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Funding Outside the Box with Charlotte Keany of CNM

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  • 1. Funding Outside the Box:
    Earning Revenue through Social Enterprise
    Presented by:
    Charlotte Keany, Director of Consulting
    Center for Nonprofit Management
    Dallas, Texas
    September 8, 2011
  • 2. Welcome and Introductions
    Partnership
  • 3. About The Center for Nonprofit Management (CNM)
    Founded in 1980
    Leading Management Support Organization
    Every year we serve:
    650 members
    1,300 agencies per year
    100 consultations
    4,000 participants at our Education Seminars
    1,250 Job placement ads
  • 4. About Community Wealth Ventures (CWV)
    Wholly owned, for-profit subsidiary of Share Our Strength, the nation's leading anti-hunger and anti-poverty organizations
    12+ years experience in nonprofit sustainability, with core expertise in social enterprise and social franchising
    Consulting services to 200+ nonprofit organizations and 50+ foundations
  • 5. Looking for Something Different?
  • 6. Objectives
    Learn why and how organizations pursue community wealth (aka social enterprise)
    Increase knowledge of the benefits and risks of social ventures
    Provide examples of what other organizations are doing
    Explore your organization’s assets
    Generate a list of community wealth opportunities for your organization
  • 7. Social Enterprise Process
    1.
    Asset
    Identification
    2.
    Assets into Opportunities
    Implementation
    3. Opportunity Screening
    4. Feasibility Assessment
    5. Select One Opportunity
    6. Business Planning
    Post-workshop
    Today
  • 8. What is Community Wealth?
    Revenues generated by profitable or self-sustaining enterprises to promote social change
  • 9. What is Different About Community Wealth?
    Community Wealth is Not…
    Community Wealth is…
    • Generating sustainable new resources to support mission
    • 10. Engaging market forces to work
    for the nonprofit sector
    • Devising new ways to leverage existing assets
    • 11. Allowing for greater flexibility by bringing in unrestricted revenue
    • 12. Decreasing dependence on the external funding community
    • 13. Traditional fundraising
    • 14. Grant money
    • 15. Gifts/donations
    • 16. A “quick fix” out of a crisis
    • 17. For everyone
  • Community Wealth Examples
  • 18. What Factors are Necessary to Launch a Successful Community Wealth Enterprise?
  • 19. Examples of Community Wealth Enterprises Based in North Texas
    • Christian Community Action
    Venture: Expansion of ReSale Thrift Shop
    • Translation & Interpretation Network (A business of Catholic charities Diocese of Fort Worth, Inc.)
    Venture: Interpretation services, translation services, qualify and train professionals in interpretation services
    • Autism Treatment Center
    Venture: Autism Diagnostic & Therapy Rehabilitation Agency
  • 20. Field Study of Social Enterprise
    The Center for the Advancement of Social Entrepreneurship at Duke University, Community Wealth Ventures, and the Social Enterprise Alliance, with support from REDF, conducted the largest national survey to date about Social Enterprise with a diverse set of nonprofit organizations.
    Top 5 Mission Areas of Nonprofits Operating a Social Enterprise
    Top 5 Social Enterprise Venture Types
    Workforce Development
    Housing
    Community & Economic Development
    Education
    Health
    Education & Training
    Retail/Thrift Shop
    Consulting Services
    Food Services/Catering
    Art Venture
    Source: Community Wealth Ventures Field Study of Social Enterprise, 2008. Survey sent to 5,965 nonprofits, 1,008 responded and 740 completed survey.
  • 21. Clarity of Social Enterprise Focus
    Mission
    Profit
    A
    B
    C
    Mission Focus – A venture that will need ongoing philanthropic support but meets key mission objectives.
    Self-Sustainable Focus – A venture that generates enough income to make it self-sustaining.
    Profit Focus – A venture that generates profits which can be re-invested in the venture or provide unrestricted funding to the parent organization.
  • 22. Field Study Findings: Mission/Revenue Relationship
     For existing social enterprises, they are equally motivated by mission and revenue. Interestingly, for those considering social enterprises, they are slightly more motivated by revenue.
  • 23. Field Study Findings: Number of Social Enterprises per Organization
     Almost half of organizations that operate a social enterprise have two or more social enterprises.
    Source: Community Wealth Ventures Field Study of Social Enterprise,, 2008.
  • 24.
    • ______________________________________________________
    • 25. ______________________________________________________
    • 26. ______________________________________________________
    • 27. ______________________________________________________
    • 28. ______________________________________________________
    • 29. ______________________________________________________
    • 30. ______________________________________________________
    What Are The Potential Risks?
