How often do you take a step back from your organization and look at the bigger picture? If you do, I’m guessing you’ll discover there are lessons nonprofit organizations can learn from for-profit businesses.
I’d like you to try a little thought exercise…
Stop fundraising — just for an hour or two. Take a little time to think about some more effective and efficient ways to run your organization, as well as potential alternative revenue sources.
A Nonprofit Business Mindset
In the business world, investment is not a dirty word. In fact, businesses are expected to invest in technology, research and development, infrastructure, and staff! None of the most successful businesses have 10-year-old computers or staff relegated to broken chairs.
Not only that, many businesses try to pay competitive salaries and offer great benefits to attract the BEST employees possible.
Nonprofits, on the other hand, try to get by with the least investment. The skimpiest budget. And the fewest staff members possible.
Don’t think NON-profit… think FOR-profit
What if your nonprofit leaders thought like business leaders, just for a day? What changes would they (and you) make?
What could you accomplish if you generated a bigger profit — not to distribute to owners or shareholders — but to reinvest in your own programs and services?
Nonprofit “Businesses” Do Generate Revenue
Just for fun, consider what you might do differently this year to bring in some additional income. Here are a couple of ideas to get you started.
1. Fee-for-Service Activities
Many organizations generate a great deal of revenue from fee-for-service activities. Some obvious examples include:
- YMCA’s with membership fees
- hospitals with patient fees
- girl scouts with participation fees
- libraries charging late fees
What services are you providing for which you might consider charging a fee? You may need to think outside the box.
2. Items You Can Sell
What do you have or make (products or services) which you could potentially sell?
Some common examples includes:
- hospital gift shops
- thrift stores
- classes for members of your community
Here’s another great example — a soup kitchen started a chef training program for clients and opened a for-profit catering company.
Now, I don’t want you to leave this post thinking, “Amy Eisenstein said to sell key chains.” Absolutely not. In fact, most of the time, the act of selling things makes for a terrible fundraiser (think holiday wrapping paper or chocolates).
However, there are plenty of opportunities for earned income that might make sense and generate significant income for your organizations. Give it a little thought. There could be something lucrative to help you and your community which fits your organization like a glove.
When Considering For-Profit Ideas, Do Your Homework
Note that if you do consider selling goods or services, it’s imperative that you have a solid business plan (one approved by business leaders on your board). And remember, there are no guarantees.
Just as with any start-up or small business, it’s possible that your new revenue-generating idea could fail. But your idea may be worth a try, and it could end up being a big hit. Remember: no risk, no reward.
Also, be sure to understand the laws surrounding how much you can earn without jeopardizing your tax status. Always consult your lawyer and accountant before considering any new revenue-generating activities.
I’m always interested in learning more about nonprofits with successful business models. Have one or know of a good example? Let me know in the comments.
This is great, Amy — fee-for-service consulting has been our lifeblood, although we haven’t developed a great strategy for promotion or a standardized fee schedule yet. We have found a niche that fits within our mission and unique skill set — developing civic engagement programs for entities that serve the community and/or building and managing collaborative partnerships — and that those public service entities are often willing to pay for. We would love to learn more best practices in this area…
It is absolutely about investment vs. expense. Taking the ‘just’ out of ‘but we are just a non-profit’ makes a huge difference.
Dan Pallotta talked about this way back in 2013 about thinking like a business. His for-profit business did huge work raising money for Susan B Korman, AIDS and other organizations because they thought like a business and made investments instead of doing everything cheaply.
I’m not saying we have to have the best of the best in all we do, but investing in core functions and infrastructure, such as technology or consultancy support, allows an organization to do more.
Brilliant insight. Having spent a dozen years in the financial services industry, and then 10 years in higher education administration and now 18 years with my strategic planning & fundraising consulting business, I challenge my clients to think this way. Kudos for putting it in writing.