Funding Outside the Box:  <br />Earning Revenue through Social Enterprise <br />Presented by:<br />Charlotte Keany, Direct...
Welcome and Introductions<br />Partnership<br />
 About The Center for Nonprofit Management  (CNM) <br />Founded in 1980<br />Leading Management Support Organization <br /...
About Community Wealth Ventures (CWV)<br />Wholly owned, for-profit subsidiary of Share Our Strength, the nation's leading...
Looking for Something Different?<br />
Objectives<br />Learn why and how organizations pursue community wealth (aka social enterprise)<br />Increase knowledge of...
Social Enterprise Process<br />1. <br />Asset <br />Identification<br />2. <br />Assets                  into     Opportun...
What is Community Wealth?<br />Revenues generated by profitable or self-sustaining enterprises to promote social change<br />
What is Different About Community Wealth?<br />Community Wealth is Not…<br />Community Wealth is…<br /><ul><li> Generating...
 Engaging market forces to work </li></ul>for the nonprofit sector<br /><ul><li> Devising new ways to leverage existing as...
 Allowing for greater flexibility by bringing in unrestricted revenue
 Decreasing dependence on the external funding community
 Traditional fundraising
 Grant money
 Gifts/donations
 A “quick fix” out of a crisis
 For everyone</li></li></ul><li>Community Wealth Examples<br />
What Factors are Necessary to Launch a Successful Community Wealth Enterprise?<br />
Examples of Community Wealth Enterprises Based in North Texas<br /><ul><li>Christian Community Action </li></ul>Venture: E...
Field Study of Social Enterprise<br />The Center for the Advancement of Social Entrepreneurship at Duke University, Commun...
Clarity of Social Enterprise Focus<br />Mission<br />Profit<br />A<br />B<br />C<br />Mission Focus –          A venture t...
Field Study Findings: Mission/Revenue Relationship<br /> For existing social enterprises, they are equally motivated by m...
Field Study Findings: Number of Social Enterprises per Organization<br /> Almost half of organizations that operate a soc...
<ul><li> ______________________________________________________
 ______________________________________________________
 ______________________________________________________
 ______________________________________________________
 ______________________________________________________
 ______________________________________________________
 ______________________________________________________</li></ul>What Are The Potential Risks?<br />
Stakeholder Engagement & Managing Risks<br />The Chorus of Nay-Sayers<br />“You don’t know anything about how to run a bus...
Is Community Wealth Legal?<br />Nonprofits can launch community wealth enterprises and maintain 501c3 tax status<br />Inco...
Field Study Findings: Common Legal Structures<br /> Most organizations operate social enterprises as a division of the pa...
Field Study Findings: Sources of Starting Capital for Social Enterprises<br />For existing social enterprises, a foundati...
1. Asset <br />Identification<br />2. Assets                  into     Opportunities<br />Implementation<br />3. Opportuni...
ASSETS<br />Things You HAVE:<br /><ul><li>Physical assets
Location/space
Distribution/sales    network
Brand/reputation
Patent
Access to desired resource
Relationships (membership, suppliers, etc.)</li></ul>Things You DO:<br /><ul><li>Continuously innovate
Manage information
Produce low cost goods
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Funding Outside the Box with Charlotte Keany of CNM

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Funding Outside the Box with Charlotte Keany of CNM

  1. 1. Funding Outside the Box: <br />Earning Revenue through Social Enterprise <br />Presented by:<br />Charlotte Keany, Director of Consulting<br />Center for Nonprofit Management<br />Dallas, Texas<br />September 8, 2011<br />
  2. 2. Welcome and Introductions<br />Partnership<br />
  3. 3. About The Center for Nonprofit Management (CNM) <br />Founded in 1980<br />Leading Management Support Organization <br />Every year we serve:<br />650 members<br />1,300 agencies per year<br />100 consultations <br />4,000 participants at our Education Seminars<br />1,250 Job placement ads<br />
  4. 4. About Community Wealth Ventures (CWV)<br />Wholly owned, for-profit subsidiary of Share Our Strength, the nation's leading anti-hunger and anti-poverty organizations <br />12+ years experience in nonprofit sustainability, with core expertise in social enterprise and social franchising<br />Consulting services to 200+ nonprofit organizations and 50+ foundations<br />
  5. 5. Looking for Something Different?<br />
