agrees according to the Wall Street Journal article speaking to the elements that thwart the ability of nonprofits to succeed. 

Interesting premise and one I largely agree with -- particularly the points about investing and messaging.  See the article here.

Nonprofit Business Planning Matters

Effective nonprofit business planning means asking the go/no go questions (demand, competition and revenue prospects) before "going". 

A great example of a good outcome from business planning was the recently reported shift by a group of community leaders in New Orleans who were planning to start their own news site and compete with the local newspaper to ensure the distribution of more local news.  While the Wall Street Journal article is not more specific, the group has decided instead to change from the original model to one that is equally effective and far more efficient.

Nonprofit and Forprofit Create Better Together Business

What do you get  when a nonprofit with a huge amount of underutilized, yet high quality light industrial space meets an industrial laundry service inhibited by growth for want of the perfect light industrial space?  You get a fully executed Plan B! 

This is a great, perhaps after-the-fact, business modeling that can occur when the original business plan just doesn't produce the intended outcomes.  I'll be generous and propose that the original business plan of Ewlyn had in its Risk and Mitigation section the question: Now that we have built this facility, what if the government contracts we had planned for don't come through?  And their answer: find different customers or a really good partner.  And, lo and behold, the latter mitigation plan came through.

So maybe I'm dreaming, but you get the message: the Risk and Mitigation part of a business plan can provide for some critical problem solving way in advance of the actual prospective problem.

For more on the story see the Philadelphia Inquirer.

Nonprofit Business Model Shift

A nonprofit's business model includes defining the revenue sources that will offset expenses and possibly generate additional resources to pursue mission.

In an interesting twist, "boutique" movie theaters in San Francisco are opting to adopt a nonprofit status and/or depend on philanthropy to stay in business.  And, the argument makes sense when we appreciate that the role of "boutique" movie theaters is to bring alternative cinema to the public.  But the business model for traditional movie theaters -- ticket sales and the snack counter really doesn't keep the boutique thriving and subsequently, non-mainstream cinema thriving.  Should the boutique movie theater started with this business model in the beginning?  Maybe...  It all comes down to truly understanding audience needs and wants and the cost of doing business.

Here's a link to the Wall Street Journal article on this topic.