Civic Entrepreneurship: Revenue Generating Strategies Government and Nonprofit Organizations
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Civic Entrepreneurship: Revenue Generating Strategies Government and Nonprofit Organizations



Presentation given by James H. Johnson, Jr. at the 2009 Health Equity Conference.

Presentation given by James H. Johnson, Jr. at the 2009 Health Equity Conference.



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Civic Entrepreneurship: Revenue Generating Strategies Government and Nonprofit Organizations Civic Entrepreneurship: Revenue Generating Strategies Government and Nonprofit Organizations Presentation Transcript

  • Civic Entrepreneurship: Revenue Generating Strategies Government and Nonprofit Organization James H. Johnson, Jr. William Rand Kenan, Jr. Distinguished Professor of Management Kenan-Flagler Business School Director, Urban Investment Strategies Center Frank Hawkins Kenan Institute of Private Enterprise University of North Carolina at Chapel Hill September 2009 1
  • Overview  Civic entrepreneurship approaches to sustainability  Drivers of change  Keys to thriving and prospering in the future September 2009 2
  • Entrepreneurial Approaches to Sustainability  Social vs. Civic Entrepreneurship  Revenue Generation Options  Partner Motivations  Steps to Creating a Strategic Alliance or Commercial Business Venture  Critical Success Factors  Potential Pitfalls September 2009 3
  • Social Entrepreneurship A set of behaviors whereby an individual acts as a change agent in the social sector by:  adopting a mission to create and sustain social value;  recognizing and relentlessly pursuing new opportunities to serve that mission;  engaging in a process of continuous innovation, adaptation, and learning;  acting boldly without being limited to resources currently in hand; and  exhibiting a heightened sense of accountability to the constituencies served and for the outcomes created. J. Gregory Dees, Kauffman Center for Entrepreneurial Leadership September 2009 4
  • Civic Entrepreneurship  Non-Profits: creating social ventures to meet society’s pressing needs and the financial needs of their organizations.  For-Profits: acting in a socially responsible manner while continuing to operate in the best interests of shareholders.  Government: operating efficiently while creating policies that encourage others to act responsibly. September 2009 5
  • Civic Entrepreneurship Driving Forces Scarcity of Federal Resources Rise in Venture Philanthropy and Social Entrepreneurship Cycle of Fundraising and Distribution September 2009 6
  • Civic Entrepreneurship Mission  To transform the culture of non-profit and government organizations from a social welfare-oriented to a business-oriented model of operation, enabling them to become creators rather than mere redistributors of wealth. September 2009 7
  • Typology of Revenue- Generating Options  Cause-related Marketing Alliances  Affinity Programs  Exclusive Agreements  Selling of Space  Incentive Programs  Sponsored Programs/Activities  Commercial Ventures Launched by Nonprofits September 2009 8
  • Traditional Cause- Related Marketing Alliances  Corporation agrees to donate a specified amount of cash, food, or equipment in direct proportion to sales revenue-- often up to a set amount-- in support of a specific cause. September 2009 9
  • Traditional Cause- Related Marketing Alliances (cont.d)  Research confirms that companies supporting social causes in this way typically garner greater market share as more and more people who believe in the cause begin to purchase their products or services. September 2009 10
  • Traditional Cause-Related Marketing Alliances (cont.d)  Thus, such initiatives enhance, rather than diminish, the company’s bottom line, while contributing to the resolution of pressing societal problems. September 2009 11
  • Traditional Cause-Related Marketing Alliances: Examples  American Express and Share Our Strength “Charge Against Hunger” Campaign  Visa and “Reading Is Fundamental” Program  J.C. Penny’s “Can Do” After School Program  Revelation Corporation of America ( September 2009 12
  • Web-Based Cause-Related Marketing Alliances: Charity Malls and Cause-Focused E-Commerce Companies                 September 2009 13
  • September 2009 14