  6. 6. Objectives<br />Learn why and how organizations pursue community wealth (aka social enterprise)<br />Increase knowledge of the benefits and risks of social ventures<br />Provide examples of what other organizations are doing <br />Explore your organization’s assets <br />Generate a list of community wealth opportunities for your organization<br />
  7. 7. Social Enterprise Process<br />1. <br />Asset <br />Identification<br />2. <br />Assets into Opportunities<br />Implementation<br />3. Opportunity Screening<br />4. Feasibility Assessment<br />5. Select One Opportunity<br />6. Business Planning<br />Post-workshop<br />Today<br />
  8. 8. What is Community Wealth?<br />Revenues generated by profitable or self-sustaining enterprises to promote social change<br />
  9. 9. What is Different About Community Wealth?<br />Community Wealth is Not…<br />Community Wealth is…<br /><ul><li> Generating sustainable new resources to support mission
  10. 10. Engaging market forces to work </li></ul>for the nonprofit sector<br /><ul><li> Devising new ways to leverage existing assets
  11. 11. Allowing for greater flexibility by bringing in unrestricted revenue
  12. 12. Decreasing dependence on the external funding community
  13. 13. Traditional fundraising
  14. 14. Grant money
  15. 15. Gifts/donations
  16. 16. A “quick fix” out of a crisis
  17. 17. For everyone</li></li></ul><li>Community Wealth Examples<br />
  18. 18. What Factors are Necessary to Launch a Successful Community Wealth Enterprise?<br />
  19. 19. Examples of Community Wealth Enterprises Based in North Texas<br /><ul><li>Christian Community Action </li></ul>Venture: Expansion of ReSale Thrift Shop<br /><ul><li>Translation & Interpretation Network (A business of Catholic charities Diocese of Fort Worth, Inc.)</li></ul>Venture: Interpretation services, translation services, qualify and train professionals in interpretation services<br /><ul><li>Autism Treatment Center</li></ul>Venture: Autism Diagnostic & Therapy Rehabilitation Agency<br />
  20. 20. Field Study of Social Enterprise<br />The Center for the Advancement of Social Entrepreneurship at Duke University, Community Wealth Ventures, and the Social Enterprise Alliance, with support from REDF, conducted the largest national survey to date about Social Enterprise with a diverse set of nonprofit organizations.<br />Top 5 Mission Areas of Nonprofits Operating a Social Enterprise<br />Top 5 Social Enterprise Venture Types<br />Workforce Development<br />Housing<br />Community & Economic Development<br />Education<br />Health<br />Education & Training<br />Retail/Thrift Shop<br />Consulting Services<br />Food Services/Catering<br />Art Venture<br />Source: Community Wealth Ventures Field Study of Social Enterprise, 2008. Survey sent to 5,965 nonprofits, 1,008 responded and 740 completed survey.<br />
  21. 21. Clarity of Social Enterprise Focus<br />Mission<br />Profit<br />A<br />B<br />C<br />Mission Focus – A venture that will need ongoing philanthropic support but meets key mission objectives.<br />Self-Sustainable Focus – A venture that generates enough income to make it self-sustaining.<br />Profit Focus – A venture that generates profits which can be re-invested in the venture or provide unrestricted funding to the parent organization.<br />
  22. 22. Field Study Findings: Mission/Revenue Relationship<br /> For existing social enterprises, they are equally motivated by mission and revenue. Interestingly, for those considering social enterprises, they are slightly more motivated by revenue.<br />
  23. 23. Field Study Findings: Number of Social Enterprises per Organization<br /> Almost half of organizations that operate a social enterprise have two or more social enterprises.<br />Source: Community Wealth Ventures Field Study of Social Enterprise,, 2008.<br />
  24. 24. <ul><li> ______________________________________________________
  25. 25. ______________________________________________________
  26. 26. ______________________________________________________
  27. 27. ______________________________________________________
  28. 28. ______________________________________________________
  29. 29. ______________________________________________________
  30. 30. ______________________________________________________</li></ul>What Are The Potential Risks?<br />
  31. 31. Stakeholder Engagement & Managing Risks<br />The Chorus of Nay-Sayers<br />“You don’t know anything about how to run a business.”<br />“We’ll loose foundation/donor support.”<br />“It’s wrong for nonprofits to compete against businesses.”<br />“It’s selling out.”<br />“Nonprofits are charities and should only focus on charitable work.”<br />“It will put the organization’s tax-exempt status at risk.”<br />
