Presentation Slides from Amuta21c: Strategies for Analyzing & Implementing Revenue-Generating Activities in a Nonprofit

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Presentation Notes from a workshop given at the Amuta21c Conference in Jerusalem on March 18, 2012.

These slides are primarily intended for the workshop participants. More developed intended for a general audience are/will be posted on my Slideshare channel.

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Presentation Slides from Amuta21c: Strategies for Analyzing & Implementing Revenue-Generating Activities in a Nonprofit

  1. 1. Strategies for Analyzing & Implementing Revenue-Generating Activities In a Nonprofit Organization Shuey Fogel @ Amuta21c Conference Jerusalem, Israel March 18, 2012The Nonprofit Banker nonprofitbanker.com
  2. 2. Greetings & Salutations • Shuey Fogel – Who am I? • Former Nonprofit Professional turned Banking Specialist • Wear two hatsThe Nonprofit Banker nonprofitbanker.com
  3. 3. Greetings & Salutations • Director, Banking Solutions for Nonprofits at a Bank in Israel • Work with local and international charities operating in Israel • Develop the Products, Services & Added Value we offer our nonprofitsThe Nonprofit Banker nonprofitbanker.com
  4. 4. Greetings & Salutations • The Nonprofit Banker • Personal project active on the web, Twitter and Facebook • Write, post and link to articles on tips, tools, trends, and regulations affecting Israel’s (Global) nonprofit sector.The Nonprofit Banker nonprofitbanker.com
  5. 5. Overview • Three Building Blocks to Successfully Strategize Revenue-Generating Activities for a Nonprofit 1. Nonprofit Business Model Statement 2. Impact vs. Profitability Matrix 3. Discovering Your Funding ModelThe Nonprofit Banker nonprofitbanker.com
  6. 6. Overview Why the Recent Demand? Don’t Get Blinded by the Hype Revenue – Define Terms 3 BUILDING BLOCKS Take-homes ConsiderationsThe Nonprofit Banker nonprofitbanker.com
  7. 7. Overview • Purpose of this presentation • Jump start the strategizing process • OR Educated reasons to refuse • Conversation starts and ends with • Accountant • LawyerThe Nonprofit Banker nonprofitbanker.com
  8. 8. Overview • These slides are class notes mainly intended for the workshop participants • More developed slides intended for a general audience will also be posted to SlideshareThe Nonprofit Banker nonprofitbanker.com
  9. 9. Why the Recent Demand? Don’t Get Blinded by the Hype Revenue – Define Terms 3 BUILDING BLOCKS Take-homes ConsiderationsThe Nonprofit Banker nonprofitbanker.com
  10. 10. Why the Recent Demand? • Economy • Nonprofits themselves • Funders • “New” Funder • Donors that are looking to “invest” • Notion of “Philanthropic Equity” • Socially Minded For-Profits • Double-Bottom LineThe Nonprofit Banker nonprofitbanker.com
  11. 11. Why the Recent Demand? Don’t Get Blinded by the Hype Revenue – Define Terms 3 BUILDING BLOCKS Take-homes ConsiderationsThe Nonprofit Banker nonprofitbanker.com
  12. 12. Don’t Get Blinded by the Hype • Nothing can substitute philanthropy (NPQ) • Donors are different than customers • Connected to the product or the cause? • Charities & Double Bottom-Line have existed for decades • SSIR study • Fee-for-Service alone or earned-income ventures separate/distinct from charity were not models of the BIG nonprofits (budget of $50 mil or more)The Nonprofit Banker nonprofitbanker.com
  13. 13. Why the Recent Demand? Don’t Get Blinded by the Hype Revenue – Define Terms 3 BUILDING BLOCKS Take-homes ConsiderationsThe Nonprofit Banker nonprofitbanker.com
  14. 14. Revenue – Define Terms • Related Business Income • Enhance and complement your mission • Unrelated Business Income • Within or External (Daughter Company) • Again, speak to lawyer/accountant on regulatory implicationsThe Nonprofit Banker nonprofitbanker.com
