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Ideas for Developing Financial Resources
 

Ideas for Developing Financial Resources

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A report by the New World Foundation with ideas for community organizations on how to raise money.

A report by the New World Foundation with ideas for community organizations on how to raise money.

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    Ideas for Developing Financial Resources Ideas for Developing Financial Resources Document Transcript

    • An Economic Stimulus Package for CBOs: Ideas for Developing Financial Resources Prepared for By Community Financial Resources April 2008
    • TABlE OF COnTEnTS InTRODUCTIOn 1 FEE FOR SERVICE 3 PROCEEDS FROM lEGAl SETTlEMEnTS 5 lOCAl InITIATIVES AnD InnOVATIOnS 7 COnnECTInG COnSTITUEnTS TO ESSEnTIAl PRODUCTS/SERVICES 9 lEVERAGInG ORGAnIZATIOnAl REAl ESTATE 11 GROUP PURCHASInG 14 AFFInITY BEnEFITS PROGRAMS 17 On-lInE AFFIlIATE MARKETInG 19 RETAIl/On-lInE RETAIl 21 In-KInD DOnATIOnS 23 On-lInE DOnATIOnS 25 CHARITY MAllS 27 CElEBRITY BUREAU AnD SPECIAl EVEnTS 29 POlITICAl DOnORS AnD PHIlAnTHROPY 31 IMPlEMEnTATIOn SUPPORT 33 REFEREnCES AnD RESOURCES 34
    • Introduction Funding the work of community-based organizations (CBOs) is a ered in thinking about their membership. Organizations may challenge in a marketbased economy. Progressive organizations move beyond their core community membership to include whose missions are to address social and economic justice issues community service providers, small family foundations, political through advocacy and organizing often find their access to donors, and local businesses when they consider increasing traditional philanthropic resources limited. Nonprofit organiza- membership and new fundraising strategies. When consider- tions’ dependence on foundation and government grants puts ing an expanded idea of membership, it may be useful to think them at risk of unexpected (and inevitable) revenue disrup- about the different roles a member can play in the work of a CBO tions. Yet, it is estimated that 80% of CBO budgets are funded including paying dues, making donations, volunteer program through these sources. CBOs must be as creative in their financial support, public testimonials, event participation and lobbying. resource development strategies as they are in executing their While a committed core of membership may be the group most organizational missions and, in fact, recognize that developing willing to do volunteer work and show up for events, other types this sort of financial independence is another way to build power. of members, such as service providers and local businesses, may This catalogue is based on the work of the New World Founda- be important sources of financial support or increased community tion Resource Lab with support from the Ford Foundation. Each visibility. By activating all of these connections, an organization catalogue entry gives a brief snap-shot of a strategy to develop can maximize its impact and access to financial resources. The financial resources for CBOs. We hope to inspire even more strategies proposed in this resource catalogue encourage CBOs creative thinking on the part of community organizations and the to consolidate core membership and to test their capacity to tap funders that support them. into multiple spheres of influence. The Importance of Membership Development Spheres of Membership Membership is a key instrument in building organizational sustainability as membership means dues, consumer power and an ability to reduce dependence on philanthropic funding. Ultimately, perhaps the most powerful way to sustain social COMMUnITY BASE justice CBOs is through the expansion of membership within and beyond the constituency in need. The membership base is the political strength of an organization, therefore its expansion SERVICE PROVIDERS is critical. If fundraising is used to support that strength, it will FAMIlY FOUnDATIOnS address resource questions while at the same time increasing thepolitical capacity of social justice activism. Additionally, POlITICAl DOnORS membership may be deployed strategically to generate revenue beyond simple dues-paying structures. lOCAl BUSInESSES nATIOnAl BUSInESS/CElEBRITIES Spheres of Influence By increasing its membership base, an organization can better insulate itself from the influence of outside forces, i.e. funding sources that can be unpredictable and less sympathetic to an organization’s work at critical moments. Organizations may have a core of committed members in the community they serve, but there are other spheres of influence they may not have consid- 1
    • Direct and Indirect Benefits The Importance of Cost-Benefit Analysis In considering the different programs listed in the catalogue, A cost-benefit analysis is a process that involves weighing the to- CBOs can take into account both the direct and indirect ben- tal expected costs against the total expected benefits of a project efits each one offers. Besides providing financial resources and or strategy in order to choose the best or most profitable option. constituent benefits, many of these programs play an important A representative cost-benefit analysis is presented for each promotional role. They build public awareness of the issues ad- initiative to prompt interested organizations to develop a more dressed by the organization, enhance the CBOs reputation and in-depth analysis. It is critical for CBOs to conduct a cost-benefit credibility, expand contacts, and energize the organization. The analysis for every program they consider and to incorporate the value of these benefits may not be directly quantifiable, but they benefits and costs that cannot necessarily be quantified. Even are tangible and indispensable. when the financial result may be marginal, the intangible benefits to either the client base or the organization may make Doing the Work the program worth pursuing. On the other hand, having a posi- CBOs should be aware that financial resource development tive financial result in the costbenefit analysis does not always opportunities, new revenue sources, and cost-cutting methods mean the CBO should pursue the program. For example, con- pose challenges, have limitations, and require the organization’s sider the concept of opportunity costs – are there alternative pro- commitment. These efforts can be incorporated as critical ele- grams the CBO can pursue that yield a higher financial return on ments of an organization’s strategic plan. By diversifying financial the resources utilized? Would the program be disruptive to the resources a CBO achieve the strength, independence and flex- organization despite its financial rewards? Cost-benefit analysis is ibility it needs to move its work forward. a very useful financial tool to assess project feasibility. A Word About Format The Implementation Support section of the catalogue suggests The listed ideas and opportunities represent a range of com- some innovative approaches to providing start-up funds and plexity and financial return. Each financial resource program is technical assistance to implement financial resource development described briefly then broken down into a component analysis initiatives. of the organizational and financial benefits that must be weighed against the required resources and implementation logistics. The Finally, the References and Resources section is a quick guide to following rating system is used to give a quick assessment of helpful materials and contacts that can provide more information. financial benefit and implementation complexity. Financial Benefit and Complexity Ratings Potential to yield a small financial benefit Potential to yield a moderate financial benefit Potential to yield a substantial benefit Potential to yield a substantial financial benefit and become a key source of revenue for the organization Easy to implement, requiring few or no new resources and no new skills. Moderately complex process requiring a small amount of new resources and skills. Complex process requiring new resources, skills, and substantial time. Very complex implementation process requiring substantial resources, funding and time. 2
    • Fee for Service OVERVIEW Community-based organizations can earn income by providing ORGAnIZATIOnAl BEnEFITS mission-related products and services through a fee for service • Generate Revenue – Charging fees using differential pricing for services and/or organizational expertise. model. Many CBOs provide valuable services to their constitu- ents that in the for-profit world are only available for a fee. While • Optimize Organizational Resources – Properly structured fees can help CBOs expand the volume of organizations want to serve the broadest population, they may services provided, e.g. offer more computer classes, and believe that the only way to do so is by offering their services induce clients to prioritize their needs which will lead to for free. However, there at least three fee-for-service options better utilization of organizational resources. Selling the that can optimize organizational resources and improve constitu- organization’s expertise will also optimize the utilization of ent outcomes. First, a CBO can charge clients fees for existing staff with extraordinary skills and experience. services on a means-based sliding-scale. Charging clients on a • Enhance Client Outcomes – By paying fees, clients sliding-scale basis will ensure everyone receives the services they have a greater stake in ensuring that they are “getting their money’s worth” and will be more committed to need while providing revenue to the CBO to defray costs which achieving a designated goal. Revenue used to expand may actually allow it to serve more people. Second, the CBO services will also provide more opportunity for positive can charge for related products and services to an expanded cli- client outcomes. ent base. For example, a CBO working for environmental justice • Strengthen Community Ties – By increasing client may provide an air quality testing service, organizations that own commitment through fees and using the income simultaneous translation equipment can rent it out when not in generated to increase or improve services, the CBO will use, or an organization fighting for corporate social responsibility deepen it ties with the community. could sell their research to socially responsible investment funds. Third, a CBO with a subject matter expertise, such as setting up FInAnCIAl BEnEFITS community benefits agreements or land trusts or creating popu- • Any fees generated through existing services will be a net lar education modules can sell “how-to” consulting services to gain to the CBO once the fee collecting and management other organizations. systems are in place. Assuming a CBO already has funding to provide a service that clients highly value; the CBO can adopt a sliding scale fee to defray the program’s Consider the following example of the revenue generation administrative costs. Even a small fee of $5 to 250 clients potential of fees: A non-profit that provides low-cost grocery would generate $1,250 that a CBO can use to improve shopping and prescriptions delivery service for the frail and or expand services. elderly can get grants and contracts from government entities. • The CBO may also be able to tap new funding sources But if they also charge a nominal delivery fee they can defray the based on the expansion of services or population served or cost of their service. by demonstrating the organization’s economic sustainability through fee-based revenue. $5 per delivery and 150 deliveries per week for 50 weeks of the year will generate $37,500 per annum that can be used to expand services. 3