  • 31. Stakeholder Engagement & Managing Risks
    The Chorus of Nay-Sayers
    “You don’t know anything about how to run a business.”
    “We’ll loose foundation/donor support.”
    “It’s wrong for nonprofits to compete against businesses.”
    “It’s selling out.”
    “Nonprofits are charities and should only focus on charitable work.”
    “It will put the organization’s tax-exempt status at risk.”
  • 32. Is Community Wealth Legal?
    Nonprofits can launch community wealth enterprises and maintain 501c3 tax status
    Income Related to Exempt Purposes
    No limit on amount of revenue
    Income from Unrelated Activities
    Taxable as “unrelated business taxable income” (UBTI)
    There is no standard legal structure
    Consult an attorney to understand the most appropriate legal structure and definition of UBTI for your organization
  • 33. Field Study Findings: Common Legal Structures
     Most organizations operate social enterprises as a division of the parent organization.
    Source: Community Wealth Ventures Field Study of Social Enterprise,, 2008.
  • 34. Field Study Findings: Sources of Starting Capital for Social Enterprises
    For existing social enterprises, a foundation grant is the most commonly used source of capital for starting ventures.
    Source: Community Wealth Ventures Field Study of Social Enterprise,, 2008.
  • 35. 1. Asset
    Identification
    2. Assets into Opportunities
    Implementation
    3. Opportunity Screening
    4. Feasibility Assessment
    5. Select One Opportunity
    6. Business Planning
    Step 1 – Identifying Assets
  • 36. ASSETS
    Things You HAVE:
    • Physical assets
    • 37. Location/space
    • 38. Distribution/sales network
    • 39. Brand/reputation
    • 40. Patent
    • 41. Access to desired resource
    • 42. Relationships (membership, suppliers, etc.)
    Things You DO:
    • Continuously innovate
    • 43. Manage information
    • 44. Produce low cost goods
    • 45. Sustain privileged assets
    Things You KNOW:
    • Understanding of specific issue
    • 46. Process expertise
    • 47. Market expertise
    • 48. People/key decision makers
    Assets Can Be Things You Have, Do or Know
  • 49. A Wide Range of Assets Can Be Leveraged In Community Wealth Ventures
    HAVE
    DO
    KNOW
    Attendant Care
    Child Abuse Prevention
    Chapel and Gardens
  • 50. Asset Identification Can Be a Matter of Perspective
    Consider this example. . .
  • 51. How: Individually and In Pairs
    Time: 20 minutes
    • Identify your organization’s keyassets that could be leveraged into potential opportunities
    • 52. Assets can be things you have, do, or know, and are often a matter of perspective…so get creative
    • 53. Once you’ve brainstormed your own assets, share them with a partner to gather more ideas
    Greyston Bakery
    A venture of
    Greyston Foundation
    Exercise #1: Asset Identification
  • 54. 1.
    2.
    3.
    4.
    1.
    2.
    3.
    4.
    1.
    2.
    3.
    4.
    1.
    2.
    3.
    4.
    1.
    2.
    3.
    4.
    1.
    2.
    3.
    4.
    People
    What people are particularly valuable to the organization? (name recognition, skill sets, etc)
    Skills/Expertise
    What kinds of skills and expertise does the organization’s staff have? What about the Advisory Board? Volunteers?
    Audience/Special Relationships
    What are the key strengths of the organization’s audience (e.g.., size, demographics, psychographics, loyalty, etc). What other key relationships does it have?
    Tangible Assets/Facilities
    What does the organization own or have the right to use? Real estate? Program related equipment? Collections, stock, materials?
    Programs/Proprietary Content/Events
    What are the key programs or content that the organization has at its disposal?
    Reputation
    What does the organization’s name mean in the community? To whom?
    Asset Identification Debrief
  • 55. Step 2 – Turning Assets into Opportunities
    1. Asset
    Identification
    2. Assets into Opportunities
    Implementation
    3. Opportunity Screening
    4. Feasibility Assessment
    5. Select One Opportunity
    6. Business Planning
  • 56. Evaluating Your Assets
    Is the asset unique?
    Who would value the asset?
    How valuable is the asset?
    What is the customer’s willingness to pay?
    Is the asset sustainable over time?
  • 57. How: Individually and in Pairs
    Time: 20minutes
    Review lists of assets and brainstorm potential opportunities. List each opportunity and its corresponding asset (10 minutes)
    - Is the asset unique?
