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

Strategies for
Analyzing & Implementing
Revenue-Generating
Activities
In a Nonprofit
Organization

Shuey Fogel

@ Amuta21c Conference
Jerusalem, Israel

March 18, 2012

The Nonprofit Banker nonprofitbanker.com

Greetings & Salutations
• Shuey Fogel – Who am I?
• Former Nonprofit Professional turned
Banking Specialist
• Wear two hats


• Director, Banking Solutions for
Nonprofits at a Bank in Israel
• Work with local and international
charities operating in Israel
• Develop the Products, Services &
Added Value we offer our nonprofits


• The Nonprofit Banker
• Personal project active on the web,
Twitter and Facebook
• Write, post and link to articles on tips,
tools, trends, and regulations affecting
Israel’s (Global) nonprofit sector.


Overview
• Three Building Blocks to Successfully
Strategize Revenue-Generating
Activities for a Nonprofit
1. Nonprofit Business Model Statement
2. Impact vs. Profitability Matrix
3. Discovering Your Funding Model


Overview
Why the Recent Demand?
Don’t Get Blinded by the Hype
Revenue – Define Terms

3 BUILDING BLOCKS

Take-homes
Considerations


Overview
• Purpose of this presentation
• Jump start the strategizing process
• OR Educated reasons to refuse
• Conversation starts and ends with
• Accountant
• Lawyer


Overview
• These slides are class notes mainly
intended for the workshop participants
• More developed slides intended for a
general audience will also be posted to
Slideshare


3 BUILDING BLOCKS
Take-homes
Considerations


• Economy
• Nonprofits themselves
• Funders
• “New” Funder
• Donors that are looking to “invest”
• Notion of “Philanthropic Equity”
• Socially Minded For-Profits
• Double-Bottom Line


• Nothing can substitute philanthropy (NPQ)
• Donors are different than customers
• Connected to the product or the cause?
• Charities & Double Bottom-Line have
existed for decades
• SSIR study
• Fee-for-Service alone or earned-income ventures
separate/distinct from charity were not models of
the BIG nonprofits (budget of $50 mil or more)

• Related Business Income
• Enhance and complement your mission
• Unrelated Business Income
• Within or External (Daughter Company)
• Again, speak to lawyer/accountant on
regulatory implications


• Two Ways of Looking at Revenue
1. Fee-for-Service vs. Product
2. Cost Recovery vs. Earned Income


• Fee-for-Service vs. Product
• Fee-for Service
• Target audience
• Beneficiaries
• Evangelists
• Possible limits on rates, however…
• Voluntary donations
• Symbolic gestures


• Fee-for-Service vs. Product
• Product
• Seems easier but not
• Keys to Success
• Enthusiastic volunteers
• Outstanding products
• Superb coordination


• Cost Recovery vs. Earned Income
• Cost Recovery
• Linked to programs
• When program ends, so does related
cost and recovery
• Earned Income
• Inherently rooted in the operations
• Earned Income or Social Enterprise?


• How to know if it is a Social Enterprise?
• Is it operated like a business?
• Strategically created for economic value
• Revenue set as independent goal
• Staffed by business professionals


• Ex: Elephants
• National Zoo in Washington D.C.
• Sells dung in gift shop as organic
fertilizer called “Zoo Doo”
• No product line
• No goals
• The more sold, the merrier
= Earned Income


• Ex: Elephants
• Zoo in Bangkok, Thailand
• Uses dung to make paper products
• Imports dung from other zoos to meet
quota and increase product line
= Social Enterprise


Strategies for
Analyzing & Implementing
Revenue-Generating
Activities
In Nonprofit Organizations

Building Blocks for Increasing Revenue
through Building Upon Your Organization’s
Strengths while Simultaneously
Promoting a Unified Message

BUILDING BLOCKS
• Nonprofit Business Model Statement
• Impact vs. Profitability Matrix
• Finding Your Funding Model


NP Business Model Statement



Must consider financial viability
and mission impact together!