    • Fee for Service IMPlEMEnTATIOn PROCESS 1. Conduct a Strengths, Weaknesses, Opportunities and PROjECT COMPlExITY Threats Analysis – identify the CBO’s strengths, opportunities • Conducting an organizational analysis of strengths, and risks: weaknesses, opportunities and threats should include the involvement of diverse stakeholders and a facilitator with an • Organization’s strengths – what does the CBO do very well; understanding of the process. what special skills and experience do staff have • Establishing differential pricing will require research to • Weaknesses – what areas must the CBO improve to offer fees- learn about market rates, clients’ ability to pay and analysis for-service to estimate outcomes. The CBO may also need to establish • Opportunities – how high is the demand for what the CBO a system to manage cashbased revenue. does (or can do), are there alternatives available • Risks – how sensitive are constituents to fees, would fees COST-BEnEFIT AnAlYSIS adversely affect any clients ability to access services, how The financial cost-benefit analysis is straight forward – how would funders react, would providing consulting services dis- much revenue does the CBO need to generate in order to justify the expense of initiating and maintaining a fee-for- tract or diminish the CBO’s ability to carry out its mission service model. Below is a breakeven analysis for establish- related programs. ing a client fee-based program using CBO staff at a cost of 2. Differential Pricing – is the practice of charging different $50/ hour or a consultant at cost of $150/hour. prices to different clients for the same service based on each A. low Cost: In-house analysis, set-up and on-going fee client’s ability to pay. Identify and establish fees for service that collection can be structured as pricing tiers or through discounting. First Year Cost: $5500 3. Cash Management – the CBO may need to incorporate a Second Year Cost: $2500 new cash-based revenue stream into its existing funds manage- 2-yr Total = $8000 ment system or develop a system if none exists. Avg per Use Fee: $5 $10 $15 Avg per Use Fee: $5 $10 $15 Client Contacts to Breakeven in 2 years: 1,600 800 534 RESOURCES nEEDED On-going Contacts Needed to Breakeven: 500 250 167 • Staff time – Staff time to do the analysis, development, B. High Cost: Consultant assisted analyses and set-up, and implementation. Project estimate: 60 hours. Daily in-house on-going fee collection. processing and tracking of fee-based revenues: 50 hours First Year Cost: $20,000 per annum. Second Year Cost: $2500 • Consultants – If allocating existing staff time to imple- 2-yr Total = $22,500 mentation is a problem, a CBO may want to hire a con- Avg per Use Fee: $5 $10 $15 sultant to assist with the organizational analysis, facilitate Avg per Use Fee: $5 $10 $15 stakeholder meetings, plan the fees rollout and plan Client Contacts to Breakeven in 2 years: 4,500 2,250 1,500 marketing strategy. A consultant to assist with the various On-going Contacts Needed to Breakeven: 500 250 167 tasks listed above would charge between $125 and $200 Clients in excess of breakeven will result in positive net per hour. income to the CBO. The second and subsequent years will only incur fee collection and accounting costs. Consequently, net-income will increase substantially once set-up fees are covered. 4
    • Proceeds from legal Settlements OVERVIEW Many CBOs actively pursue legal strategies and litigation to ORGAnIZATIOnAl BEnEFITS further their organizational mission, be it civil rights, environ- • Generate Revenue – Cypres funds, legal settlements, awards and IOLTA funds are all potential funding sources mental protection, or effective government regulation. Civil for topically related programs. suits may result in awards or settlements that can be used • Inform and Protect Constituents – Organization can to fund mission fulfilling programs. Lawsuit settlements and educate constituents about the issues at the root of the regulatory proceedings can also result in the establishment of legal settlements and prevent similar types of occurrences. trust or restitution funds to compensate parties wronged by the • Build membership and community support— defendant. On occasion fulfilling the original purpose of the constituents and the general public value organizations settlement is impossible or impracticable. In such situations the that do the hard work of fighting for justice. courts distribute “cy pres” funds to trustees who see to it that • Enforcing Corporate Accountability—active litigation the funds benefit the parties wronged or similarly situated acts as a deterrent to unlawful behavior. parties, or to promote the law consistent with the underlying court case. Any organization that serves constituents that may be subject to unfair, unethical or potentially dangerous com- FInAnCIAl BEnEFITS mercial practices can apply for cy pres funds. (See Implementa- • Cypres grants can range between a few thousand tion Process below re: guidelines for monitoring litigation.) For to several hundred thousand dollars. CBOs, the challenge will be to identify relevant litigation and then to clearly document the link between their constituents • Pro-active litigation can net settlements in excess of $100k. and court decisions that result in restitution funds being award- ed. A slightly different variation upon this theme is the IOLTA (Interest on Lawyers Trust Accounts) public service program. PROjECT COMPlExITY CBOs working on legal programs for low-income households can apply for IOLTA funds. • It is easy to monitor pending class action and identify foundations designated as trustees of cypres funds • State IOLTA programs are listed on the web • Becoming a trustee or pursuing a litigation strategy is substantially more complex and will require dedicated resources and legal knowledge 5
    • Proceeds from Legal Settlements IMPlEMEnTATIOn PROCESS 1. Monitor Pending litigation – CBOs can monitor pending RESOURCES nEEDED class action lawsuits and engage legal counsel to file cy pres • Staff time – An organization’s development director or petitions for cases related to the organization’s mission. The other staff can monitor class actions and then contact website www.classactionamerica.com provides both a free and designated trustees. a subscription based service that list current and pending class • Access to Databases – Subscriptions to WestLaw or action lawsuits divided by case categories, current disposi- CourtLink/Lexis-Nexis databases can be fairly expensive tion status, the amount at issue, a brief summary, and links to costing a few thousand dollars a month. However, most obtain additional information. An alternative mechanism for law firms have contracted these services and may provide tracking pending litigation is to set-up topic alerts through the probono support to organizations interested in a CourtLink, WestLaw, or Lexis-Nexis databases. monitoring service which involves the set-up and receipt 2. Apply for Grants – A CBO can identify foundations that have of topic alerts. set up restitution funds or consumer trusts resulting from settle- ments and apply for grants under the foundation’s grant-making guidelines. CBOs working on legal programs for low-income households can apply for grants from the state IOLTA programs. -continued next page- COST-BEnEFIT AnAlYSIS Points to consider before pursing proceeds from legal 3. Petition for Settlement Funds – Organizations can work settlements: with attorneys to directly file a cy pres petition to the court recommending the disposition of funds to their organization. • CBOs that actively pursue litigation to generate settle- However, recent restrictions on funds administration have ment funds must carefully assess the expected cost of a pushed more cy pres funds directly to foundations as trustees court case even if they can utilize pro bono legal counsel rather than individual charitable or community-based organiza- and weigh those costs against the likely awards or settle tions. In order to be designated as a trustee, parties need to ment. secure an order or decision in the case at hand that stipulates: • Other cost factors to consider are the staff time and the • The recipient foundation tools to actively monitor and respond to legal opportuni ties and the cost of legal resources. • Funding priorities consistent with the underlying case and/or benefiting class • For a CBO applying for restitution grants from trustees, • The duration of trust the cost-benefit will be similar to researching and apply ing for foundation, government and corporate grants. The • Administrative fees cost to research and prepare grant applications should be • Reporting requirements weighed against the likelihood of receiving the restitution funds. 6
    • local Initiatives and Innovations OVERVIEW There is no denying the power of community and a “sense of ORGAnIZATIOnAl BEnEFITS place”. Cultivating that energy is a way for CBOs to organize • Build Membership – Demonstrate to residents the power of organized action and encourage them to become perma- neighborhoods and marshal resources to address community nent members to address other issues. needs and issues such as public safety, race relations, commer- • Generate Revenue – Tap into local funding sources both cial revitalization, physical improvements, education, economic grassroots and institutional, many of which are not regularly and social justice. Neighborhood improvements that evolve publicized. into neighborhood empowerment programs will build a political • Inform and Protect Constituents – Inform residents of power base. The first step on a long journey may be developing their rights and help them identify community goals and neighborhood pride by creating a special event such as a jazz address community issues. festival or an art fair or obtaining a historic district designation • Build Organization Credibility – By addressing quality of or even publicizing the neighborhood’s unique assets and vital life issues. character to make it a tourist destination. There are informal and • Enforce Government Accountability – Mobilize residents formal channels to fund these types of initiatives. A start can be to demand government action on community needs, and house parties to discuss goals and raise funds. On a larger scale, help government entities become aware of community the Federal Community Development Block Grant Programs, priorities. redevelopment agencies, and local community foundations are a • Advancement of Social Goals – Create an environment good source of support. LISC, the Local Initiatives Support that promotes every citizen’s right to a healthy and prosper- Corporation, can help community organizations gather the nec- ous community. essary financial resources to invest in community development. There are city and regional programs such as the City of Seattle’s FInAnCIAl BEnEFITS Neighborhood Matching Fund and many programs are not pub- licized and take some research to uncover. The key to accessing •The financial resources generated will depend on the type of project(s) selected. Targeting the appropriate funding these funds is the CBO’s ability to mobilize the community to source. Grassroots fundraising can raise several thousand take ownership of the projects. dollars. Grants can range between a few hundred dollars and hundreds of thousands. PROjECT COMPlExITY •Grants will typically cover personnel expenses, supplies and materials, services, capital expenses and overhead. • Start with small group functions and house meetings to Often times the CBO will function as a contractor compen- define scope of work. sated for delivering the completed project. • Projects can range from policy initiatives that take human capital—time and research—to large-scale neighborhood redevelopments. • Neighborhood events can range from potlucks to street fairs: remember even block parties require permits. 7