  • Cause-Related Marketing Alliances: Public Health Examples Company Promotion Contributions($) Benefits American Charge For The Up to $500,000 Komen Express Cure Foundation Avon Kiss Goodbye to N/A Avon Breast Cancer Foundation* BMW BMW Ultimate Up to $1,000,000 Komen Drive Foundation Eureka Clean For The Up to $250,000 Komen (Electroux) Cure Foundation * - Donations to various breast cancer organizations and research institutions September 2009 15
  • Cause-Related Marketing Alliances: Public Health Examples (cont.d) Company Promotion Contributions($) Benefits Yoplait Save Lids to Up to $750,000 Komen (General Mills) Save Lives Foundation Creative Triumph $526,532 Alzheimer’s Memories Album Association Consultants Dreyer’s & Pink Ribbon Up to $250,000 City of Hope Edy’s September 2009 16
  • Affinity Programs  A variant of cause-related marketing alliances. In exchange for the opportunity to provide products or services to association members at a reduced cost, corporations agree to donate a specified percentage of profits to a charitable cause. September 2009 17
  • Affinity Programs (cont.d)  Target two types of associations  Trade - representing businesses  Professional - representing individuals September 2009 18
  • Associations  “Associations are an underserved market niche that is open to any business willing to understand their unique needs…the association marketplace is one of the finest niche-marketing opportunities to be found.” Daniel Bicker, Camelot Travel Services, Englewood, CO. September 2009 19
  • Key Facts About Associations in the U.S.  Over 100,000 associations exist in the U.S.  More than 80% of associations have 1 to 20 employees and have annual budgets under $1 million.  Small businesses are represented at the national level by more than 25 associations.  Most Americans belong to at least one association; over 40% belong to 4 or more. September 2009 20
  • Key Facts About Affinity Programs  Used to market products for more than 20 years.  Rely on the good name of the association to market products or services.  Allow members to gain improved access or pricing on products/services, and enable business partners generate increased sales.  Help to attract and retain members while decreasing association dependence on membership dues. September 2009 21
  • Key Facts About Affinity Programs (cont.d)  Co-branded Credit Cards are the most popular example of Affinity Programs  Cards appeal to consumers with specific interests or desires  Examples include the following… September 2009 22
  • MBNA International MBNA also has cards with: NHL Gateway LL Bean NFL NASCAR Universities September 2009 23
  • First USA Visa: Companies Broadcasting Companies, Magazines Retail, Financial Institutions Internet Companies Travel and Entertainment Companies September 2009 24
  • First USA Visa: Organizations Animal and Environmental Organizations Colleges/Universities Military Professional Associations Special Interest Groups Sports Organizations Fraternities and Sororities Symphonies September 2009 25
  • Bank of America N.A. September 2009 26
  • Examples of Associations Involved in Affinity Programs NAME MEMBERSHIP National Association of Realtors 720,000 Assoc. of the Bar of the City of NY 20,000 Greater Washington Society of Assoc. 3,400 Executives American Academy of Periodontology 7,000 Aircraft Owners and Pilots Association 341,000 U.S. Chambers of Commerce 215,000 September 2009 27
  • Cities Involved in Affinity Programs  Shaker Heights, OH  Boston, MA  South Orange, NJ  San Francisco, CA  Plano, TX  Charlotte, NC September 2009 28
  • Affinity Programs: Opportunities for Development  Group Purchasing Program  Financial Services  Insurance  Information and Education  Marketing and Advertising September 2009 29
  • Advantages of Affinity Programs  Portability  Satisfied Customers  Royalties September 2009 30
  • Nonprofit Organizations with Affinity Portals  AFL-CIO  National Federation of Republican Women  National Association for Underwater Instructors September 2009 31
  • Exclusive Agreements: Definition  Local governments and other public sector organizations grant private sector companies exclusive rights to provide a particular product or service to their clientele in exchange for signing bonuses, a percentage of profits, and other perks. September 2009 32
