This presentation was given at the Miami Philanthropy Forum FEB 2012. It helps social venture founders decide whether to choose non-profit, social entrepreneurship or entrepreneurship approaches. It is based on a class I taught at MIT Sloan School of Management JAN 2012.

1. LEADERSHIP FORUM
FEBRUARY 16, 2012
ROBERT H. HACKER

2. “Altruism has a credibility problem in an
industry that thrives on intense commercial
competition”
Ivan Krstic TR35 Laureate
“An ever growing number intend to fund their
social ventures through commercially
generated revenue rather than charitable
donations….”
Battilana and Lee HBS

3. “What kind of a society isn't structured on
greed? The problem of social organization is
how to set up an arrangement under which
greed will do the least harm.”
—Milton Friedman, The Macmillan Book of Business and Economic Quotations

4. TOPICS
1. SOCIAL VENTURE CHECKLIST
2. VALUE CREATION-VALUE CAPTURE
3. FINANCIAL MODELING

5. SOCIAL VENTURE CHECKLIST
NON-PROFIT or FOR-PROFIT?

6. COMPETITIVE ADVANTAGE
BENEFITS OF NON-PROFIT?

7. BENEFITS OF NON-PROFIT
• ACCESS TO CAPITAL
• LOWER COSTS THROUGH VOLUNTEER
COMMUNITIES
• PARTNERING-NGOS, GOV’T, MULTI-LATERALS,
UNIVERSITIES
• BRANDING

8. FOR-PROFIT?
SOCIAL ENTREPRENEURSHIP OR
ENTREPRENEURSHIP?

9. SOCIAL?
• NORMATIVE
• ECONOMIC

10. ECONOMICS
MAXIMIZE VALUE CREATION or
MAXIMIZE VALUE CAPTURE

11. VALUE CREATION-VALUE CAPTURE

12. VALUE CREATION-VALUE CAPTURE

13. VALUE CREATION-VALUE CAPTURE

14. MODELING
• ASSUMPTIONS=RISKS
• SOCIAL AND ECONOMIC RISK

15. FINANCIAL MODELING NON-PROFIT
1. DONOR ACQUISITION
2. ADMIN COSTS=FINANCIAL CONSIDERATION
3. SOCIAL SERVICES=IMPLICIT COST
DONOR VALUE
INTRINSIC COST
FINANCIAL CONSIDERATION
NON-PROFIT

16. DONOR ACQUISITION
• TARGET DONOR LIST
• $/DONOR
• ACQUISITION COST/DONOR or
• ACQUISITION COST/$ DONATED
• DETAIL ACQUISITION COSTS BASED ON
BUDGET OF ACQUISITION COST

17. ADMIN COSTS
• NON-DONOR AND NON-SOCIAL SERVICES
COSTS
• OVERHEAD
– EXECUTIVES, SALARIES & BENEFITS
– RENT
– T&E EXECUTIVE
– PROFESSIONAL FEES
– IT, PHONE ETC.

18. SOCIAL SERVICES
• DOG RESCUE SHELTER
– DOGS RESCUED PER WEEK, PER MONTH
– NEW DOG HOMES and TEMPORARY DOG HOMES
– CASH COSTS PER DOG
– NON-CASH COSTS PER DOG
(VOLUNTEERS/DONATIONS)
• STAFF COSTS/HR or PER DOG
• FOOD
• MEDICAL (VETS, DRUGS, ETC.)

19. DOG RESCUE KPIs
• WEEKLY, MONTHLY YTD
– DONOR $
– DONOR ACQ COST/$ DONATED (MONTHLY, YTD)
– DOGS RESCUED
– DOG HOMES
– CASH OPERATING COSTS/DOG (MONTHLY, YTD)

20. Robert H. Hacker
rhhfla@gmail.com
305-742-8222
Skype: rhhfla
If I said anything you disagree with, think was
confusing, stupid, or just plain wrong, please
tell me. I won’t take offense – don’t sugar coat
it – just tell me. Brad Feld