    • Local Initiatives and Innovations IMPlEMEnTATIOn PROCESS 1. Research Funding Options – identify city, county, and COST-BEnEFIT AnAlYSIS regional funding options including Community Development This revenue strategy offers CBOs a wide array of options, Block Grants (CDBG) and funding available for communities from very simple community events costing a few hundred designated as redevelopment or enterprise zones. Identify local dollars to construction projects costing hundreds of thou- foundations, corporations and business that can support the sands. A few points to keep in mind when conducting the project. cost-benefit analysis for individual projects: 2. Identify Pressing Community needs – gather community • If the project is sufficiently complex, the CBO needs to input to identify and prioritize pressing needs that are vital for think of it as if it were starting a new organization program. improving the neighborhood residents’ quality of life. How much staffing is required, how much executive director oversight, how much support staff, how much office space 3. Organize Residents – set up community meetings and will be required? Keep in mind these are all costs that publicize them to inform residents about the need for action. should be part of the project proposal. Solicit community leaders’ support to inform and mobilize the community. • As noted in the benefits section, an important compo- nent of this project is the non-financial benefits to the CBO 4. Apply for Funding – Complete grant applications as and the community. Therefore, it is important for the CBO needed. Government funds usually become available at the to heavily weigh the non-tangible benefits of this type of start of the fiscal year. Therefore, if working with government program, including the opportunity to derive revenue in entities, CBOs needs to be ready to apply for grants or funding conjunction with some of the other strategies outlined in six months before the start of the jurisdiction’s fiscal year. Many this catalogue. government entities will also hold public hearings on commu- nity needs and proposed budgets six to nine months before the Following are examples of CBO initiated community start of the next fiscal year. projects: • A CBO proposed to transform an underutilized space into a green space that invites visitors, provides educa- RESOURCES nEEDED tional opportunities and provides environmental benefits. • Staff time – Staff time to initiate a new program, including The project improvements will connect two socially and researching funding options and organizing the community. economically different neighborhoods and provide com- The project estimate staff hours will depend on the com- munity members the opportunity to bring their children and plexity of the project. families to a safer area together. Total project cost $198,000 ($98,000 form the City of Seattle) • Consultants – Special issues may require outside consul- tants to provide subject matter expertise. Event coordina- • A CBO initiated a pilot mentoring program at West tors are an effective way to produce public functions, e.g. Seattle High School designed for 20 bilingual migrant festivals. students. Eight mentors will be trained and their parents involved in the program. Total cost $7,700 ($4,675 from the • Seed Money – The CBO will likely incur staff costs to City of Seattle) initiate the project. Usually, these funds cannot be covered retroactively once the project is funded. • Nuestra Communidad Development Corporation of Boston renovated the historic but dilapidated Dartmouth Hotel into 65 units of affordable housing and retail space with the help of a $625,000 loan from Boston LISC. 8
    • Connecting Constituents to Essential Products/Services OVERVIEW Community-based organizations’ constituencies often lack ac- ORGAnIZATIOnAl BEnEFITS cess to essential products and services, e.g. banking services, • Improve Constituents’ Quality of life – By providing constituents with a product or service that is not readily healthy food, or health care, and these deficits can negatively af- available to them or is a financial burden at normal market fect constituents’ civic participation. CBOs can facilitate constitu- rates. ent access to important products or services and even though • Strengthen Relationship with Constituents – Providing this role may not be directly mission fulfilling, the organization access to important services at fair price will build an will gain the appreciation and support of the community. The organization’s credibility with the community creates additional benefit of this type of program is that the CBO can opportunities to build organizational membership. be compensated by the product/service supplier for acting as • Effect Social Change – The CBO can influence the a distributor. For example, a CBO organizing low-wage workers marketplace by representing the collective needs and can significantly improve their constituents personal safety and purchasing power of its constituents. financial management capabilities by providing a low-cost bank- • Generate Revenue – Negotiate revenue share from the ing product like a prepaid debit card that eliminates the need product/service provider. to use a high-cost check casher. The card vendor would pay the CBO to open up card accounts. RESOURCES nEEDED • Staff or Consultants: baseline 1 FTE PROjECT COMPlExITY - To develop a new program, the CBO will need incremental • The easiest implementation strategy is to research social staff or consultants with experience in research methods, enterprises and non-profit ventures to find existing con- marketing and product knowledge. sumer friendly product/service programs that a CBO can – For joining existing or developing new programs, ad- recommend. ditional staff time would be necessary to carry out the • This type of revenue generation program can be complex. day-to-day distribution functions e.g. contacting constitu- If an organization is customizing a new product/service of- ents to offer the product and/or enroll participants into new fering, it must have access to various business skills, includ- services, on-going marketing, serving as a liaison between constituents and vendors when help is needed, inventory ing industry research, negotiating, marketing and partner control, etc. management. It also calls for considerable knowledge about the products and services the CBO decides to pro- – Expect administrative functions to be affected and require vide. This type of project will resemble running a business additional work, including management oversight, account- and requires a business plan ing and fundraising. Outreach and Marketing budget to generate sufficient volume to produce material revenue. 9
    • Connecting Constituents to Essential Products/Services IMPlEMEnTATIOn PROCESS 1. Constituent needs Assessment – conduct a needs assess- COST-BEnEFIT AnAlYSIS ment of the CBO’s constituency and supporters. Identify quality CBOs can explore a wide array opportunities to provide of life issues that are negatively affecting constituents’ commu- services but the final decision to do so should be based on nities that could be addressed through a market-based solution, whether the financial (and social) benefits outweigh the cost e.g. access to health care, education, financial services, healthy of providing the service. Because it would be impossible to food, etc. provide sample cost-benefit analyses for every type of ser- vice, this section provides only one example of a remittance 2. Form a Coalition – partner with other organizations to form service. This example provides an analysis on how many a significant consumer power block. Quantify your purchasing regular clients a CBO would need given certain assump- power, e.g. number of households, dollars spent on similar tions to break even or make a profit providing a retail outlet services. for proprietary internet-based remittance wire service. 3. Vendor Research – research current supplier offers and capa- In this example the supplier would take care of licensing bilities to determine the best option for providing constituents and set-up and the CBO would serve as a retail distributor. the desired products or services. The CBO would charges clients $8.95 per wire, pay the sup- 4. negotiate with Suppliers – using the collective consumer plier $5 and keep $3.95. Assuming a quarter time FTE staff power of the constituency base, negotiate with suppliers to at an hourly staff cost of $50 (annual cost =$26,000) to staff provide the products or services needed by the represented the project, it would generate the following results based consumers at a fair or advantageous price. Appeal to the on various client levels and service usage: supplier’s interest in opening new markets to establish a Clients: revenue share for the CBO’s role as distributor of the product 275 300 350 275 300 350 275 300 350 or service. Average Monthly Transactions per Client: 5. Market the Product or Service – the value of this distri- 2 2 2 2.5 2.5 2.5 3 3 3 bution model is that the CBO can leverage its constituency Annual Revenue: outreach strategies into a marketing plan—the likes of which $26,070 $28,440 $33,180 $32,588 $35,550 a vendor or supplier could not replicate since they lack the $41,475 $39,105 $42,660 $49,770 embedded relationship with the consumer. Net Profit: $70 $2,440 $7,180 $6,588 $9,550 $15,475 $13,105 $16,660 $23,770 FInAnCIAl BEnEFITS As noted, an organization with a moderate-size constitu- • The revenue share that CBOs can earn for connecting ency of 350 individuals would generate annual revenue of consumers with needed products or services can be based $7,180 to $23,770 in excess of costs. The CBO must also on per capita “sales” or usage volume or a combination factor in potential revenue increases from the expansion of of these factors. The CBOs earned income is not an incre- membership and donor base from new contacts through mental cost to the consumer but rather a revenue shift from this retail service. a for-profit distributor to a nonprofit distributor. However, these opportunities usually involve low per unit revenue and therefore require significant volume to generate material revenue. 10
    • leveraging Organizational Real Estate OVERVIEW ORGAnIZATIOnAl BEnEFITS Many CBOs own real estate or rent office space. Strategically • Generate Revenue – by renting out under utilized space managing an organization’s real estate whether owned or leased and pursuing innovative real-estate strategies that creates many opportunities to generate additional revenue, adapt and reuse facilities where possible. reduce or off-set costs. Carefully planning real-estate utilization • Reduce Administrative Costs – by negotiating cost can effectively free up funds to use for other core service needs. reductions, stabilizing premises expense, or upgrading So what does this mean for a CBO? A real estate asset manage- premises to get more for less. ment strategy means analyzing and categorizing the organiza- • Improve Client Access to Services – By including in the tion’s current uses of real estate and setting goals for each type strategic real estate plan options to co-locate with other of use and facility. Goals can be maximizing revenue or reducing organizations serving similar clients. costs, as well as, include mission-related goals such as building • Build Community Credibility – by providing space for community or cultivating partnerships. community events or expanded community services. For example, if an organization has excess office space, its strategy should extend beyond placing a “for rent” sign and FInAnCIAl BEnEFITS negotiating a lease. Instead the CBO should study what type •Real estate holdings—property, plant, and equipment-- of use would produce greatest benefit to the organization and typically represent one of the highest-cost categories for pursue that type of user. Similarly, the CBO should study what CBOs after salaries and benefits. Improving asset manage- property improvements are viewed as beneficial enough to justi- ment strategies will improve the organizations financial fy charging higher rents or attracting tenants. Even as a renter, a position. Benefits must be analyzed on a case by case basis. CBO should consider projects such as reducing heating costs by •As an example, the Silicon Valley Foundation in California weatherizing a rented office itself. Or it can offer the landlord to rents its conference rooms for public meetings. It charges split the cost of replacing energy inefficient single pane windows $675-$950 per meeting depending on room size and number of hours used. and then raise funds to cover its share of the cost. As discussed below, there are many ways to actively manage •Remodeling or constructing a new building should include revenue generating opportunities such as rental office real estate. CBOs need to include property management in their space, retail space, etc. See Cost-Benefit section strategic plan, manage expansion effectively, adapt and reuse facilities where possible, and pursue innovative real-estate strat- •Local Foundations and Credit Unions are often motivated to partner and invest in CBO real estate. egies that will generate funds for other uses. 11