  15. 15. Revenue – Define Terms • Two Ways of Looking at Revenue 1. Fee-for-Service vs. Product 2. Cost Recovery vs. Earned IncomeThe Nonprofit Banker nonprofitbanker.com
  16. 16. Revenue – Define Terms • Fee-for-Service vs. Product • Fee-for Service • Target audience • Beneficiaries • Evangelists • Possible limits on rates, however… • Voluntary donations • Symbolic gesturesThe Nonprofit Banker nonprofitbanker.com
  17. 17. Revenue – Define Terms • Fee-for-Service vs. Product • Product • Seems easier but not • Keys to Success • Enthusiastic volunteers • Outstanding products • Superb coordinationThe Nonprofit Banker nonprofitbanker.com
  18. 18. Revenue – Define Terms • Cost Recovery vs. Earned Income • Cost Recovery • Linked to programs • When program ends, so does related cost and recovery • Earned Income • Inherently rooted in the operations • Earned Income or Social Enterprise?The Nonprofit Banker nonprofitbanker.com
  19. 19. Revenue – Define Terms • How to know if it is a Social Enterprise? • Is it operated like a business? • Strategically created for economic value • Revenue set as independent goal • Staffed by business professionalsThe Nonprofit Banker nonprofitbanker.com
  20. 20. Revenue – Define Terms • How to know if it is a Social Enterprise? • Ex: Elephants • National Zoo in Washington D.C. • Sells dung in gift shop as organic fertilizer called “Zoo Doo” • No product line • No goals • The more sold, the merrier = Earned IncomeThe Nonprofit Banker nonprofitbanker.com
  21. 21. Revenue – Define Terms • How to know if it is a Social Enterprise? • Ex: Elephants • Zoo in Bangkok, Thailand • Uses dung to make paper products • Imports dung from other zoos to meet quota and increase product line = Social EnterpriseThe Nonprofit Banker nonprofitbanker.com
  22. 22. Why the Recent Demand? Don’t Get Blinded by the Hype Revenue – Define Terms 3 BUILDING BLOCKS Take-homes ConsiderationsThe Nonprofit Banker nonprofitbanker.com
  23. 23. Strategies for Analyzing & Implementing Revenue-Generating Activities In Nonprofit Organizations Building Blocks for Increasing Revenue through Building Upon Your Organization’s Strengths while Simultaneously Promoting a Unified MessageThe Nonprofit Banker nonprofitbanker.com
  24. 24. BUILDING BLOCKS• Nonprofit Business Model Statement• Impact vs. Profitability Matrix• Finding Your Funding ModelThe Nonprofit Banker nonprofitbanker.com
  25. 25. NP Business Model StatementThe Nonprofit Banker nonprofitbanker.com
  26. 26. NP Business Model Statement Must consider financial viability and mission impact together!The Nonprofit Banker nonprofitbanker.com
  27. 27. NP Business Model Statement • Internal document • Describes what fuels the economic engine of the organization • More than listing all the types of funding • Strategy for financial sustainability • Reference point/guide for the organizations focus and strategiesThe Nonprofit Banker nonprofitbanker.com
  28. 28. NP Business Model Statement • When Creating the Building Blocks • Nonprofit Business Model Statement is last of the 3 pieces to be created • Once Building Blocks are Established • Nonprofit Business Model Statement is the first point of reference • Business Models changes over timeThe Nonprofit Banker nonprofitbanker.com
  29. 29. NP Business Model Statement • Ex: (Blue Avocado) • Food Bank: "We obtain donated food from businesses (85%) and individuals (15%), sorted and distributed largely by volunteers, and financially supported by individual donors and the community foundation." • Affordable Housing: "We build affordable housing for low-income people where government and developer fees are available."The Nonprofit Banker nonprofitbanker.com