    - Who would value the asset?
    - How valuable is the asset?
    - What is the customer’s willingness to pay?
    - Is the asset sustainable over time?
    Share ideas and brainstorm new ones (10 minutes per person/organization)
    Exercise #2: Leveraging Assets Into Opportunities
  • 58. Potential Opportunities - Debrief
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12
    13
    14
    15
    16
    17
    18
  • 59. 1.
    Asset
    Identification
    2.
    Assets into Opportunities
    Implementation
    3. Opportunity Screening
    4. Feasibility Assessment
    5. Select One Opportunity
    6. Business Planning
    Post-workshop
    Today
    Next Steps
  • 60. Ease of Implementation
    Expected complexity of the project
    Availability and skills of current staff to manage the new opportunity
    Ability to recruit other staff quickly
    Access to necessary capital
    Financial / Market Potential
    Market demand and estimated size of the market
    Start-up costs
    Level of competition
    Expected profit margin
    Expected growth rate
    Opportunity Screening Goal: To Choose The Top Three Ideas For Further Analysis
  • 61. Easy
    Ease of Implementation
    Hard
    High
    Low
    Financial/Market Potential
    Case Study – CCDoFWExample: Opportunity Screening
  • 62.
    • A high-level assessment of the market opportunity, profitability, and fit with the organization for a potential business venture
    • 63. Informsa “Go or No Go” decision on a business opportunity using impartial market research and internal assessments
    What is a Feasibility Assessment?
  • 64. Feasibility: External & Internal Factors
    Internal Factors
    External
    Factors
  • 65. External and Internal Factors
    External Factors
    • Market Size – How big is the current market? Is it growing or contracting?
    • 66. Customers – Who are the key customers? What are they willing to pay?
    • 67. Competitors – Who are the key competitors? How do they differentiate themselves?
    • 68. Margins – What are current vendor’s margins in the market? What is their profit?
    • 69. Barriers to Entry – How difficult will it be to enter this market? What are the barriers?
  • External and Internal Factors
    Internal Factors
    • Internal Support – Will your organization enthusiastically support this opportunity?
    • 70. Buy-In – Can you secure board and staff buy-in?
    • 71. Fit – How well does the opportunity fit with your organization’s skills and expertise? Will you need to obtain outside expertise?
    • 72. Competitive Advantage – Do you have a potential competitive advantage in the market?
    • 73. Initial Investment – What investment is needed to launch and grow the opportunity?
    • 74. Risks – What are the risk factors? What are ways to mitigate these risks?
    • 75. Timing– How long will it take to make the opportunity a reality? Will you have sufficient financial resources to support the opportunity until then?
  • External Factors
    Internal/ External
    Internal Factors
    Each opportunity is ranked by the following criteria…
  • 76. Business Plan Goal: To Prove That Your Venture Will Be Successful
    Market
    Intro &
    Summary
    • Industry Analysis
    • 77. Competitive Analysis
    • 78. Executive Summary
    Business
    Plan
    • Marketing Plan
    • 79. Operational Plan
    • 80. Management & Personnel Plan
    • 81. Financial Plan
    Contingency
    Strategy
    • Risk Analysis
  • Implementation: Keys to Success
    The venture should have:
    A Strategic Direction
    Sufficient planning behind it
    Clearly defined goals
    Mission alignment with the parent organization
    Human & Financial Capital
    • A champion or leader that passes the “shower test”
    • 82. Support from the entire staff and board
    • 83. Appropriate staffing
    • 84. Autonomy for quick decision making
    • 85. Adequate capitalization
    For more information download :
    Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability
    at www.communitywealth.com/resources_tools.htm
  • 86. Social Enterprise Alliance North Texas Chapter
    What is the Social Enterprise Alliance?The Social Enterprise Alliance is the only member organization in North America to bring together the diverse field of social enterprise. It serves as advocate for the field, hub of information and education, and builder of a vibrant and growing community of social enterprises.
  • 87. Opportunities to Learn MoreResources
    For more information on Social Enterprise download :
    Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability
    at www.communitywealth.com/resources_tools.htm
    To Learn More about Social Innovation Programs offered by the Center for Nonprofit Management
    and Community Wealth Ventures visit: http://www.communitywealth.com/CWC_North_Texas.html
  • 88. Questions?
    Charlotte Keany
    214-826-3470 ext. 244
    keany@cnmdallas.org
    www.cnmdallas.org

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