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

1. An Economic Stimulus Package for CBOs:
Ideas for Developing
Financial Resources
Prepared for
By Community Financial Resources
April 2008

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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.
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