Nonprofit Business Planning

Nonprofit Sustainability

The Mars (chocolate) people opened a big chocolate bar factory today in Kansas.  So what could this have to do with nonprofit governance you might say?

Well.....in the Washington Post article telling of this factory opening, there is a note that the Mars Company owns a chain of animal hospitals/clinics named Banfield (PetSmart).  The company also owns a pet care insurance company.

Well...I said to myself thinking about all the cat projects and animal welfare groups that try in ever-so-humble ways to maintain largely tiny budgets (except perhaps for the ASPCA, why aren't these groups in these businesses -- particularly lucrative if one takes a Wiki glance at the numbers (see Banfield Pet Hospital).  

Frankly the reason I would offer that these groups aren't dabbling in insurance or for-profit ventures may be their size (no economy of scale); lack of knowledge or interest in running a revenue generating business); competition (Banfield) and capital.  All of these are reasonable rationale for finding what I propose could be very effective ways to finance their operations. 

But, what if these groups joined together, say multi-city or regionally or state-wide or even multi-state wide with a for-profit subsidiary that could pursue one or more of these efforts.  In the area of insurance, think Knights of Columbus.  Or think a pet-food brand (which Mars Co. also owns).

Financial sustainability for smaller nonprofits may be better achieved in partnership given today's market.  The opportunities as I've outlined above for animal welfare groups for instance appear pretty wide ranging as they might for other nonprofit industries.  Imagine soup kitchens following the Newman's Own path and perhaps even partnering together and then partnering with Newmans to create a product line that would generate visibility for the cause and revenue.

Imagine.....

Social Enterprise: A Study

The iconic CitiBike program is undergoing some challenges and the New York Times story outlining these challenges provides a series of lessons for social enterprisers.

Some of these lessons include:

a. understanding and responding to demand (when the majority of consumers want to buy an annual plan not a daily plan)

b. fully projecting costs (when you have ?unexpected costs, what to do about budgets going forward)

c. when your business model didn't include philanthropy while similar models did OR you really hadn't charged enough for "naming"

 

Nonprofit Revenue Generation

Nonprofits generate a lot of income from their core services.  Think "state contracts" and fees for services like counseling.  Such service provision is central to mission and while not usually enough to make all ends meet, the income generated represents the springboard for survival.

But beyond the essentials, some nonprofits come-up with additional revenue generating producs and services.  Think Newman's Own salsas and chips or in Connecticut, the University of Connecticut sports chips and salsas.  These are tangentially or brand related products that after expenses, most times, make a financail contribution to the bottom line.  

But an article in the Philadelphia Inquirer moves me to ask: is there a product or service that no matter how lucrative, it just sends the wrong message for some nonprofits to accept the income?  Or do we go back to the other phrase I occasionally refer to: the only thing wrong with tainted money is there 'taint enough of it?

The article, actually a blog, is about the 'Walk of Shame Kit'.  The kit provides young women with the "necessities" pertinent to spending an unplanned overnight with a partner and upon leaving, being more ready to begin the day.  And, some portion of the sales benefits a charity (one of those "buying this makes you a better person and is good for you" pitches.

So, what do you think?  Would you, a women's organization for instance, want a product like the Kit to generate income for your organization?  And, who in your organization would decided?  Does such a question just get flown upto the board where questions of ethics and values maybe get asked and answered?  

Nonprofit Social Enterprise: Policy and Market Matters

A Washington Post editorial about a policy Dartmouth University initiated last years should serve to remind all that corporate policies can have a significant impact on the ability of a nonprofit to effectively achieve mission.  The editorial can also helpfully remind nonprofits that practicing the golden rule of marketing success, understand and satisfy your market's needs, wants and/or interests to be successful.

First, I presume that nonprofit boards approve the "big" overarching policies that affect the way a nonprofit does its buisiness.  These policies are in writing and to be observed and failure to do so wins usually negative consequences to the employees.  Such policies are often proposed by staff, presumably with some fodder (e.g. research) presented to assist the board's consideration of the policy and its effects.  In some nonprofits, these policies come out of committees or perhaps come out of a board discussion, are sent to a committee for learning and thinking and are then returned to the board for action.  The subject that started me on this topic today is Dartmouth College's decision "to deny college credit to students who got good scores on high school college-level exams such as Advanced Placement, International Baccalaureate and the Advanced International Certificate of Education."  The impact of the policy: a 14% reduction in new student applications.  And yes, there could be additional variables contributing to this result but the article suggests not likely.  Was this a good policy that just went awry or was this a badly researched policy with unanticipated results?  The board must of course call on staff to find the answers recognizing that the resulting losses are not acceptable into the future.

This article went on to speculate about the drop from the student applicant perspective.  The speculations may be correct, I don't have enough data.  Suffice it to say though that whatever a nonprofit offers, it needs to have characteristics and benefits that appeal to its target audience.  Failure to do so results in lack of demand and lack of demand results in failed mission.  

