Nonprofit Business Planning

Nonprofit Research Based Revenue Generating Businesses

I don't have the answer for the question raised by the New York Times article on Universities and the revenue generating ventures that arise out of their research activities but I do wonder: are other types of nonprofits engaged in activities that could lead to similar opportunities?  Certainly a question each nonprofit board and staff might annually visit wearing their "generative" hat.

Nonprofit Risk and Mitigation Plan

The recent occurance at Sesame Street should provide nonprofits a couple of risk and mitigation planning reminders.  One reminder should be focused on emergency succession planning.  Key employees can not be guaranteed to be "on duty" for ever and certainly, unplanned events may expedite this reality.  This would suggest then that a nonprofit venture's business plan risk and mitigation section should likely include an emergency succession plan when the founders or producer's absence would seriously impact the production and delivery of an organization's service or product.

Nonprofit-Business Partnerships: A business strategy

A Wall Street Journal article noted the partnership between Sears and Rebuilding America.  Sears will be providing "up to 30% discounts on the cost of appliances and services.  For those who don't know, I believe Sears remains as the largest seller of applainces in the US.

Partnerships continue to play an important role in ensuring that a nonprofit achieves its mission.  Successful partnerships between nonprofits and for-profits often require a win:win:win formula where the business, the nonprofit, and the nonprofit's customer all gain.

I must say I see the win for Sears (distribution and sales of more appliances); a win for the nonprofit (getting appliances into the homes they will renovate); but the win for the customers doesn't "feel" as significant to me as maybe it should.  Is 30% off all Sears could do given the volume it will ultimately be handling?  But maybe this is just part of the lesson of business-nonprofit partnerships.

Nonprofit Doing What it's Passionate About and Generating Revenue

There is a saying in the world of small business: do what you love and the money will follow.

Well, I don't know the finance specifics but the Idelshon Society in New York is about preserving Jewish music and a by-product -- special muscial releases.  I imagine that the market is not necessarily huge while at the same time there is likely enough demand to more than cover the costs of this nonprofit's efforts.  The real challenge: a really good communications strategy.  At the same time, having the New York Times take an interest is a reasonable strategy to me.

Nonprofits Might Apply

I saw this ad on TV and decided to check-out the posted link and lo-and-behold I'm thinking this is a business planning competition where 10 winners get $10K and a new car, and, "mentors".  Worth checking out if you are in the arts. 

Nonprofit Capitalism

In yesterday's Wall Street Journal, Dan Pallatta argued that if we gave the tools of capitalism to nonprofits, solving the world's challenges would be less challenging.

More specifically, Dan says that "If we free the nonprofit sector to hire the best talent in the world, take fundraising risks, use marketing to build demand and invest capital for new revenue-generating efforts, we could bring private ingenuity to bear on those problems and would not need to look to government to fill the gaps."

I kind-of agree but I stumble a bit thinking about what exactly keeps nonprofits from using the tools of capitalism.  And one quibble I have with Mr. Pallotta in particular is his emphases on the idea that organizations must pay big salaries to get the "best talent".  I won't dispute that there are occasions where the "best talent" might slip away for more money and that nonprofits aren't always the place for the really big salaries but I do believe that many of the best talents in the world do work for nonprofits despite the salary level.

Regarding the use of marketing (communications) strategies, there are number of nonprofits that are at the forefront of innovative uses of social media and other marketing communications strategies.  Alas, most don't need to build demand for their services (there's plenty who want to make use of a nonprofit's offerings) but I suppose there's plenty of room to build demand by donors.  Building demand by donors and using current marketing communications strategies is a really right idea anyway.

But, I have to agree that there is certainly a shortage of capital especially for innovative revenue generating ideas.  I however think the problem may lay more in the development of innovative than a singular shortage in capital.  Now, offering financial returns on capital investment, that is a whole other topic.

So Mr. Pallotta, thanks for continuing to think about the nonprofit sector.  I look forward to your continuing ruminations.

 

Nonprofit Brand

Marketing communications folks have said over and over that brand matters.  Brand identity particularly supports consumer choice between one provider and another and between one offering (product or service) and another.  Brand identity also provides an understanding of what an organization is about.

So, I'm scratching my head just a bit when I read recently that the Andy Warhol Foundation is having a liquidation sale of, well, Andy Warhol art.  When complete and there's oodles of money (they've already generated $17 million), the foundation will be just that -- not the keeper of Warhol but a grantmaker with a pretty health endowment from which to make gifts -- but not the keeper of Warhol.

But it probably won't take long for grantseekers to get past the idea that the Foundation is just, well, a grantmaker. 

Nonprofit Celebrity Business Model

A number of nonprofits have lived well and prospered with the affiliation of a celebrity. Really, just name a celebrity and you can probably find an affiliated celebrity.  But some nonprofits are started by celebrities and they too live and prosper with that celebrity's involvement.  Michael J Fox comes to mind to me as does Willie Nelson (FarmAid) and quite a few others.

We know for a fact that celebrity status and brand can be a plus for any product or service (does William Shatner count?) but the risks are also clear and I for one do not have at my fingertips the research that indicates what happens to the value of a service or product when the celebrity's name is sullied. 

I bring this up because in today's Chronicle of Philanthropy news the story on Lance Armstrong and the charity he founded, Livestrong, says that a celebrity can walk away and not negatively affect the brand value of the charity.  In fact, Livestrong claims to have had an increase in income since Mr. Armstrong's departure. 

One explanation could be that Mr. Armstrong's strategy was to create a charity whose offerings are so desireable, his presence would not be relevant.  I'm willing to accept that this was indeed his business strategy, at least according to the evidence.

Lessons are plenty here -- feel free to share your thinking.

Nonprofit Revenue Generating Venture Planning Update

You've been operating your revenue generating for a long time and it's going swimmingly and according to the business plan -- correct? 

Not likely I would offer or suggest you've probably formally or informally tweaked your plan on multiple occasions.  Good for you if you have!  Business plans are not documents that should sit on a shelf but should be a working resource to inform the decisions you make about your venture.  And periodically, taking a more formal step and revisiting your market research and analysis might pay off and you might even then want to revisit your business model (4 ps, operations and finances).

For inspiration check-out 14 year-old Olivia, a Girl Scout and a major success story in the world of cookie sales (according to Time).  I would note that her real secret of her success: adoption of social media -- not something around when cookies were introduced.  The article also offers some other factors that have changed the industry.

Thank you Olivia and the Girl Scouts for reminding us that doing our homework and maybe changing our business model can possibly make a difference in achieving our goals.

Nonprofit Market Research

I hear it all the time: we've got no money to pay for good data!  This is the response to the questions about the basis for designing and offering (service or product) in addition to the pricing, distribution and communications strategies.  Yes, it does appear that folks would rather go with their instincts than make fully informed decisions and strategies.

Necessary?  I don't believe so.  While I love doing market research to fully understand the needs, wants, interests and characteristics of a prospective customer (aka client or beneficiary) and even more love learning about that prospects alternatives to the offering you would like to provide, there are some softer-cost approaches that can compliment the cost of a fancy consultant like myself.

Here's two.  First, if you have email addresses or can get them, develop a Survey Monkey survey -- reasonably simple to construct, little or no cost for compilation -- you just do the analysis.  Next, there are a whole lot of undergrad and grad students taking survey and interview and data collection courses.  You can be one of their projects.  Yes, you have to be very specific about what you want to know and very time aware and maybe even adding more hands-on management.  But in the end, you might be surprised by what you can learn and maybe even build some new constituents for your organization.

Don't make market decisions without understanding your market.  Data is way cheaper than the alternative of developing an offering and having no one show up.