    • Leveraging Organizational Real Estate IMPlEMEnTATIOn PROCESS 1.Prepare a Real Estate Asset Management Strategy – RESOURCES nEEDED Categorize real estate by use (office, community, potential • Staff Time – Existing staff may be able to carry out surplus), develop strategy goals (maximize benefits, minimize additional administrative functions such as advertising and costs, stabilize costs, optimize returns) and gather needed renting out meeting space. More lucrative programs could information (expenses, internal rent, market value, revenues, fund additional staff resources. value-in-use) for analyses. • Real Estate Specialist – For more sophisticated programs, 2. Space needs Study – Evaluate current space usage and a CBO should enlist a public interest oriented real estate future space needs based on estimated growth/contraction. specialist to devise a real estate asset management strategy that generates additional revenue or cost savings for the 3. Implement Strategy – potential outcomes of strategy organization. Nonprofit organizations that focus on afford- include: able housing and community land-use planning programs •Rent conference room/meeting space exist in many geographical areas. These organizations can •Consolidate multiple office locations either informally advise a CBO or provide consulting services •Downsize space usage and rent out surplus space for a fee. Alternatively, consulting firms and independent •Dispose of surplus land Develop a construction and consultants can provide real estate services such as highest expansion plan and best use studies for developing or redeveloping land. •Co-locate with other organizations in new facility Since local governments actively use these services, a CBO •Enter into a sale-and-leaseback agreement to free capital can contact them to inquire about consultants they have 4. Partner with Cities/Counties and Redevelopment Agencies used for these studies. – leverage resources. Municipalities have an interest in main- taining services for CBO constituents and will likely be willing partners in well-thought out development plans. PROjECT COMPlExITY • A real estate asset management strategy can range from simple to complex. • Most CBOs should be able to complete the analyses of some basic opportunities (e.g. renting excess space or reducing energy costs) and carry out actions identified in the process. • Larger management initiatives should employ a real estate specialist. 12
    • Leveraging Organizational Real Estate COST-BEnEFIT AnAlYSIS • A cost-benefit analysis would have to be conducted on a • The following is a sample analysis. In this case, an orga- project by project basis. In general, a CBO will be better off nization owns a building that has an old industrial kitchen in the long run by actively managing its real estate as an as- facility. It decides to upgrade this facility to meet catering set (something that produces a benefit) instead of a liability standards and then rents the space to independent catering (a cost obligation). Over time the cost saving or increased contractors from the community. Additionally, the organiza- revenue from preparing an asset management strategy will tion can now rent out its adjoining meeting for banquets. outweigh the upfront costs. Area realtors can quote going rental rates for your type of property. • A real estate specialist will charge $125 - $200 per hour. The costs of developing a strategy will depend on the Construction Expense Appliances & Furnishings organization’s assets but should cost between $5,000 and Total Cost: $25,000* $20,000 $45,000 $25,000. The cost to carry out a real estate project will be Daily Facility Rental Fee: around 10% to 20% of hard costs. Days Rented: 52 • A word of caution, many foundations and donors are Gross Revenue: $500 predisposed to fund property acquisition as they see the $26,000 inherent value of real estate. However, CBOs should care- Annual Operating Expenses: $11,700 fully study whether owning a building is the best option Net Revenue: $14,300** for their organization. Just because the organization owns it does not mean it occupies the space for free; there are The project will break even in three to four years if it meets mortgage and insurance payments, maintenance and gen- its goal of 52 rental days. eral operating costs that are usually covered under a rental agreement. Consider the opportunity costs of investing in *Cost below commercial prices due to access to volunteer real estate (the alternate use of or return on investing capi- help and contractor price discounts. tal instead of buying real estate). **Does not include potential unrelated business taxes. • With real estate, a CBO needs to think about the long- term sustainability of the asset so that it can keep generat- ing revenue or benefits. The organization needs to consider and plan for maintenance such as roof replacements rather than reactively worrying about repairing a leaky roof. 13
    • Group Purchasing OVERVIEW ORGAnIZATIOnAl BEnEFITS Group purchasing, or cooperative purchasing, is an expense • lower Prices – By standardizing products/services, and reduction technique in which various organizations join together aggregating requirements, CBOs benefit from the com- to purchase identical or similar products at a discount. Coopera- bined economies of scale of multiple organizations. tive purchasing can save CBOs significant time and money in the • lower Administrative Costs – A lead organization procurement process through the power of aggregate purchas- prepares, negotiates, and administers a group purchase ing. Organizations can save an average of 10% on total purchas- contract. Participating organizations only need to determine es. Savings on individual products such as recycled paper can be the specifications and quantities they will need. as high as 78%. Every organization should research opportunities • Higher Quality Products and Services – By leveraging to cut purchasing expenses through group purchasing— pooling the skills and knowledge of members, cooperative purchas- resources to improve economic outcomes. For most CBOs the ing groups can evaluate and negotiate for higher quality products and services. process will involve a small amount of research to find existing cooperative purchasing groups. Once the CBO establishes the • Convenience – Instead of searching, evaluating and negotiating for products and services, a CBO can simply relationship, it will be able to save money on most of its every- refer to a cooperative’s contract catalog. day purchases and on many infrequent, “big-ticket” items. • Advancement of Social Goals – A purchasing coopera- tive can decide to pursue social goals such as increasing the PROjECT COMPlExITY purchase of recycled products or purchasing from socially CBOs can easily join an existing cooperative, whether responsible businesses.refer to a cooperative’s contract through a local government entity or a third party aggrega- catalog. tor. • Most public institutions have a purchasing or procurement department that would administer group purchasing agree- ments. A CBO can establish a new cooperative. Three types of cooperative agreements exist: •Formal Cooperative -Contractual agreements between participants and participation obligation •“Piggyback” Cooperatives -casual purchasing through larger buyers •Third-Party Aggregators - independent organization brings together various organizations to represent their require- ments to vendors and manages resulting contracts 14
    • Group Purchasing IMPlEMEnTATIOn PROCESS 1.Determine needs – determine the organization’s product FInAnCIAl BEnEFITS and service needs. Save 10% on average on an organization’s total product 2a. join an Existing Purchasing Cooperative research options: and services costs and more on individual products. For example: • Search for existing purchasing cooperatives. Many existing cooperatives readily allow members to join • Save $1,000 on purchasing budget of $10,000 • Search on the Internet for “purchasing cooperative” by • Save $10,000 on a purchasing budget of $100,000. location (such as city or county), field of work, and affiliations. • Save 78% on the retail cost of paper—$20 retail vs. $4.50 Check with Union Locals that may have access to national cooperative purchasing costs purchasing cooperatives. • Save 20% on the retail cost of a printer—$249 retail vs. • School districts and state, county and city governments are $200 cooperative purchasing costs high volume buyers and are likely to be operating a coopera- tive that may allow CBOs to participate. Contact the entity’s Finance Dept. RESOURCES nEEDED • Regional organizations such as California Association of • Staff Time – Joining an existing cooperative requires the Nonprofits operate cooperatives upfront research to identify the appropriate group. Once • Search for third party aggregators. Membership is often this relationship is established, little additional staff time will free for nonprofit organizations. Visit the National Institute of be required to reap the benefits. Governmental Purchasing (NIGP) web site for a list of national • new Organization – Alternatively, establishing a new and regional cooperatives at http://www.nigp.org/Purch cooperative will require a material investment of resources Coop.htm or at nigp.org. Examples of third party aggrega- to establish lasting vendor relationships that will involve mul- tors are: US Communities Government Purchasing Alliance tiple orders. If group purchasing includes the procurement and HGACBuy.com of high-cost, complex, or highly technical products, support 2b. Alternatively, Establish a Formal Cooperative or Third staff must have sufficient knowledge to research products, Party Aggregator – Identify and survey organizations about prepare appropriate RFPs, and evaluate bids. A contract their interest in forming a purchasing cooperative. specialist would be needed to prepare contracts and man- • Invite Cooperative Members—Identify and survey organiza- age vendor relationships. An attorney may be involved as tions about their interest in forming a purchasing cooperative well as support staff. Assuming a 3-person start-up and pro bono legal counsel, a new cooperative seeking to achieve • Enter Into a Cooperative Agreement—Select the type of immediate economies of scale can reach first year operating cooperative agreement that best suits the needs of members costs in the range of $250,000. and determine how the costs of joint procurement will be shared. • Select a Lead Organization—Select the organization that will be responsible for procurement and contract administration. 15
    • Group Purchasing COST-BEnEFIT AnAlYSIS • The cost of becoming a member of an existing group pur- • Based on an estimated annual budget of $250,000 to create chasing cooperative is minimal. A CBO will immediately begin a new cooperative, it will take the following levels of participa- saving money by purchasing goods and services through a tion and purchasing for the cooperative members to break cooperative. A small sampling of the products an organization even. can save on through group purchasing includes: Average Savings: – Tires, batteries, auto parts 10% 10% 10% 15% 15% 15% 20% 20% 20% Total Purchasing: – Hand tools $2.5 Million $2.5 Million $2.5 Million $1.67 Million – Appliances $1.67 Million $1.67 Million $1.25 Million $1.25 Million $1.25 Million – Computer hardware/software No. Coop Members: – Telecommunications supplies and equipment 25 50 100 25 50 100 25 50 100 – Janitorial supplies Annual Purchasing per Member: $100,000 $50,000 $25,000 $66,667 $33,333 $16,667 – Chairs, desks, filing cabinets Teaching and art supplies $50,000 $25,000 $12,500 – Full services contract for repair, remodeling, and renovation Another significant benefit of participating in or developing of facilities a cooperative purchasing group, that should be factored into any analysis, is the value of building cooperative relationships – Full line of office supplies, copiers, office equipment with other organizations and networks. These collective – Cars, trucks, passenger vans frameworks can leveraged for other mission-related endeavors. – Computer & Office Paper Products) 16