  30. 30. NP Business Model Statement • Ex: (Blue Avocado) • Same Mission but Dif Business Models • "Our mission is to develop and implement evaluation tools that help nonprofits identify, understand, and increase their impact.“ • Organization A: "Foundations contract with us to conduct evaluations with their grantees.“ • Organization B: "We develop and promote evaluation tools and processes that are affordable -- and therefore can be purchased directly by nonprofits."The Nonprofit Banker nonprofitbanker.com
  31. 31. BUILDING BLOCKS• Nonprofit Business Model Statement• Impact vs. Profitability Matrix• Finding Your Funding ModelThe Nonprofit Banker nonprofitbanker.com
  32. 32. Impact vs. Profitability Matrix • Analysis of current programs • With an eye on revenue • Focus on what you’re already doing • Enhance the mission • Clarity • Feasibility • How can our activities fit together and leverage each other?The Nonprofit Banker nonprofitbanker.com
  33. 33. Impact vs. Profitability Matrix • Dual-Bottom Line Strategy • Mission (external) • Financial (internal)The Nonprofit Banker nonprofitbanker.com
  34. 34. Impact vs. Profitability Matrix MATRIX MAP HIGH IMPACT HIGH PROFITABILITY IMPACT LOW IMPACT LOW PROFITABILITY PROFITABILITYThe Nonprofit Banker nonprofitbanker.com
  35. 35. Impact vs. Profitability Matrix IDEAL SITUATION - MATRIX MAP HIGH IMPACT HIGH PROFITABILITY 25% 50% 0% 25% IMPACT LOW IMPACT LOW PROFITABILITY PROFITABILITYThe Nonprofit Banker nonprofitbanker.com
  36. 36. Impact vs. Profitability Matrix Blue AvocadoThe Nonprofit Banker nonprofitbanker.com
  37. 37. Impact vs. Profitability Matrix • Examples of Successful Impact? • Alignment with Core Mission • Excellence in Execution • Scale and Volume • Filling an Important Gap • Community Building • Leverage • Chart ItThe Nonprofit Banker nonprofitbanker.com
  38. 38. Impact vs. Profitability Matrix • Ex: Charting Successful Impact Core ExcellenceFilling an Community Mission in Important Building Execution Gap Program 1 4 4 3 1 12 Program 2 3 4 2 2 11 Program 3 2 4 4 3 13The Nonprofit Banker nonprofitbanker.com
  39. 39. Impact vs. Profitability Matrix • Determine Profitability • Revenue • Restricted & Unrestricted Separately? • Expenses • Include full costs • Program Costs • Shared Costs • Administration CostsThe Nonprofit Banker nonprofitbanker.com
  40. 40. Impact vs. Profitability Matrix 25% 50% 25% Blue AvocadoThe Nonprofit Banker nonprofitbanker.com
  41. 41. Impact vs. Profitability Matrix • Chart it again • Identify Activities & Analyze Impact $$ Effort Type Action Program 1 High Low High Heart ??? Program 2 Medium High Medium Money ??? Tree Program 3 Low Medium Low Stop Sign ??? but GrowingThe Nonprofit Banker nonprofitbanker.com
  42. 42. Impact vs. Profitability Matrix • STOP SIGNS… • Low Impact, Low Profitability • Instead of • Trying to improve it (again) • Ignoring it • Spin it off to another organization • Close itThe Nonprofit Banker nonprofitbanker.com
  43. 43. Impact vs. Profitability Matrix • STARS… • High Impact, High Profitability • Pay attention • Increase organization involvement • Invest time and money • Grow itThe Nonprofit Banker nonprofitbanker.com
  44. 44. Impact vs. Profitability Matrix • HEARTS… • High Impact, Low Profitability • Instead of • Closing it • Making it a “Sacred Cow” • Keep & Celebrate it • Most importantly • Contain Costs & Increase ProfitabilityThe Nonprofit Banker nonprofitbanker.com
  45. 45. Impact vs. Profitability Matrix • MONEY TREES… • Low Impact, High Profitability • Instead of • Giving it second class status • Keeping it separate from programs • Increase profitability • Scale or efficiency • Increase impactThe Nonprofit Banker nonprofitbanker.com
  46. 46. BUILDING BLOCKS• Nonprofit Business Model Statement• Impact vs. Profitability Matrix• Finding Your Funding ModelThe Nonprofit Banker nonprofitbanker.com
