Tie New Revenue Ventures to Your Mission
By Rick Wilkins
Nonprofits looking for new sources of revenues may find numerous possibilities without taking big risks or leaps of faith by building on the goods or services they already provide.
There are no limits in absolute scope or the number of opportunities available, except that each venture must tie closely to your core mission. Any nonprofit has the ability to innovate around its mission, generating profitable revenue streams while enhancing its ability to achieve its higher mission and objectives.
Consider the following ways to build on what you already do:
Fee for Services
- Consulting Expertise in a particular discipline can drive new revenue.
- Analysis, benchmarking and reporting All organizations, for profit or not, need continuous improvement. Nonprofits with specific skill sets can compete in offering objective evaluations, metrics to gauge performance improvement, and independent reports that help manage transformative changes going forward of other nonprofit or C corporations.
Education, Learning and Distance Knowledge Transfer
- Virtually any food, chemical, paper, commercial/industrial supply, software, or other consumer or commercial product, if well aligned, can be a candidate. A well known example is what Girl Scout Cookies have done for the Girl Scouts. Or, how Gary Hirshberg started Stonyfield Farm Products to help finance his center dedicated to education on organic farming and integrating the environment into business models.
Intellectual Property Commercialization
- Training on specific skill sets focused on transferring rich content to a broad audience.
- Seminars offered to groups of constituents.
- Forums convened where experts are assembled and special classes offered to a large group.
- Films educational, drama, travel and discovery, or documentaries reporting on complex research or environments for the public.
- Written material books, white papers, reports, etc.
- Data aggregation and analysis on special areas enable your organization to become the repository of specific intelligence not otherwise found or readily available.
- Patents may be licensed or used to start a business.
- Offering values for a membership fee. Examples of member value are regular publications on a specific topic, providing relevant educational materials, providing a virtual community within which members can meet and exchange experiences, or aggregating special data and selling it as a benefit to membership.
Next Steps for Nonprofits
Decide What to Do
Typically, deciding on a social venture that is close to the core mission can be relatively easy, because you are already providing a product services under a grant that, if structured differently, or focused on a related but different market, can be sold and delivered for a profit. If a service or product is not available, you might provide a membership in return for valuable products and/or information important to the constituents served.
Build Your Business Case
That generally means doing market research to understand where the product or service will fit with other competitors, what product features and benefits are needed, and what price points to hit. Also needed are marketing plans, production plans, a sales force or method to get it to market, product or service specifications, alliances needed, and understanding who is going to buy first, and how repeat sales are going to be realized. Once those components have been sorted out, write a business plan. It should include financial forecasts that show when break even is achieved and how much capital is required.
Determine Financing Needs
Capital to start a social venture may be developed with grant money from foundations, corporate alliances and support, and/or special venture funds established to serve those entrepreneurial nonprofits with ideas that can ramp to national and/or international markets. If you can rely on some surplus money generated from on-going operations, that will help demonstrate prior success and add credibility to the plan.
Remember: Finding sources is usually not difficult. Closing the deal is. Understanding the motivation is critical for each source you approach.
Important components of closing sources of capital include fair terms, legal agreements, contingency plans, an exit strategy for the investor, a well grounded plan to protect intellectual property if it is involved, and strong board support. Attorneys and counsel are required.
With the deal closed and agreements signed, the team must now execute the plan. Keep a calendar of achievements and tasks to be completed on a weekly basis. That will organize and prioritize actions for the whole management team, enabling it to deal with the unexpected crises that inevitably crop up while staying on schedule.
Rick Wilkins is principal/partner at Strategic Giving LLC, which focuses on social ventures as a means of bringing financial self-sufficiency to nonprofits. Contact him at R.Wilkins@strategicgivingllc.com