The National Assembly

1. The National Assembly Earned Revenue as a strategy for diversifying income National Center on Nonprofit Enterprise

2. Earned Revenues • What earned income is. • Why pursue Earned Revenues as a strategy. • Conditions of success. • Taking the right steps. The Nonprofit Entrepreneur

3. Earned Revenues: terminology Social Enterprise Social Venture Social Entrepreneur Nonprofit Business Commercial Venture Affirmative Business Social Business Earned Income Initiative Pricing a Service

4. Earned Revenues: definition “…………earning income in a nonprofit entails making products or services available to organizations or individuals, who pay a price that covers some, all of or more than, the costs of these products or services…..”

5. Earned Revenues: range of activities • Price for a service: Healthcare, counseling • Current service delivered to new audience (stress counseling to for-profit employees) • Leveraging value of assets: - reputation: cause related marketing; - land: parking lot or natural gas • Unrelated business activity: Ben and Jerry’s

6. Ben and Jerry’s

7. The National Park Service

8. Computer recycling

9. Charging for a service

10. Earned Revenues: a different type of income? • Needs Wants Clients Customers • Volatility Stability • Dependency Autonomy • Charity Interdependence

11. Earned Revenues: Why? • More $! • More unrestricted $: - management capacity - independence……advocacy • To Manage Risk - general diversification - protecting particular activity

12. Earned Revenues: Why? • To Do more Mission • To Do Mission better • To Develop the skills and culture of the nonprofit • To attract more of current types of revenue

13. Earned Revenues: range of activities John Hopkins Listening Post Project Commercial income % t % e • Improved/expanded Marketing 63 11 • Introduction of/raised fees 56 15 • Borrowed money 27 <5 • Profit-making subsidiary 5 ?

14. Earned Revenues: Why Not? • Too Expensive • Mission Drift • Management Drift • Other revenue “crowd-out” • Culture clashes/Divisions

15. Earned Revenues: How? The Nonprofit Entrepreneur…….. …………who thinks economics

16. Earned Revenues: How? Nonprofit readiness 1 • Clarity of Mission • Client Focus • Strategic Mind-Set • Experience of Change • Effective and Adaptable business systems • Financial Health

17. Earned Revenues: How? Nonprofit readiness 2. • Leadership: - commitment - consistency - communication - awareness of risks and opportunities

18. Earned Revenues: How? Nonprofit readiness 3. • Marketing approach to work: - focus on the 4 P’s - ability to identify nonprofit’s assets and their value

19. Ben and Jerry’s criteria • Nonprofit status • Annual operating budget of more than $5,000,000 • More than 5 years in operation • Job training and life skills development programs for youth and young adults, ages 15 - 21 • Experience operating a social purpose business • Knowledge of the retail foodservice industry and/or franchising • The desire and capacity to operate a social enterprise business • A staff and board with small business expertise • An excellent credit history • Financial acumen and stability • A record of fundraising success • The willingness and the capacity to manage the complexities of developing a new business

20. Earned Revenues: How? Feasibility of strategy 1. • Clarity of purpose • Understanding of customers • Customer focus • Marketing approach • Clear business model • A product or service people are prepared to pay for – enough to ensure achievement of purpose.

21. Earned Revenues: How? Feasibility of strategy 2. • People with appropriate experience • Clarity of accountability • Appropriate place in structure • Planning • Management • Review and learning

22. 10 steps to earned income heaven • Clarify what your nonprofit’ program and revenue priorities. • Assess how well you raise and use resources now: are your revenues diverse; do you spend the right amount on different types of fundraising; have you assessed the efficiency of your program staffing?

23. 10 steps to earned income heaven • Identify the most cost-effective changes that support program and revenue priorities……and make these happen. Not enough unrestricted revenue…assets still underused….. • Generate and select strategies: - engage people for ownership; - work on criteria first: assets + customer needs = revenues; relate everything back to mission, program and revenue priorities; risks and rewards.

24. 10 steps to earned income heaven • Assess feasibility and risk in detail, and select options for business planning • Address structural and legal issues • Clarify accountability and reporting protocols • Do the Business Plan • Find and secure money required for implementation

25. 10 steps to earned income heaven • ……….DO IT>>>> • Incremental steps • Testing and review • Roll-out • Communication, Communication, Communication

26. Earned Revenues: How? The Nonprofit Entrepreneur…….. …………who thinks economics

27. ……to achieve mission

28. The National Assembly Earned Revenue as a strategy for diversifying income National Center on Nonprofit Enterprise