  47. 47. Discover Your Funding Model • You’re not unique as you think • SSIR study revealed 10 dif. Models • Successful orgs had 1 (maybe 2) • Models are all-encompassing • Branding • Programs • Fundraising EffortsThe Nonprofit Banker nonprofitbanker.com
  48. 48. Discover Your Funding Model • Focus on Related Business Income • Enhance and complement your mission • Build upon existing expertise & programming • Clarity is King (SSIR) • “One of the most liberating and clarifying things we’ve done to date.” • “Taking ‘maybe’ out of the process has already boosted our bottom line.”The Nonprofit Banker nonprofitbanker.com
  49. 49. Discover Your Funding Model • Three Parameters to Define Fundraising Models 1. Source of Funds • Individuals • Corporation • Foundation • Government – Types of Decision Makers – Motivation of Decision MakersThe Nonprofit Banker nonprofitbanker.com
  50. 50. Discover Your Funding Model • Funding Models • Essentially, who is your donor base? • Examples • Many Individual Donors • Government • CorporationsThe Nonprofit Banker nonprofitbanker.com
  51. 51. Discover Your Funding Model • Funding Model - Many Individual Donors 1. Causes 2. Beneficiaries 3. MembershipThe Nonprofit Banker nonprofitbanker.com
  52. 52. Discover Your Funding Model • Many Individual Donors – Causes • Create ways for people to connect • Popular with environment, international, and medical research areas • Inherent appeals to Volunteers • To get involved • To run their own fundraising eventsThe Nonprofit Banker nonprofitbanker.com
  53. 53. Discover Your Funding Model • Many Individual Donors – Causes • Ex: Revenue-Generating Activities • Sell items that promote your cause • T-Shirts / Chatchkies / Bling / Swag for Volunteers • Tool kits • TrainingThe Nonprofit Banker nonprofitbanker.com
  54. 54. Discover Your Funding Model • Many Individual Donors – Beneficiaries • Reimbursed for services to the Beneficiary • ALSO rely on donations from people who’ve benefited in the past • Motivated because they believe that the benefit they received changed their lifeThe Nonprofit Banker nonprofitbanker.com
  55. 55. Discover Your Funding Model • Many Individual Donors – Beneficiaries • Examples • Two Best: Hospitals and Universities • Pastoral Care, Financial Management, MentoringThe Nonprofit Banker nonprofitbanker.com
  56. 56. Discover Your Funding Model • Many Individual Donors – Beneficiaries • Ex: Revenue-Generating Activities • More Careful, More Sensitive • Create ways for beneficiaries to express gratitude • Execute mission in different venues • Ex: See TishkofetThe Nonprofit Banker nonprofitbanker.com
  57. 57. Discover Your Funding Model • Many Individual Donors – Membership • Issue is integral to their every day life • Don’t need to create the rationale • Just offer or support activities that members already seekThe Nonprofit Banker nonprofitbanker.com
  58. 58. Discover Your Funding Model • Many Individual Donors – Membership • Ex: Revenue-Generating Activities • Lectures • Events • Periodicals (e-newsletter, magazine) • Swag for member prideThe Nonprofit Banker nonprofitbanker.com
  59. 59. Discover Your Funding Model • Government 1. Government Outsourcing 2. Policy Innovator 3. BrokersThe Nonprofit Banker nonprofitbanker.com
  60. 60. Discover Your Funding Model Government 1. Outsourcing • Gov has defined & allocated funding 2. Policy Innovator • Novel models to address social issues • Not 100% compatible w/ existing funding 3. Brokers • Beneficiaries can choose the suppliers • Ex: Kupat CholimThe Nonprofit Banker nonprofitbanker.com
  61. 61. Discover Your Funding Model • Government 1. Brokers • Beneficiaries are free to choose the supplierThe Nonprofit Banker nonprofitbanker.com
