The profitable non-profit

Government funding for not-for-profit organizations is not even keeping up with inflation, never mind with increasing demand for services. Operational funding is being replaced by project-based funding, and much-needed core programs are being sacrificed for innovative or ‘flavour of the month’ initiatives that may or may not be essential.

These are a few of the challenges facing the non-profit sector today, according to participants at a workshop hosted by Scale Collaborative in Victoria two weeks ago. The solution? Adopting an entrepreneurial mindset.

Workshop facilitators presented an emerging model of being “enterprising” that included diverse sources of revenue: not just grants, donations, and fundraising, but contracts and multi-year funding, program fees, social-purpose real estate, social enterprise, social ventures, and deep corporate partnership.

Lee Herrin, Executive Director of Fernwood Neighbourhood Resource Group Society, presented an excellent case study showing how Fernwood has diversified its own revenue and become more profitable, stable, and effective as a result. By investing in real estate, and operating a daycare, a coffee shop, and a hair salon, the Society reduced its dependence on grants from 67% to less than 30% in 10 years. Their micro-businesses have also allowed them to listen to the community and communicate with their neighbourhood in an unobtrusive way.

Scale Collaborative is accepting applications for ‘21st Century Non-Profits’, a cohort of eight non-profits who will participate in four workshops and receive individualized coaching over six months, to move their organizations toward financial diversification for social impact. Because the program is subsidized by Victoria Foundation, the cost is just $500 and three participants from each organization will be able to attend. The deadline for submissions is December 10th. You can find the application online at http://www.scalecollaborative.ca/#!21st-century-nfp/c3g 

However far along the diversification road your organization may be, effective marketing communications is a must. Consider each revenue source in terms of target audience, key messaging, the promise you’re making, and creative tone and manner. Think about your competitors, risk management, and new product development. Think about profit. In short, think like an entrepreneur.