  • Exclusive Agreements: Organizations  Cities  Public Schools  Public School Districts  Other Non-profit Organizations (e.g., zoos) September 2009 33
  • Exclusive Agreements: Examples “Pouring Rights” Contracts ENTITY COMPANY VALUE * San Diego, CA Pepsi $6.7 m Huntington Beach, CA Coke $6 m Madison (WI) Metro School Coke $1.5 m District Colorado Springs (CO) Coke $8.0 m School District Denver Public School Pepsi $1.5 m District * Contracts typically range from 5 to 15 years. September 2009 34
  • Exclusive Agreements: Examples “Pouring Rights” Contracts (cont.d) ENTITY COMPANY VALUE* Town of Amherst (NY) Pepsi $550,000 Recreation Center Crete-Monee District 201-U American $2.7 m (Chicago Schools) Bottling Company Keller School District (TX) Coke $4.2 m Wilson County Schools Coke $4.4 m (NC) * Contracts typically range from 5 to 15 years. September 2009 35
  • Exclusive Agreements: Examples “Pouring Rights” Contracts (cont.d) ENTITY COMPANY VALUE* Bozeman School District Pepsi $120,000 (Montana) Louisville (KY) Zoological Coke $550,000 Garden Hurst-Euless-Bedford Pepsi $1.95 m Independent School District (TX) * Contracts typically range from 5 to 15 years. September 2009 36
  • Selling of Space  Billboards  Computer Screen Savers  Telephone Kiosks  Cafeteria Menus  Trashcans  Book Covers  Buses/Vans/Taxi-Cabs  School Rooftops  Airports  Fruit  ATMs  Scoreboards, Fences, etc. September 2009 37
  • Incentive Programs  Provide Equipment or Cash  Sharon Luggage “The Pack that Gives Back” Program  Apples for Learning  Promote Learning  Pizza Hut “Book It” Program  General Mills “Box Tops for Education” September 2009 38
  • Sponsored Programs/Activities  Corporations prepare materials that are designed to enhance the quality of entrepreneurial education in public schools.  Merrill Lynch’s “Money Matters in the Millennium”  BIC’s “Quality Comes in Writing” Program September 2009 39
  • Corporate Ventures Launched By Nonprofits Social business enterprises are specifically set up to generate revenue. Products Habitat for Humanity - Tee Shirts, Gifts Services Nature Conservancy - Educational Tours Storefronts The World Wildlife Fund Canada Online Shops American Civil Liberties Union National Rifle Association Save the Children September 2009 40
  • Partner Motivations Non-Profit/Government Increase Revenue Access to Resources Enhance Capacity to Offer Services Corporation Solve Business Problems Build Customer Loyalty Enhance Public Relations Access to New Markets September 2009 41
  • Steps in Creating a Strategic Alliance  Research the company’s history of donations and future plans for charitable contributions - understand their motivations  Present your added value – “What do you bring to the table?”  Build on what works; eliminate what doesn’t - rely on the existing expertise of both organizations  Begin with the end in mind - outcome focus  Communicate and follow up September 2009 42
  • Steps in Creating a Social Purpose Enterprise  Get Buy In - Internally and Externally  Create A Task Force  Brainstorm Ideas  Conduct Feasibility Studies  Develop Business Plan September 2009 43
  • Critical Success Factors  Clarity of Purpose  Dedication of Partners  Customer/Community Focus  Congruency of Mission and Goals  Planning  Communication  Expertise September 2009 44
  • Potential Pitfalls  Community Perspective  Generation of revenue is perceived as moving away from mission --- any or all stakeholders  Human and Capital Resources  Limitations of what is available to launch venture  Legal Implications  Make sure revenue doesn’t “inure” to benefit of an individual or outside interest.  Business launched has to be directly related to mission of nonprofit. September 2009 45
  • Path to Independence Transformation of a Nonprofit/Government Entity Obtain Modify Form Leverage Achieve Business Internal Strategic Dollars Mission Skills Operations Alliances Spent of NP September 2009 46
  • The Civic Entrepreneur Effect Probability of Success Financial Profitability Stabilty Business Acumen Dependence on External Funds September 2009 47
  • Implications For Financial Health  Change is the only constant  Business intelligence gathering is paramount  Speed  Agility  Flexibility September 2009 48
  • Implications for Managers and Leaders  Competitive drive  Voracious consumer of competitive intelligence  Tenacity  Persistence  Entrepreneurial spirit  Soft skills  Hard work September 2009 49