    • Affinity Benefits Programs OVERVIEW Affinity benefits programs provide organizations and their mem- PROjECT COMPlExITY bers, staff and other constituents discounts and special access • Pre-packaged affinity benefits programs already exist. to services by leveraging their large affinity group’s purchasing The research, set-up and maintenance of these existing programs takes some orientation but is not unduly complex. power. An example of this type of program is the American Au- tomobile Association’s (AAA) which offers its members car and • Alternatively, developing an expanded or customized affinity benefits program requires some specialized skills in home-related products, services and travel discounts. Affinity vendor negotiations and marketing. benefits programs can offer CBOs and their constituents discounts of 10% to 60% off retail pricing Generally, CBOs gain access to discount programs at no fee or for a nominal annual RESOURCES nEEDED fee. • Staff Time – Leveraging an existing affinity benefits This initiative is ideal for any type of organization that can indi- program can be implemented with a small allocation of vidually, or by partnering with other CBOs, form a large constitu- staff time. A large-scale or customized program requires dedicated staff. ency of “shoppers” (e.g. organizations, staff, clients, supporters, • Consultants – consultants are advisable to establish and and other constituents). Organizational coalitions are good manage more complex or customized programs. candidates to put together group benefits programs. AARP and • Start-up or buy-in costs – some prepackaged affinity Union Privilege are examples of programs for very large member programs have a buy-in, e.g. cost per discount card or bases, but even a 1000 member constituency base would have annual fee. could negotiate an attractive benefits package. • Marketing budget – is necessary to inform constituents of the program and to expand program utilization. ORGAnIZATIOnAl BEnEFITS • Build Membership – Discount programs are an enticing membership recruitment and retention tool as they help FInAnCIAl BEnEFITS stretch the income of constituents and/or give them access • Financial benefits primarily accrue to the organization’s to lower cost resources they need to achieve economic constituents and staff as cost savings. stability. • Organizations can reduce expenses by utilizing the • Reduce Organizational Expenditures – Save money by offered purchase discounts. purchasing products and services through the organization’s • Organizations can negotiate a revenue share agreement affinity program. with participating merchants. • Staff Recruitment and Retention Tool – Include affinity • Affinity credit cards can produce a lucrative revenue program discounts as part of staff benefit packages, saving stream. staff money on their purchases. • Royalties and Rebates – Large volume programs can generate royalties and rebates back to the sponsoring organization. 17
    • Affinity Benefits Programs IMPlEMEnTATIOn PROCESS 3. Evaluate Existing Programs – pre-packaged program, e.g. PerksCards, may fulfill the organization’s required criteria. 1. Define Program Goals – Contribution to mission, individual or organization cost savings, membership recruitment and reten- 4. Contact Merchants – If existing programs don meet needs, tion, staff recruitment/retention, and/or revenue production. an organization can develop its own program. Starting with merchants in other discount programs, contact merchants to 2. Identify Target Audience Size and Interests – Estimate pro- negotiate discount levels and terms. gram utilization. If the CBO’s constituency is not large enough, it should consider partnering with other organizations to form a 5. Market the Program – Market beyond immediate constitu- larger market. Find the types of discounts and benefits attractive encies. A strong web presence can yield more cost effective to target audience. marketing opportunities than direct mail or other media channels. COST-BEnEFIT AnAlYSIS Affinity benefits programs offer cost savings to the users Examples of products and services provided through affinity which can be a CBO’s constituents, staff, or the organization benefits programs include: itself. The implementation and management cost needs to • Dell Computer be weighed against the potential of an affinity benefits program to augment membership development, improve • AT&T Wireless discount staff retention and entice greater constituent/supporter • Auto Insurance (AIG) participation in mission related programs. • VOIP One way to size the potential of a benefits package is to look • Car Rental at how quickly the purchasing power of a group of organiza- • Credit Counseling tions’ constituents adds up. • Entertainment Discounts As an example: • Goodyear Tire and Service • 5 organizations with 200 members each create a 1000 • Health Clubs member consumer base. • Health care discounts (Save on out-of-pocket health care • If the average constituent take-home pay is $20,000 and expenses for prescriptions, dental care, vision care, diabetic assuming that only 50% of members’ income is available supplies and more.) for discretionary expenditures, the purchasing power of the • Legal Services group is still $10 million. • Mortgage and Real Estate – fee reductions • Saving group members 20% through discounts and special • Pet Insurance offers will generate a savings of $2 million for the community. Organizations seeking to build membership will find affinity benefits programs an attractive member benefit that helps stretch the income of constituents and/or give them access to resources that help them to be happier, healthier, or more stable economically. AARP acknowledges that the provision of insurance benefits and travel discounts has expanded its membership which builds its political base. Union Privilege, which is a discount program for AFL-CIO union members or affiliates, views reducing the cost of living for its members and expanded benefits, e.g. voluntary insurance, as mission- fulfilling. 18
    • On-line Affiliate Marketing OVERVIEW On-line Affiliate Marketing is the promotion of products and ORGAnIZATIOnAl BEnEFITS services of for-profit businesses (the advertiser) by placing ads • Generate Revenue – The advertising compensation can or links on an organization’s website. The advertiser compen- be used to support the organization’s programs. sates the on-line affiliate organization for the number of visitors, • Increase Site Traffic and Engage Visitors – The products subscribers, customers, and/or sales proffered to the business by and services advertised may generate CBO website visits in and of themselves. By increasing website traffic, organiza- the affiliate’s efforts. The advertising usually takes the form of tions will have the opportunity to further engage visitors in advertiser banners and links on the CBO’s website. Any type other aspects of the organization’s mission. of organization with a website can pursue an on-line affiliate • Build Membership – Increasing the number of new marketing program, however, the program will provide the visitors and repeat visitors to a CBO’s website gives the best results to CBOs whose website generates a high volume organization more opportunities to encourage visitors of traffic and/or has visitor demographics that are desirable to to become members or donors. advertisers. PROjECT COMPlExITY RESOURCES nEEDED • On-line affiliate marketing programs are readily available • Staff Time – A few hours a week of staff time can from many different types of businesses. Set-up and main- leverage existing on-line affiliate marketing programs. tenance of these relationships can be done with minimal • Consultants – A CBO looking to establish a more resource commitments, but significant web traffic is aggressive program should consider hiring a consultant to needed to generate material revenue. establish and manage the marketing strategy. Typical set-up • Alternatively, establishing a new affiliate marketing coali- costs are in the $15k to $20K range with additional fees for tion will require dedicated resources. In addition to tasks ongoing support. listed in the Implementation Process Section, the CBOs will • new Staff and Tools– – An on-line affiliate marketing have to enter into contractual agreements establishing coalition should expect to hire a program coordinator as participant obligations. well as purchase website management tools. Expect total annual costs of approximately $150,000 per year. 19
    • On-line Affiliate Marketing IMPlEMEnTATIOn PROCESS 1. Identify the Market niche – Determine the organization’s COST-BEnEFIT AnAlYSIS website traffic volume and the market characteristics of visitors. Cost will vary depending on the program the CBO pursues. Organizations can maximize revenue by identifying and selling The following guide will help a CBO determine its best op- a well defined viewer market niche to advertisers willing to pay tion given its web traffic potential and set-up costs. For ex- for specific market demographics. ample, an organization that provides useful public content that generates high visitor traffic, but whose visitors have no 2. Identify Products and Services to Market – Find the right other relationship to the CBO may want to pursue a CPM combination of products and services that are reputable and advertising or pay-per-click strategy. Alternatively, if the compatible with the organization’s mission, generate material CBO has a relationship with a smaller but more dedicated commissions, and entice visitors to explore the offer. visitor base, it can pursue a lead generation or pay-per-sale 3a. Enter Into and Manage Relationships – Negotiate and strategy. enter into relationships with advertisers: Compensation Method and Rate CPM Advertising: • Select relationships and advertisements. Find affiliate program ($2.50 per 1,000 views) opportunities by consulting on-line affiliate program directories Pay per Click: (1¢ per click-through) that list advertisers and outline compensation plans such as affiliatething.com, clickbank.com, commissionjunction.com and Lead Generation: ($6 per lead) linkshare.com. Pay per Sale: (10% sales commission) • Optimize website design to convey mission related content Website Users: 400,000 1,000,000 2,857 4,000 and to encourage viewers to notice and act on advertisements. Click-Through Visitors: (10%) 100,000 286 400 • Develop strategies to drive visitors to the organization’s web- site, e.g. reciprocal links and registering keywords with search Sales Leads: (50% of click through) 143 engines. Sales: (25% of click through, $100 Average Sale) 100 • Pursue additional packaged affiliate opportunities including CBO Revenue: $1,000 $1,000 $1,000 $1,000 Google/Adsense.com, chitikia.com, blogads.com and text-link- ads.com 3b. Form a Coalition of non-Profit Organizations to Manage an Affiliate Marketing Pro – Sharing research and manage- FInAnCIAl BEnEFITS ment costs with other organizations to customize an on-line Revenue varies widely by type of affiliate marketing affiliate marketing program can increase bargaining power with structure and the appeal of the organization’s web site. advertisers. Examples of revenue from different marketing techniques • Share set-up and coordination costs are listed below: • Compare organizational constituent needs •Website Sponsorship: Annual fees for sponsorship to be • Vet merchants or product/service offers for coalition members displayed on website. Make-A-Wish Foundation charges a • Share website visitor behavior and identify effective lay-out, $250,000 annual sponsorship fee. messaging, and navigation techniques that appear to optimize • Cost-per-thousand views (CPM): 50¢ - $20 per 1,000 page revenue generating behavior views. • Discern current and evolving marketing trends • Pay per click: 1¢ per click through • Negotiate larger commissions for all CBOs participating in • Lead Generation: $6-$10 per lead (e.g. GEICO Insurance) the coalition, and sell packaged ad space across the coalition members’ various websites to merchants who are interested in •Pay per sale: 1% - 20% of dollar value of final sale the demographics of the collective readership. 20