  32. 32. Is Community Wealth Legal?<br />Nonprofits can launch community wealth enterprises and maintain 501c3 tax status<br />Income Related to Exempt Purposes<br />No limit on amount of revenue<br />Income from Unrelated Activities<br />Taxable as “unrelated business taxable income” (UBTI)<br />There is no standard legal structure<br />Consult an attorney to understand the most appropriate legal structure and definition of UBTI for your organization<br />
  33. 33. Field Study Findings: Common Legal Structures<br /> Most organizations operate social enterprises as a division of the parent organization.<br />Source: Community Wealth Ventures Field Study of Social Enterprise,, 2008.<br />
  34. 34. Field Study Findings: Sources of Starting Capital for Social Enterprises<br />For existing social enterprises, a foundation grant is the most commonly used source of capital for starting ventures.<br />Source: Community Wealth Ventures Field Study of Social Enterprise,, 2008.<br />
  35. 35. 1. Asset <br />Identification<br />2. Assets into Opportunities<br />Implementation<br />3. Opportunity Screening<br />4. Feasibility Assessment<br />5. Select One Opportunity<br />6. Business Planning<br />Step 1 – Identifying Assets <br />
  36. 36. ASSETS<br />Things You HAVE:<br /><ul><li>Physical assets
  37. 37. Location/space
  38. 38. Distribution/sales network
  39. 39. Brand/reputation
  40. 40. Patent
  41. 41. Access to desired resource
  42. 42. Relationships (membership, suppliers, etc.)</li></ul>Things You DO:<br /><ul><li>Continuously innovate
  43. 43. Manage information
  44. 44. Produce low cost goods
  45. 45. Sustain privileged assets</li></ul>Things You KNOW:<br /><ul><li>Understanding of specific issue
  46. 46. Process expertise
  47. 47. Market expertise
  48. 48. People/key decision makers</li></ul>Assets Can Be Things You Have, Do or Know<br />
  49. 49. A Wide Range of Assets Can Be Leveraged In Community Wealth Ventures <br />HAVE<br />DO<br />KNOW<br />Attendant Care<br />Child Abuse Prevention<br />Chapel and Gardens<br />
  50. 50. Asset Identification Can Be a Matter of Perspective<br /> Consider this example. . .<br />
  51. 51. How: Individually and In Pairs<br /> Time: 20 minutes<br /><ul><li>Identify your organization’s keyassets that could be leveraged into potential opportunities
  52. 52. Assets can be things you have, do, or know, and are often a matter of perspective…so get creative
  53. 53. Once you’ve brainstormed your own assets, share them with a partner to gather more ideas</li></ul>Greyston Bakery<br />A venture of<br />Greyston Foundation<br />Exercise #1: Asset Identification<br />
  54. 54. 1.<br />2.<br />3.<br />4.<br />1.<br />2.<br />3.<br />4.<br />1.<br />2.<br />3.<br />4.<br />1.<br />2.<br />3.<br />4.<br />1.<br />2.<br />3.<br />4.<br />1.<br />2.<br />3.<br />4.<br />People<br />What people are particularly valuable to the organization? (name recognition, skill sets, etc)<br />Skills/Expertise<br />What kinds of skills and expertise does the organization’s staff have? What about the Advisory Board? Volunteers?<br />Audience/Special Relationships<br />What are the key strengths of the organization’s audience (e.g.., size, demographics, psychographics, loyalty, etc). What other key relationships does it have?<br />Tangible Assets/Facilities<br />What does the organization own or have the right to use? Real estate? Program related equipment? Collections, stock, materials? <br />Programs/Proprietary Content/Events<br />What are the key programs or content that the organization has at its disposal? <br />Reputation<br />What does the organization’s name mean in the community? To whom?<br />Asset Identification Debrief<br />
  55. 55. Step 2 – Turning Assets into Opportunities <br />1. Asset <br />Identification<br />2. Assets into Opportunities<br />Implementation<br />3. Opportunity Screening<br />4. Feasibility Assessment<br />5. Select One Opportunity<br />6. Business Planning<br />
  56. 56. Evaluating Your Assets<br />Is the asset unique?<br />Who would value the asset?<br />How valuable is the asset?<br />What is the customer’s willingness to pay?<br />Is the asset sustainable over time?<br />
  57. 57. How: Individually and in Pairs<br /> Time: 20minutes<br />Review lists of assets and brainstorm potential opportunities. List each opportunity and its corresponding asset (10 minutes)<br /> - Is the asset unique?<br /> - Who would value the asset?<br /> - How valuable is the asset?<br /> - What is the customer’s willingness to pay?<br /> - Is the asset sustainable over time?<br />Share ideas and brainstorm new ones (10 minutes per person/organization)<br />Exercise #2: Leveraging Assets Into Opportunities <br />
  58. 58. Potential Opportunities - Debrief<br />1<br />2<br />3<br />4<br />5<br />6<br />7<br />8<br />9<br />10<br />11<br />12<br />13<br />14<br />15<br />16<br />17<br />18<br />