• Internal document
• Describes what fuels the economic
engine of the organization
• More than listing all the types of funding
• Strategy for financial sustainability
• Reference point/guide for the
organization's focus and strategies


• When Creating the Building Blocks
• Nonprofit Business Model Statement is last
of the 3 pieces to be created
• Once Building Blocks are Established
• Nonprofit Business Model Statement is the
first point of reference
• Business Models changes over time


• Ex: (Blue Avocado)
• Food Bank: "We obtain donated food from
businesses (85%) and individuals (15%),
sorted and distributed largely by volunteers,
and financially supported by individual
donors and the community foundation."
• Affordable Housing: "We build affordable
housing for low-income people where
government and developer fees are
available."

• Ex: (Blue Avocado)
• Same Mission but Dif Business Models
• "Our mission is to develop and implement
evaluation tools that help nonprofits identify,
understand, and increase their impact.“
• Organization A: "Foundations contract with us to
conduct evaluations with their grantees.“
• Organization B: "We develop and promote
evaluation tools and processes that are affordable
-- and therefore can be purchased directly by
nonprofits."


Impact vs. Profitability Matrix
• Analysis of current programs
• With an eye on revenue
• Focus on what you’re already doing
• Enhance the mission
• Clarity
• Feasibility
• How can our activities fit together and
leverage each other?

• Dual-Bottom Line Strategy
• Mission (external)
• Financial (internal)


MATRIX MAP

HIGH IMPACT
HIGH PROFITABILITY

IMPACT
LOW IMPACT
LOW PROFITABILITY

PROFITABILITY


IDEAL SITUATION - MATRIX MAP

HIGH IMPACT
HIGH PROFITABILITY

25% 50%

0% 25%
IMPACT
LOW IMPACT
LOW PROFITABILITY

PROFITABILITY



Blue Avocado

• Examples of Successful Impact?
• Alignment with Core Mission
• Excellence in Execution
• Scale and Volume
• Filling an Important Gap
• Community Building
• Leverage
• Chart It


• Ex: Charting Successful Impact
Core ExcellenceFilling an Community
Mission in Important Building
Execution Gap

Program 1 4 4 3 1 12

Program 2 3 4 2 2 11

Program 3 2 4 4 3 13


• Determine Profitability
• Revenue
• Restricted & Unrestricted Separately?
• Expenses
• Include full costs
• Program Costs
• Shared Costs
• Administration Costs



25% 50%

25%

Blue Avocado

• Chart it again
• Identify Activities & Analyze
Impact $$ Effort Type Action

Program 1 High Low High Heart ???

Program 2 Medium High Medium Money ???
Tree

Program 3 Low Medium Low Stop Sign ???
but
Growing


• STOP SIGNS…
• Low Impact, Low Profitability
• Instead of
• Trying to improve it (again)
• Ignoring it
• Spin it off to another organization
• Close it


• STARS…
• High Impact, High Profitability
• Pay attention
• Increase organization involvement
• Invest time and money
• Grow it


• HEARTS…
• High Impact, Low Profitability
• Instead of
• Closing it
• Making it a “Sacred Cow”
• Keep & Celebrate it
• Most importantly
• Contain Costs & Increase Profitability


• MONEY TREES…
• Low Impact, High Profitability
• Instead of
• Giving it second class status
• Keeping it separate from programs
• Increase profitability
• Scale or efficiency
• Increase impact


Discover Your Funding Model
• You’re not unique as you think
• SSIR study revealed 10 dif. Models
• Successful orgs had 1 (maybe 2)
• Models are all-encompassing
• Branding
• Programs
• Fundraising Efforts


• Focus on Related Business Income
• Enhance and complement your mission
• Build upon existing expertise &
programming
• Clarity is King (SSIR)
• “One of the most liberating and clarifying
things we’ve done to date.”
• “Taking ‘maybe’ out of the process has
already boosted our bottom line.”

• Three Parameters to Define Fundraising
Models
1. Source of Funds
• Individuals
• Corporation
• Foundation
• Government
– Types of Decision Makers
– Motivation of Decision Makers

• Funding Models
• Essentially, who is your donor base?
• Examples
• Many Individual Donors
• Government
• Corporations


• Funding Model - Many Individual Donors
1. Causes
2. Beneficiaries
3. Membership


• Many Individual Donors – Causes
• Create ways for people to connect
• Popular with environment, international,
and medical research areas
• Inherent appeals to Volunteers
• To get involved
• To run their own fundraising events