    • Retail/On-line Retail OVERVIEW A retail/on-line retail strategy for a CBO is based on the sale of ORGAnIZATIOnAl BEnEFITS articles of merchandise that are ordinarily used as a part of fund • Generate Revenue – by selling relatively inexpensive items with high price mark-ups. raising and awareness-raising campaigns. CBOs create these items, imprinted with the organization’s name, and sell or give • Increase the Organization’s Visibility – use items sold as part of guerrilla marketing campaigns to increase the them away to clients, supporters and other stakeholders. Most organization’s visibility. People wearing or using these prod- promotional items are relatively small and inexpensive, such as ucts in public will garner publicity for the organization and t-shirts, caps, key chains, mugs and mouse pads. New technolo- enhance the CBO’s “brand name.” gies are making it easier for organizations to set up on-line retail stores and increase the sale of these items to generate greater revenue. This strategy has the potential to generate significant RESOURCES nEEDED revenue for an organization that offers a niche market a desirable • Staff Time – Existing staff and interns have the capacity name or message, for example Sierra Club calendars. However, to establish a retail project and manage a simple design and product creation whether done in house or through an for most organizations the value will be in promoting the CBO, e-commerce company. Plan on expending 5%-10% of an raising public awareness or creating goodwill. CBOs can cover FTE to carry out the necessary project work. program costs and generate some profit, especially if they avoid • Planning Inventory – E-commerce companies usually setting up a separate physical storefront which carry too many have no minimum requirements and only produce products fixed overhead costs. when ordered; therefore there are no inventory commit- ments or upfront costs. PROjECT COMPlExITY • Design Consultant – A CBO may want to hire a design consultant to create a stylish design for the organization, or • This business model has low barriers to entry and it can work with artists or art students willing to undertake e-commerce stores reduce risk even further by offering little the project pro-bono or for minimal fees in order to expand upfront development costs and minimum order require- their portfolios. A design consultant would charge between ments. $75 and $150 per hour. • CBO staff can select, create, source and distribute its own promotional items. Alternatively, a CBO can work through an e-Commerce company to design its product and launch an online store. The e-Commerce stores will handle inven- tory management, shipping, logistics, and billing for the CBO. Zazzle claims it typically takes less than an hour to open a store. 21
    • Retail/On-Line Retail IMPlEMEnTATIOn PROCESS 1. Select the Product(s) – promotional items are usually simple COST-BEnEFIT AnAlYSIS products such as t-shirts, caps, key chains, mugs and mouse Before initiating a retail strategy, a CBO should conduct a cost-benefit analysis of the different options it has. Should pads. However, many other options are available such as first the CBO place a large volume order with a local vender class stamps, aprons, ties, greeting cards, water bottle, etc. and sell the items in person, or work through an on-line 2. Create the Design – Find the right combination of products retailer like Zazzle? How many items does the CBO believe and services that are reputable and compatible with the orga- it can sell, and in what period of time? The CBO can select nization’s mission, generate material commissions, and entice the best strategy by estimating the total costs of different visitors to explore the offer. options and weighing them against the projected revenue based on the estimated sales volume. 3. Order Product(s) – the CBO can order products from local vendors or via the Internet. Consider realistic market size and Below is a simple cost-benefit analysis that shows how many order accordingly. Venders usually offer volume discounts when t-shirts at various price levels a CBO has to sell in order to ordering large quantities. break even and make a profit. Assumptions: – 40 hours of project staffing at $50 per hour (fully loaded), 4. Select Distribution Channels – expand distribution channels – 70% profit margin (Zazzle takes a 30% cut but there are no beyond face-to-face sales at the CBO or at events. Make the other upfront production or inventory management costs). product available through the CBO’s website and list it with an e-Commerce company such as Zazzle/GoodStorm. In this example, a CBO would begin earning a profit after selling 385 t-shirts for $16.99. Selling an additional 100 5. Other Options – MeCommerce offers a product-serving t-shirts with zero additional effort will earn the CBO $519. technology allowing nonprofits to sell CDs, DVDs and books on their own website or blog, and realize 50% of the profit. Basic t-shirt price: $12.99 $14.99 $16.99 $18.99 $20.99 70% CBO profit share: $2.39 $3.79 $5.19 $6.59 $7.99 T-shirt sales needed to Breakeven: 837 528 385 303 250 FInAnCIAl BEnEFITS • Financial benefits depend on product, volume and distribution. For example, CBOs can sell tshirts for as much as $20 a piece. At $20 per piece, the sale of 200 shirts can gross the CBO as much as $2,000 (excluding design and distribution expenses). CBOs with brand name recognition and stylish designs can easily achieve greater sales and revenue outcomes. 22
    • In-Kind Donations OVERVIEW In-Kind Donations are donations that are given in goods, com- RESOURCES nEEDED modities, or services rather than cash. These non-monetary • Staff Time – Moderate development staff involvement is required for tracking and acknowledging in-kind donations. donations can help CBOs to reduce direct expenses for travel, If a customized approach is utilized, more time and skills are supplies, equipment, the use of services and facilities, and involved in negotiating with businesses that provide, for professional expertise. Occasionally, these types of donations example, donated earnings or allowing employees to can be converted into cash through re-sale or charity auctions. donate earned time off. Organizations should carefully consider what type of in-kind donations would serve them well and then identify what busi- PROjECT COMPlExITY nesses or individuals may be able to provide these resources. CBOs can also benefit from working with in-kind donation clear- • Ranges from easy implementation by signing up with inghouses to gain access to a broader, more efficient network of existing company or clearinghouse programs to a more complex approach of cultivating relationships with business corporations for product donations. partners for customized support. ORGAnIZATIOnAl BEnEFITS • Reduce Expenses and Conserve Cash Flow – By offering goods, commodities, or services that must otherwise be purchased. • Expansion of Mission Directed Operations – Donations of operational supplies can support an increase in organizational activity • Can be utilized as Incentives – For membership, fund raising solicitations, major gift recognition, or raffles. • Provides an Alternative to Cash Donations – When a direct cash contribution might not be possible. • Thinking Green – Re-allocating resources to those who can use them instead of throwing them away. Another mode of re-use, recycling or free cycling. 23
    • In-Kind Donations IMPlEMEnTATIOn PROCESS 1. Identify Products – Identify the available commodities, COST-BEnEFIT AnAlYSIS goods and or services that could be donated that would serve • As an example, assume an hour of fundraising develop- the needs of the CBO. ment activity costs an organization $50 fully loaded (staff time plus overhead). If the organization averaged an hour 2a. Contact Clearinghouses – Contact organizations that serve a day sourcing in-kind donations, they will spend approxi- as clearinghouses for nonprofits seeking product donations mately 240 hours on this effort over a year. The organization such as: Gifts In Kind International, the National Association for would need to obtain goods and services valued around the Exchange of Industrial Resources, InKindEx.org and Share $12,000 to breakeven on this type of program. the Technology. TechSoup Stock is an online source for donated • In-kind donations of services can save an organization software and hardware that can be ordered by non-profits and significant expense and effectively expand the organiza- educational institutions for nominal fees. tion’s skill sets. Supporters can donate their experience and 2b. negotiate – Negotiate directly with for-profit organizations knowledge in specialized fields including how to do cost- that produce goods or services that would be beneficial to a benefit analyses or developing financial resources. CBO – The Foundation Center offers resources for identify- ing corporate sponsors of in-kind gifts. Several airlines, e.g. American and Delta/ Continental, allow organizations to register with them to allow travelers to donate excess airline miles to a FInAnCIAl BEnEFITS 501c3. Southwest Airlines will donate travel vouchers. • In-kind donations can have significant value. For example 3. Register with Giftcarddonor.com – Giftcarddonor.com is a donated airline miles can be used to reduce staff travel professional fundraising business that aggregates and re-sells costs and save an organization thousands of dollars. unused gift cards and store credits. People can designate re- • Technology hardware and software can be a high-value cipient organizations on the Gift Card Donor website and then donation. send in their cards or credit receipts. The organizations receive 75% or the re-sale proceeds. • Goods offered as prizes for raffles and auctions, effectively become cash. 5. Publicize – Advertise in-kind donation needs to existing donor base and supporters. Don’t forget to ask for expertise, e.g. accounting, web-site support, marketing communications. For program success and longevity make the donation process easy for interested parties. Newsletters or websites should be kept fresh by continually posting and acknowledging participat- ing partners and reminding readers how to execute an in-kind donation. 24