  59. 59. 1. <br />Asset <br />Identification<br />2. <br />Assets into Opportunities<br />Implementation<br />3. Opportunity Screening<br />4. Feasibility Assessment<br />5. Select One Opportunity<br />6. Business Planning<br />Post-workshop<br />Today<br />Next Steps<br />
  60. 60. Ease of Implementation<br />Expected complexity of the project<br />Availability and skills of current staff to manage the new opportunity<br />Ability to recruit other staff quickly<br />Access to necessary capital<br />Financial / Market Potential<br />Market demand and estimated size of the market<br />Start-up costs<br />Level of competition<br />Expected profit margin <br />Expected growth rate<br />Opportunity Screening Goal: To Choose The Top Three Ideas For Further Analysis<br />
  61. 61. Easy<br />Ease of Implementation<br />Hard<br />High<br />Low<br />Financial/Market Potential<br />Case Study – CCDoFWExample: Opportunity Screening<br />
  62. 62. <ul><li>A high-level assessment of the market opportunity, profitability, and fit with the organization for a potential business venture
  63. 63. Informsa “Go or No Go” decision on a business opportunity using impartial market research and internal assessments</li></ul>What is a Feasibility Assessment?<br />
  64. 64. Feasibility: External & Internal Factors<br />Internal Factors<br />External <br />Factors<br />
  65. 65. External and Internal Factors<br />External Factors<br /><ul><li>Market Size – How big is the current market? Is it growing or contracting?
  66. 66. Customers – Who are the key customers? What are they willing to pay?
  67. 67. Competitors – Who are the key competitors? How do they differentiate themselves?
  68. 68. Margins – What are current vendor’s margins in the market? What is their profit?
  69. 69. Barriers to Entry – How difficult will it be to enter this market? What are the barriers?</li></li></ul><li>External and Internal Factors<br />Internal Factors<br /><ul><li>Internal Support – Will your organization enthusiastically support this opportunity?
  70. 70. Buy-In – Can you secure board and staff buy-in?
  71. 71. Fit – How well does the opportunity fit with your organization’s skills and expertise? Will you need to obtain outside expertise?
  72. 72. Competitive Advantage – Do you have a potential competitive advantage in the market?
  73. 73. Initial Investment – What investment is needed to launch and grow the opportunity?
  74. 74. Risks – What are the risk factors? What are ways to mitigate these risks?
  75. 75. Timing– How long will it take to make the opportunity a reality? Will you have sufficient financial resources to support the opportunity until then?</li></li></ul><li>External Factors<br />Internal/ External<br />Internal Factors<br />Each opportunity is ranked by the following criteria… <br />
  76. 76. Business Plan Goal: To Prove That Your Venture Will Be Successful <br />Market<br />Intro &<br />Summary<br /><ul><li>Industry Analysis
  77. 77. Competitive Analysis
  78. 78. Executive Summary</li></ul>Business<br />Plan<br /><ul><li>Marketing Plan
  79. 79. Operational Plan
  80. 80. Management & Personnel Plan
  81. 81. Financial Plan</li></ul>Contingency<br />Strategy<br /><ul><li>Risk Analysis</li></li></ul><li>Implementation: Keys to Success<br />The venture should have:<br />A Strategic Direction<br />Sufficient planning behind it<br />Clearly defined goals<br />Mission alignment with the parent organization<br />Human & Financial Capital<br /><ul><li>A champion or leader that passes the “shower test”
  82. 82. Support from the entire staff and board
  83. 83. Appropriate staffing
  84. 84. Autonomy for quick decision making
  85. 85. Adequate capitalization</li></ul>For more information download :<br />Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability<br />at www.communitywealth.com/resources_tools.htm <br />
  86. 86. Social Enterprise Alliance North Texas Chapter<br />What is the Social Enterprise Alliance?The Social Enterprise Alliance is the only member organization in North America to bring together the diverse field of social enterprise. It serves as advocate for the field, hub of information and education, and builder of a vibrant and growing community of social enterprises. <br />
  87. 87. Opportunities to Learn MoreResources<br />For more information on Social Enterprise download :<br />Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability<br />at www.communitywealth.com/resources_tools.htm <br />To Learn More about Social Innovation Programs offered by the Center for Nonprofit Management <br />and Community Wealth Ventures visit: http://www.communitywealth.com/CWC_North_Texas.html<br />
  88. 88. Questions?<br />Charlotte Keany<br />214-826-3470 ext. 244<br />keany@cnmdallas.org<br />www.cnmdallas.org<br />

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