• Many Individual Donors – Causes
• Ex: Revenue-Generating Activities
• Sell items that promote your cause
• T-Shirts / Chatchkies / Bling / Swag for
Volunteers
• Tool kits
• Training


• Many Individual Donors – Beneficiaries
• Reimbursed for services to the Beneficiary
• ALSO rely on donations from people
who’ve benefited in the past
• Motivated because they believe that the
benefit they received changed their life


• Examples
• Two Best: Hospitals and Universities
• Pastoral Care, Financial Management,
Mentoring


• More Careful, More Sensitive
• Create ways for beneficiaries to express
gratitude
• Execute mission in different venues
• Ex: See Tishkofet


• Many Individual Donors – Membership
• Issue is integral to their every day life
• Don’t need to create the rationale
• Just offer or support activities that
members already seek


• Many Individual Donors – Membership
• Lectures
• Events
• Periodicals (e-newsletter, magazine)
• Swag for member pride


• Government
1. Government Outsourcing
2. Policy Innovator
3. Brokers


Government
1. Outsourcing
• Gov' has defined & allocated funding
2. Policy Innovator
• Novel models to address social issues
• Not 100% compatible w/ existing funding
3. Brokers
• Beneficiaries can choose the suppliers
• Ex: Kupat Cholim


• Government
1. Brokers
• Beneficiaries are free to choose the
supplier


• Government
• Individual Donor revenue streams
• Offer services to other sectors
• Get more contracts
• Make organizational more desirable
• Increase added-value
• Increase expertise in subject area


• Corporate Funding
• Two Types
1. Corporate Philanthropy
• Treat like Individual Donor
2. In-kind Donations
• Willing to donate to prevent waste
• Cash should still be an important piece
of the equation


• Corporate Funding
• Individual Donor revenue streams
• Appeal to corporate culture
• Sell advertising
• Preferred suppliers book


Revenue – Keep in Mind (Disclaimer)
3 BUILDING BLOCKS
Take-homes
Considerations


Take-homes
• Don’t get blinded by the hype
• Don’t lose confidence in what is already
working
• However, understand the donor’s viewpoint
• How will your org relate to revenue?
• Is revenue an unexpected bonus or crucial
to your survival?
• Products, fee-for-service or both?


Take-homes
• NP Business Model Statement
• Works in tandem with Mission Statement
• Reference point for any potential revenue
generating activity
• Build on your strengths and expertise


Take-homes
• Impact vs. Profitability Matrix
• Analyze current programs to see what
quadrant can be strengthened
• First monetize existing programs before
creating new ones
• No shortcuts to creating “uni-voice”
programming


Take-homes
• Discovering Your Funding Model
• You’re not so unique, build on the work of
others
• Understand your donor
• Create revenue streams that appeal to your
donors’ and constituents’ needs/wants


Considerations
• Weigh revenue potential against
associated costs
• Costs - Investments in Four Areas
1. Programs
2. Personnel
3. IT (software, hardware, database etc.)
4. Communications


Considerations
• When investing in these areas
• Don’t spread to thin, Stay focused
• Avoid mission creep
• Communication includes:
• Promotion of business activities
• Branding: internal & external perception


Things to Consider
• Start-up costs
• Scalability
• If and how will our mission change to
meet the new business demands?
• Market research
• The Competition
• Is it being done already?


Bibliography
• Stanford Social Innovation Review (SSIR)
• 10 Nonprofit Funding Models
• Finding Your Funding Model
• The Imp. of Earned Income in a Funding Model
• While not used in this presentation, this last
article is a short read & recommended.
• Blue Avocado
• Nonprofit Business Model Statements


Reminder
• These slides are class notes mainly
intended for the workshop participants
• More developed slides intended for a
general audience will also be posted to
Slideshare


Thank You
Shuey Fogel - The Nonprofit Banker

For questions, speaking engagements or to
arrange a free consultation for your amutah:

nonprofitbanker@gmail.com
LinkedIn: /nonprofitbanker
Facebook: /nonprofitbanker
Twitter: @nonprofitbanker


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

Recomendados

Recomendados

Mais conteúdo relacionado

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

Semelhante a Presentation Slides from Amuta21c: Strategies for Analyzing & Implementing Revenue-Generating Activities in a Nonprofit (20)

Último

Último (20)

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