  62. 62. Discover Your Funding Model • Government • Ex: Revenue-Generating Activities • Individual Donor revenue streams • Offer services to other sectors • Get more contracts • Make organizational more desirable • Increase added-value • Increase expertise in subject areaThe Nonprofit Banker nonprofitbanker.com
  63. 63. Discover Your Funding Model • Corporate Funding • Two Types 1. Corporate Philanthropy • Treat like Individual Donor 2. In-kind Donations • Willing to donate to prevent waste • Cash should still be an important piece of the equationThe Nonprofit Banker nonprofitbanker.com
  64. 64. Discover Your Funding Model • Corporate Funding • Ex: Revenue-Generating Activities • Individual Donor revenue streams • Appeal to corporate culture • Sell advertising • Preferred suppliers bookThe Nonprofit Banker nonprofitbanker.com
  65. 65. Why the Recent Demand? Revenue – Keep in Mind (Disclaimer) Revenue – Define Terms 3 BUILDING BLOCKS Take-homes ConsiderationsThe Nonprofit Banker nonprofitbanker.com
  66. 66. Take-homes • Don’t get blinded by the hype • Don’t lose confidence in what is already working • However, understand the donor’s viewpoint • How will your org relate to revenue? • Is revenue an unexpected bonus or crucial to your survival? • Products, fee-for-service or both?The Nonprofit Banker nonprofitbanker.com
  67. 67. Take-homes • NP Business Model Statement • Works in tandem with Mission Statement • Reference point for any potential revenue generating activity • Build on your strengths and expertiseThe Nonprofit Banker nonprofitbanker.com
  68. 68. Take-homes • Impact vs. Profitability Matrix • Analyze current programs to see what quadrant can be strengthened • First monetize existing programs before creating new ones • No shortcuts to creating “uni-voice” programmingThe Nonprofit Banker nonprofitbanker.com
  69. 69. Take-homes • Discovering Your Funding Model • You’re not so unique, build on the work of others • Understand your donor • Create revenue streams that appeal to your donors’ and constituents’ needs/wantsThe Nonprofit Banker nonprofitbanker.com
  70. 70. Why the Recent Demand? Revenue – Keep in Mind (Disclaimer) Revenue – Define Terms 3 BUILDING BLOCKS Take-homes ConsiderationsThe Nonprofit Banker nonprofitbanker.com
  71. 71. Considerations • Weigh revenue potential against associated costs • Costs - Investments in Four Areas 1. Programs 2. Personnel 3. IT (software, hardware, database etc.) 4. CommunicationsThe Nonprofit Banker nonprofitbanker.com
  72. 72. Considerations • When investing in these areas • Don’t spread to thin, Stay focused • Avoid mission creep • Communication includes: • Promotion of business activities • Branding: internal & external perceptionThe Nonprofit Banker nonprofitbanker.com
  73. 73. Things to Consider • Start-up costs • Scalability • If and how will our mission change to meet the new business demands? • Market research • The Competition • Is it being done already?The Nonprofit Banker nonprofitbanker.com
  74. 74. Bibliography • Stanford Social Innovation Review (SSIR) • 10 Nonprofit Funding Models • Finding Your Funding Model • The Imp. of Earned Income in a Funding Model • While not used in this presentation, this last article is a short read & recommended. • Blue Avocado • Nonprofit Business Model StatementsThe Nonprofit Banker nonprofitbanker.com
  75. 75. Reminder • These slides are class notes mainly intended for the workshop participants • More developed slides intended for a general audience will also be posted to SlideshareThe Nonprofit Banker nonprofitbanker.com
  76. 76. Thank You Shuey Fogel - The Nonprofit BankerFor questions, speaking engagements or toarrange a free consultation for your amutah: nonprofitbanker@gmail.com LinkedIn: /nonprofitbanker Facebook: /nonprofitbanker Twitter: @nonprofitbankerThe Nonprofit Banker nonprofitbanker.com

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