    • On-line Donations OVERVIEW An on-line donation strategy involves making it easier and/or RESOURCES nEEDED increasing opportunities for supporters and website visitors to • Staff Time – Computer and internet savvy staff to sort through the online charity portals and evaluate and install make donations to an organization. Two simple strategies are to integrated member application software packages. Consul- create a “donate” button on the organization’s own website and tants are available to help with this process. to list the organization with websites called charity portals that offer visitors a list of nonprofit organizations to which they can donate. Each option has its benefits. Having a donate button PROjECT COMPlExITY offers the CBO full control and collects 100% of the donation. • It is easy to list an organization with a charity portal to The benefits of listing with a charity portal, on the other hand, reach new donors or to set-up a “donate” button on an is that they have marketing programs to attract traffic to their organization website. websites and they eliminate the process of setting up a system • Alternatively an organization can build a customized to accept on-line donations. Websites have also been set-up donor relationship management system that meets its exact needs. This effort is typically more complex and costly. to give people the opportunity to make donations to specific charitable programs or projects, e.g. Seva.org, or as a gift for someone else, e.g. Changing the Present. Finally, though not FInAnCIAl BEnEFITS exactly an on-line donation method but in the realm of mak- ing it easy for people to give, don’t forget workplace giving • Incremental revenue once the CBO has modified its campaigns which include matching grants for donations made website and/or listed with charity portals or programs. by employees or the automatic payroll deduction programs like • Revenue generated through charity portals is a function of United Way or Community Shares. Remind your supporters that marketing and website traffic. For example, the Dance Theater of Harlem reported raising $27,864 through the they can often “write in” or designate specific 501c3 organiza- charity portal www.networkforgood.org. tions to receive their donations when they fill out the annual Pledge Card. Almost every CBO can utilize some variation of this strategy because participation choices range from lowcost, easy-to-use options to complex management systems (see Cost Benefit Analysis section). ORGAnIZATIOnAl BEnEFITS • Generate Revenue – by making it easier for supporters to make donations through the organization’s website and by increasing the frequency of donation opportunities. • Increase the Organization’s Visibility – people visiting on-line charity portals often learn about organizations they may not have previously known. 25
    • On-Line Donations IMPlEMEnTATIOn PROCESS 1. Research Options – Be sure to research online giving 3. list the CBO with a Charity Portal – Examples of charity thoroughly before deciding on your organization’s preferred portals include NetworkForGood.org, GreaterGood.com, method. Differences in costs and benefits vary greatly. Groundspring.org (formerly eGrants.org) and justgive.org. Individuals interested in donating to charities often use charity 2. Create a Website “Donate” Button – There are several portals to help them with their research. It is important that an full-service solutions provided as part of packaged donation and organization’s listing in Guidestar’s database be up-to-date. membership management software that provide a defined set of features covering a number of common membership needs, 4. list the CBO with Search Engines – List with search engines including the ability to receive on-line donations. Software that donate advertising revenue to charities, e.g. Goodsearch. packages include Wild Apricot, ETapestry, GivenGain and Mem- com. Donations occur every time a user clicks on a sponsored ad berClicks. Online packages include Network for Good’s Suite, that comes up in a search. In order to leverage this fundraising Democracy in Action, Entango.com and Acteva.com. These tool, a CBO could install a link from its website to the packages, known as donation engine providers, do not require search engine which will pre-populate the organization’s name in-depth technical skills or substantial set-up. Alternatively, a as the selected cause. CBO can contract with a backend donation collection service connected to an existing charity portal or a standalone service which would provide the website link (donation button) to feed into their funds collection platform. COST-BEnEFIT AnAlYSIS • The simplest solution for a CBO with limited resources is to • Purchasing and installing a membership and donation list the organization with a charity portal. Listing is free and management software package can be accomplished for as there are no monthly charges. However charity portals will little as $50 (e.g. ClickandPledge’s Trio) or as much as $7,500 charge a fee between 2.5 and 5 percent of the total (e.g. Blackbaud’s Net Community software license compo- contribution upon accepting the contribution for the CBO. nent of required integrated package). There is usually some • A slightly more complicated option is setting up the combination of a set up fee, monthly fee, transaction fee and on-line donation capability on the CBOs own website using a credit card processing fee. The ability to receive donations is program from an existing charity portal. Processed donations only one feature of the software which includes various useful appear on the donor’s credit card statement with the portal’s membership and organizational management systems. name, however. A sample scenario: A sample scenario: – First year cost with consultant assisted analyses and set-up (approximately 20 hours @ $150/hour), – 40 hours of staff time costing $50/ hour (fully loaded) to – in-house maintenance of the software application review options, set up an online package, and perform (approximately 30 hours @ $50/hour), on-going maintenance, and – $100 monthly subscription fee, and – 3% processing fee on each donation. – 3% processing fee for each donation. – The CBO would need just over one hundred $25 In this example, it would take 226 $25 donations to break donations to break even. Donations beyond that level would even. The CBO would reach the breakeven point much faster result in a net profit to the CBO. The table below provides the second year since it has already installed the software various breakeven scenarios based on different average dona- package. This solution works best for CBOs that expect high tion amounts. volume website traffic and plan to initiate a donor relationship Average Donation: $25 $50 $75 $100 $150 $200 management program. Donors Needed to Breakeven: 103 52 35 26 17 13 Average Donation: $25 $50 $75 $100 $150 $200 Donors Needed to Breakeven: 236 118 79 59 39 30 26
    • Charity Malls OVERVIEW The Charity Mall concept can take several forms. One version RESOURCES nEEDED is the online shopping website that returns a commission to • Staff Time – Development staff can easily register the CBO with charity portals. Depending on the desired finan- an organization when members or supporters make purchases cial results, the CBO can minimally or aggressively publicize through the mall’s network of online stores. There are also pro- this option to supporters through its ongoing communica- grams where consumers can register their loyalty, debit or credit tions and other marketing efforts. cards with a charity mall. When the consumer uses that card to • new Staff and Consultants – Creating a new Charity make purchases at participating on-line or physical storebased Mall will require a team that includes business development merchants, the retailers pay a sales commission to the charity and relationship management resources, marketing strate- gists, website designers, and operations support. mall card program operator, and all or part of that commis- sion is then passed on to a nonprofit. Retail store managers or retail store chains are often willing to set-up discount-donation PROjECT COMPlExITY programs whereby an organization’s constituents making pur- • It is easy for organizations to list with existing charity chases at a store receive a discount and the store also donates a malls. Organizations must create a marketing and commu- percentage of the purchase to a designated non-profit. Another nication strategy to remind supporters to link through the version of retail store donation programs is to allow shoppers CBO website for on-line shopping or register their purchase the option of “rounding up” their bill with the additional money cards with a designated charity portal. Though it may take going to a charitable fund or a designated nonprofit. Some more effort to convince supporters to register their loyalty, debit and credit cards to support the CBO, once it’s done retailers will match the shopper donations. These programs work supporters will be automatically contributing to the CBO best if they can be tied to a card that can track purchases, like a without any extra effort on their part. grocery store loyalty card. • Organizations can set up their own charity mall but much Almost every CBO can utilize this strategy because the level of more work is involved, including: designing the mall, estab- lishing relationships with retailers and administering account complexity and cost ranges between very easy to carry out and set-up. This option works best for organizations with a large costing virtually nothing to taking on a sophisticated develop- base of supporters and/or resources to heavily market the ment effort that is moderately expensive but can generate a mall. A large volume of transactions makes in-house pro- good return. cessing cost-effective and eliminates 3rd-party fees. 27
    • Charity Malls IMPlEMEnTATIOn PROCESS 1a. Register with a Charity Mall – Register with a shopping COST-BEnEFIT AnAlYSIS portal, such as escrip.com, ShopForChange.com, and eBay Giv- • A CBO would incur minor costs to identify and sign up ing Works. Lesser-known groups can participate at sites like, with an existing charity mall. However, the organization iGive.com and MyCause.com. which let shoppers choose from would have to make some effort to market the program to their database of organizations or add their own, including encourage people to either shop at the mall or registers groups that lack 501(c) 3 status. their cards. If this marketing were included in existing com- munications, even this cost can be minimized. Therefore, 1b. Create a Charity Mall – By administering a charity mall financial benefits would immediately accrue to the CBO. in-house, the organization receives 100 percent of the commis- Additionally, supporters will often think about the CBO sions from purchases, it can select the appropriate retailers and when conducting purchases. match web pages to the CBO’s existing web site. • Creating an in-house charity mall will require significantly 2. Set-up up a store-based donation program – Contact more work. First year cost for in-house analysis, set-up and local retail store managers and discuss what discounts-donation on-going maintenance (based on 48 hours of project staff- arrangement could be set for purchases made by the organi- ing @$2400—about an hour a week, plus $600 incremental zation’s constituent base. Or explore a “round-up” donation marketing expense) would cost about $3,000. The table be- program. low provides the number of transactions necessary at given commission rates and purchase levels to recapture the cost FInAnCIAl BEnEFITS of staff time investment. Average Purchase $50 $100 $50 $100 • Depending on the charity mall and the retailer, the charity Commission Rate 5% 5% 10% 10% mall forwards commissions ranging from 2% to 30% of con- sumer spending to the shoppers’ charity of choice. Transactions Needed to Breakeven: 1,200 600 600 300 • One charitable portal estimates that 50 supporters spend- ing $400 per month at participating merchants would gen- erate $12,000 per year, 200 supporters would generate $48,000 per year. ORGAnIZATIOnAl BEnEFITS • Generate Revenue – Ask supporters to raise funds for the CBO by shopping on-line through the organization’s charity mall links or by registering their loyalty, debit or credit cards and using them at designated merchants. • Increase Supporter Opportunities to Participate – Give supporters an easy way to regularly participate and raise revenue for your organization through their regular shop- ping activities. 28