Nonprofit Mission versus Sustainability

The Boyd Theater in Philadelphia is at a crossroads: financial sustainability is only achievable with, for all intensive purposes, with the destruction of the theater.  What you say: destruction of the theater?  Yes, that's the conclusion of the latest assessment and desire of developers who propose to effectively gut the building and convert it into what maybe could be a sustainable opportunity.  The alternative to this plan: government and possibly philanthropic subsidies.

I would wager that government and philanthropic subsidies is pretty much par for a great number of such historic entities.  But maybe that was the past and maybe the future for such sustainability strategies is not so feasible.  And so shall these institutions fall?  

These are obviously difficult challenges for a nonprofit board.  Nonprofit boards must pusue mission and the pursuit of mission requires ensuring the model for sustainability is sound.   It appears there is no win:win solution or at least that the win:win solution is not consistent with what the board believes was its mandate.  But, feasible is feasible....is it not?  There is certainly much work ahead for this board.

See here for the story.

Nonprofit Social Enterprise Win:Loss

The folks who brought many cities what is now recognized as a bike-sharing are bankrupt -- seriously bankrupt owing their founding city some $40 million dollars and other creditors another $9 million.

Oops!  Is this an indicator of the prospects for nonprofit social enterpise?  It just doesn't work?  

I for one do not believe this organization's belly flop is a harbinger of the evils of social enterprise but it sure does offer some warning lessons.  One such lesson: social enterprise is a risk.  But what revenue generating venture is not?  The risks are huge for every venture: upredictable market demand; unpredictable economic environments; unpredictable competition.  One can't be guaranteed a win.

But there are lessons to be had about what it takes to launch, maintain and manage a social enterprise and as the NPQ notes: the lessons will be one of this program's legacies.  

Nonprofit Marketing & Sustainability Planning

If you didn't watch the Rose Parade and haven't yet heard the story of Meatball the Bear, check-out this Wall Street Journal article.  

Meatball is a bear who's appetitite has brought him into the spotlight, at least temporarily.  Meatball earned his name when seen rummaging through garbage and apparently having favored discarded meatballs.  But this of course is not THE story.  THE story is about a "disagreement".  

Sadly for the preserve, an area entrepreneur got on Meatball's bandwagon ahead of the preserve producing revenue generating stuff.  The preserve has challenged the entreprenuer's "right" to economic claims over the bear recognizing that it, the preserve, has to bear all the costs without any of the benefits.  It want's all the benefits not just a "cut" as offered from the entrepreneur.

In the meantime, the two players compete while Meatball is still "hot" resulting in a dividing of the pot.  

One lesson: nonprofit sustainability in today's economy (this is not really new though) demands marketing saavy ahead of opportunities.  Meatballs don't roll-in every day but a saavy nonprofit should have it's plate ready for when just such an event might occur.

One solution: the Preserve should consider inviting its competitor to join its board.  The two share a joint passion and perhaps strengthening the relationship could result in a win:win proposition for both by using some of the basic rules of negotiation: separate the problem from the people; distinguish between interests and position.

A sustainable new years to all!

 

 

Nonprofit Revenue Generating Venture Values

Nonprofit revenue generating ventures can offset dependency on grants adding funds for a nonprofit to better pursue mission.

A Washington Post, accurate or not, should serve as a reminder, I believe, that a nonprofit's revenue generating ventures should be operated in line with the values held by the nonprofit.  The Post story tells of the Church Bible of Understanding's operating two high-end antique stores to generate revenue to finance a Haitian orphanage.  The story highlighted that the orphanage is being run at a stardard of care well below Haitian standards or effectively what would be considered inconsistent to most core faith values.  

A lesson?  See here for the story.

Nonprofit President and CEO

There's has been a recent upsurge in the adoption by nonprofit CEO's of the additional title  of President.  Many have scratched their head over this perceived need for status.  The recent appointment by StoryCorps (see Chronicle)  of a CEO to complement the long-term President may help folks understand that the two titles are more than titles and actually reflect more full descriptions of the job (s) that nonprofit executives have to carry -- essentially internal and external responsibilities.  This may be good fodder for execs to use with their boards in both adding the title and perhaps, increased salaries (ok, maybe dreaming).  More importantly, full understanding of exec respoonsibilities can produce more effective evaluations.

Nonprofit Mission

There can come a time in a nonprofit's life when the "market" is just not buying what the nonprofit has to offer.  Mission accomplished? Perhaps.  

I'm not sure that the St. Mark's Bookstore (New York) is the classic example of 'mission accomplished - now what" but the questions it must ask itself are similar and so the organization serves as a fine example of what "stops" must be pulled-out to continue to pursue board dreams.  Check-out the story here.