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

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

18. What Factors are Necessary to Launch a Successful Community Wealth Enterprise?

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.

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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

37. Location/space

38. Distribution/sales network

39. Brand/reputation

40. Patent

41. Access to desired resource

43. Manage information

44. Produce low cost goods

46. Process expertise

47. Market expertise

48. People/key decision makersAssets 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. . .

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 ideasGreyston 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

63. Informsa “Go or No Go” decision on a business opportunity using impartial market research and internal assessmentsWhat is a Feasibility Assessment?

64. Feasibility: External & Internal Factors Internal Factors External Factors

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?

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?

77. Competitive Analysis

79. Operational Plan

80. Management & Personnel Plan

82. Support from the entire staff and board

83. Appropriate staffing

84. Autonomy for quick decision making

85. Adequate capitalizationFor 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