Funding Outside the Box with Charlotte Keany of CNMPresentation Transcript
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
Welcome and Introductions Partnership
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
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
Looking for Something Different?
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
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
What is Community Wealth? Revenues generated by profitable or self-sustaining enterprises to promote social change
What is Different About Community Wealth? Community Wealth is Not… Community Wealth is…
Generating sustainable new resources to support mission
Engaging market forces to work
for the nonprofit sector
Devising new ways to leverage existing assets
Allowing for greater flexibility by bringing in unrestricted revenue
Decreasing dependence on the external funding community
A “quick fix” out of a crisis
Community Wealth Examples
What Factors are Necessary to Launch a Successful Community Wealth Enterprise?
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
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.
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.
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.
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.
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.”
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
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.
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.
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
ASSETS Things You HAVE:
Access to desired resource
Relationships (membership, suppliers, etc.)
Things You DO:
Produce low cost goods
Sustain privileged assets
Things You KNOW:
Understanding of specific issue
People/key decision makers
Assets Can Be Things You Have, Do or Know
A Wide Range of Assets Can Be Leveraged In Community Wealth Ventures HAVE DO KNOW Attendant Care Child Abuse Prevention Chapel and Gardens
Asset Identification Can Be a Matter of Perspective Consider this example. . .
How: Individually and In Pairs Time: 20 minutes
Identify your organization’s keyassets that could be leveraged into potential opportunities
Assets can be things you have, do, or know, and are often a matter of perspective…so get creative
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
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
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
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?
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
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
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
Easy Ease of Implementation Hard High Low Financial/Market Potential Case Study – CCDoFWExample: Opportunity Screening
A high-level assessment of the market opportunity, profitability, and fit with the organization for a potential business venture
Informsa “Go or No Go” decision on a business opportunity using impartial market research and internal assessments
Market Size – How big is the current market? Is it growing or contracting?
Customers – Who are the key customers? What are they willing to pay?
Competitors – Who are the key competitors? How do they differentiate themselves?
Margins – What are current vendor’s margins in the market? What is their profit?
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?
Buy-In – Can you secure board and staff buy-in?
Fit – How well does the opportunity fit with your organization’s skills and expertise? Will you need to obtain outside expertise?
Competitive Advantage – Do you have a potential competitive advantage in the market?
Initial Investment – What investment is needed to launch and grow the opportunity?
Risks – What are the risk factors? What are ways to mitigate these risks?
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…
Business Plan Goal: To Prove That Your Venture Will Be Successful Market Intro & Summary
Management & Personnel Plan
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”
Support from the entire staff and board
Autonomy for quick decision making
For more information download : Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability at www.communitywealth.com/resources_tools.htm
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.
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
Questions? Charlotte Keany 214-826-3470 ext. 244 firstname.lastname@example.org www.cnmdallas.org