    • Celebrity Bureau and Special Events OVERVIEW Harness the power of the Stars! A celebrity is a widely-recog- RESOURCES nEEDED nized or famous person who commands a high degree of public • Staff and Directors Time – Existing development staff, executive director and/or board members to establish and media attention. The celebrity can be an author, politician, contacts and execute program. sports star, artist, entertainer, journalist, business leader or a key • Marketing Expertise – To develop marketing campaign community figure. Their connection to a cause can help raise and “brand” management resources. money in a number of ways. However, individual community • Marketing Budget—to support outreach. organizations may find that contacting and cultivating a fundrais- • Consultant and Meeting Space – If program is event ing relationship with a celebrity challenging. A more effective oriented, the CBO will need a meeting place, production approach might be to pool the collective networking resources support, and an event planning consultant. of foundations and their grantees to enlist a group of celebrities • Volunteer Coordinator – The CBO will need a person to manage volunteer resources needed to facilitate program willing to make periodic public appearances, speak out, or give and events their endorsements to progressive causes and the organizations that “do the work”--thus creating a celebrity bureau. While many organizations can handle smaller events, producing gala events PROjECT COMPlExITY take a material amount of time and money. Large events must • Like all fundraising, establishing contacts and cultivating be augmented with a diverse set of related income producing a commitment can take time and requires persistence and promotions to produce a good return upon investment. How- patience. Using network contacts is key. ever, there are a number of smaller-scale special events that can • A less complicated approach to leveraging a celebrity’s be effective fundraisers, e.g. restaurants that donate a portion of fame is to create a marketing campaign using various their receipts during a set time period or theatre performances advertising media and promotional collateral emphasizing the celebrity’s endorsement. or music events that donate proceeds to a specified nonprofit. A • Organizing events usually take several months of planning bit of brainstorming can produce several good fundraising ideas and typically require a team of people to plan and execute that can be built around the concept of interesting activities the production. that make it fun, easy and attractive for people with disposable income to contribute to a good cause. ORGAnIZATIOnAl BEnEFITS • Generate Revenue – Increase public profile of cause or organization. Engage the celebrity’s fan base and capture the attention of the media and the general public. • Energize the Organization – the celebrity halo or a special event can create excitement among the organiza- tion’s members, donors, and constituents, particularly around a major event. 29
    • Celebrity Bureau and Special Events IMPlEMEnTATIOn PROCESS 1a. Identify Potential Celebrity Supporters: COST-BEnEFIT AnAlYSIS • Survey members and Board members of the coalition of CBOs Given the many variables that go into a celebrity based and Funders to determine existing connections to mission marketing campaign or event, it is important to carefully aligned VIPs. assess the revenue potential of the plan and then carefully control production expenses. It may be possible to cover • Identify regional or geographic ties that may be important to some production costs through pro bono support. particular celebrities, e.g. Bruce Springsteen and New Jersey. • Research public statements made by VIPs that indicate A sample analysis: mission alignment. Planned Proceeds Ticket Sales: 300 @$50 …………………………… $15,000 • Research celebrity interests and personal background to Silent Auction: 5 items avg. at $250 ………………. 1,250 determine connection to causes Commemorative Posters/T-shirts: 100@ $15 ……...1,500 • Review Speaker Bureau lists. Total Proceeds: ……………………………….........$17,750 2. Establish Contacts with Celebrities: Example costs: • Network through member and Board member social and Staff time – 60 hrs @$50 per ………………..……. $3,000 business contacts Consultant—40 hrs@ $150 per ………....….……… 6,000 Marketing Expense …………………………………. 2,500 • Talk to business managers, agents, editors Location Expense ………………………….…….….. 3,000 • Use tools: Celebrity Black Book 2008, www.contactanyceleb- Total Costs: ………………………………..….…… $14,500 rity.com ($20/mo. database usage fee) Net Revenue ………………………….…….......….. $3,250 3. Cultivate Celebrity Relationships: • Suggest modes of participation—public endorsement, public Ancillary revenue: appearances, performances, talks, book signings, donating Projected expansion of membership base = $x mementos for charitable auctions or raffles, private engage- Projected expansion of donor base = $y ments with major donors, using their image or related graphics on T-shirts, posters, etc. • Solicit celebrities’ suggestions as to how they may contribute FInAnCIAl BEnEFITS to the cause. •Generate revenue form event ticket sales and themati- • Agree upon scope of commitment. Document the offer, e.g. cally tied complementary fundraising activity. Donation a certain number of public appearances in a year. campaigns based on celebrity endorsements and sale of 4. Develop Marketing Campaign Templates – how-to guides celebrity related memorabilia also can produce funds. for organizations wanting to use the celebrity bureau. • Producing events • Selling memorabilia • Leveraging endorsements in donation appeals 30
    • Political Donors and Philanthropy OVERVIEW Political giving can go beyond the traditional contributions to RESOURCES nEEDED candidates and electoral campaigns. To advance a political • Community organizing program staff—may involve no incremental cost or time if the community organizing agenda or effect social change, political donors may also want to agenda already addresses cultivating political officials. fund the on-the-ground organizations that are doing the work for • Development Staff –for networking, presentations, and the cause. Advocacy organizations do the research and build proposals. consensus to formulate policy. Community organizers educate • Marketing strategy support and mobilize voters, train candidates, and get officials elected to office. A host of community-based organizations execute mis- sions to strengthen the civil society and promote social, PROjECT COMPlExITY economic and environmental justice. • Connecting to regional political entities is classic There are at least three ways for CBOs to harness the financial community organizing coupled with donor development. resources of politics. One is to become part of the investment •Connecting to large-scale or national political funds is portfolio of newly developing “political mutual funds”--struc- comparable to developing national foundation relationships. tured contribution programs that bring new financial resources to community-based organizations while satisfying the donors’ ORGAnIZATIOnAl BEnEFITS desire for a “political return upon investment”. Secondly, CBOs • Raises public awareness of organizational mission – need to cultivate their relationships with political candidates, either as a selected investment target or by partnering with elected officials and key government operatives and demon- political officials. strate their organization’s value and influence by developing and • Facilitates fundraising – A new way to connect with mobilizing their constituent base as they address social issues. donors who are already contributing to political campaigns. Thirdly, CBOs can research who is donating to political cam- • Create opportunities – to leverage governmental paigns that align with their organizational missions and approach resources. these parties with additional options to make their money work • Advances policy agenda – that supports the for social change. Potential local donors in your area can be eas- organization’s mission. ily identified through some of the online databases listed below. 31
    • Political Donors and Philanthropy IMPlEMEnTATIOn PROCESS 1. Identify local or regional political entities that would COST-BEnEFIT AnAlYSIS recognize the mutual benefit of directing financial support • Assuming 5 hours a week or 240 hours per annum of to mission aligned CBOs. staff time @$50/hr =$12K per year plus $3000 marketing 2. Ask for endorsements or referrals to their contributor base. expense 3. Actively work to elect progressives and make these efforts • Need to gross $16.5K for a 10% return upon investment. visible. 4. Contact a political fund such as the New Progressive Coalition or the Democracy Alliance to discuss inclusion in FInAnCIAl BEnEFITS their social agenda prospectus. •Potentially, a new source of donor relationships which can 5. Use on-line political contribution tracking databases, e.g. provide incremental funding. FundRace, to identify potential funding sources. •May open access to government resources or contracts. 6. Use the Voter Action Network www.voteractivationnetwork. com to data mine voter lists. 32
    • Implementation Support There are several ways for CBOs to obtain assistance loans for Revenue Generating Programs Most existing loan programs for nonprofits focus on financing in implementing the ideas outlined in this guide. capital assets, particularly real estate, or providing emergency The first step is to contact the program officers of funds during a cashflow crisis. Larger Program Related Invest- ment (PRI) loans are beginning to support social enterprise the funders supporting your organization to discuss initiatives. The revenue stream generated from these types of what technical assistance resources may be available. projects, either through cost savings or new income can make this an economically viable approach. These discussions should consider the following The projects outlined in this catalogue have short breakeven types of support. time horizons (1-3 years) if the program can reach appropriate scale. Micro-loan terms should reflect this reality offering Technical Assistance 12-24 months initial deferred payments, low interest rates, and Most CBOs are resource constrained and don’t necessarily have up to 5-year payback. A $20,000 loan at 0% interest, 12-month the skill sets to identify, develop, or put financial resource devel- payment deferral and 5 year payback would commit a CBO to opment programs in place. There are consultants that specialize a manageable $417 a month payment in years 2 through 5. in developing business opportunities, e.g. Internet marketing, Venture philanthropy investments, which can be structured as or are specifically oriented towards supporting non-profits in the equity participation as well as loans, may be the next step once development of revenue sources. The References and Resources a CBO or a CBO coalition determines they have a scalable social section of this catalogue cites a few consulting organizations that enterprise requiring growth capital. can support these types of projects. loans for Revenue Generating Programs Some foundations fund organizational capacity building Another discussion that CBOs can have with foundation program programs and are starting to develop formal and informal officers is the value of funders providing organizational capacity technical assistance programs that pull together a network of building grants as seed money for CBOs to expand their fund- consultants and staff that can provide: raising capabilities. Whether the project is as basic as setting up a membership and donor tracking database or developing one • Market research and feasibility analyses of the expanded fundraising opportunities outlined in this • Program design catalogue, these types of grants economically empower CBOs. In addition to traditionally structured grants, a funder may want • Business plan development to consider “pay for performance” grants that are usually larger in size, with funds released as fundraising benchmarks • Implementation strategies are achieved. • Implementation support • Post-implementation follow-up, and even some • Centralized program management for projects, programs, and initiatives that will actualize a foundation’s strategic mission. Some examples of these initiatives include the New World Foundation’s Resource Lab and the French American Charitable Trust’s (FACT) Capacity Building Program for its grantees. To identify these resources at other foundations, CBOs should discuss what resources may be available with their own networks of foundation funders. 33
    • References and Resources FOOTnOTES i New World Foundation President Colin Greer, February 2008. 34