charity? or tax exempt business?

socialenterpriseventures.com 1

Charity? or

Tax Exempt Business?

Getting Started on Social Enterprise

Presented by Jean BlockSocial Enterprise Ventures, LLC

Jean Block Consulting, Inc.

Introducing Social Enterprise Ventures

Incorporated in 2006 National training and

consulting company Led by Jean Block,

Jean Block Consulting, Inc.



What is Social Enterprise?

It is unrestricted renewable income that creates the path toward sustainability and enhances your mission.

It is generated through sales, payment for services or other business opportunities.

It should not replace fundraising – it is a new tool in your organizational tool kit.

More Money = More Mission!

Social Enterprise is NOT about turning your nonprofit into a business…

It’s about applying sound business principles to your tax-exempt business.



Traditional Funding

Grants, special events, donations, sponsorships, underwriting, etc.

You work hard to get it, use it up and have to go back for more…the funnel effect!

Strings attached: grantors require reports to ensure you have met their funding requirements, donors at a special event want to have a good time, enjoy the food, etc.

Traditional funding is usually restricted in some way.


Myths about Social Enterprise

Nonprofits can’t make a profit. You do now – you just aren’t paying taxes on it!

It’s a quick fix – We can do this tomorrow.

If we earn money, we will lose our nonprofit status – Nope. Not likely.

What if we have to pay federal tax? Well, what if? *state sales taxes may apply, however.


Why Consider Social Enterprise?

The funding marketplace is changing: Corporate giving directed toward investing for the long term

rather than buying tables for one night. Government funding diminishing and being redirected. Donors tired of giving to organizations that operate with a

poverty mentality.

What does this change mean for you? It means a shift to earned income instead of relying on a 'hand

out."

Nonprofit is a tax designation, not a business plan!


Assessing Organizational Readiness

Board and Staff are willing to invest in change from charity-think to sustainability!

Board and Staff are open-minded. Board and Staff create a dedicated team to

learn social enterprise. Board and Staff are willing to invest the

time and dollar resources into learning social enterprise.


Typical Outcomes

Fundamental and systemic changes in the way you manage your tax-exempt business.

A business plan for an earned income social enterprise venture.

Enhancement of current programs and services by providing value added benefits that create new income sources from new payer markets and customers.


Burning Questions?


How to Become a Successful Social Entrepreneur

We have learned that seven basic skills are involved in the journey to become a

successful social entrepreneur.

The Seven Steps to Success

Step 1 – Organizational Focus Step 2 – Assets and Opportunities Step 3 – Market Research – The Customer(s) Step 4 – Market Research – The Competition Step 5 – Costing and Financing Step 6 – Write the Sales Plan Step 7 – Write the Business Plan



Start With the Basics

Step I - Organizational Focus

Mission, Vision and Core Values Internal and External Forces Mission and Dollar Goals

These are your benchmarks along the journey

Stakeholder Communication


Build an Inventory of Assets

Step 2 – Assets and Brainstorming Core Competencies – What you do extremely well

(e.g. your products and services). Physical Assets – What you have that is

underutilized. Technical and Knowledge Assets – What you

know (e.g. training). Relationship Assets - Who you know that can help

with social enterprise (e.g. people with influence).


Set Objective Evaluation Criteria

Set parameters to evaluate potential earned income opportunities.

Narrow the field to serious potential opportunities.

Prevents WHO HOO!


Brainstorm Opportunities

Leverage Your Assets into Earned Income

Service Opportunity -Delivers a service to a current or new market.

A human service agency bundles current and new programs for seniors, selling to their adult children and caregivers.

Knowledge Opportunity - Delivers your knowledge to a current or new market.

An agency delivers financial literacy training to small businesses.

Brainstorming…

Product Opportunity - Produces or delivers a tangible product.

A food bank expands its product line to include non-food items.

Employment Opportunity - Provides direct employment to current or future customers or clients.

An agency serving persons with disabilities expands its greenhouse program into the organic market.



Brainstorming…

Unrelated Venture Opportunity - Takes advantage of underutilized assets or develops an opportunity unrelated to your asset inventory.

An agency brings its vehicle donation program in house.


Evaluate Opportunities

Rank and score the opportunities. Use objective criteria. Select those with highest initial potential to

reach mission and dollar goals. Begin Market Research & Feasibility.


Market Research & Feasibility

Step 3 - Venture Market Research Part 1 :The Customer(s)

Introduction to Market Research Market Push vs. Market Pull Market Trends Target Market Planning

target markets market size buyers vs. users buyer and user motivation buyer and user profiles features and benefits


…a quote about research…

“You were right regarding the idea vs. the results of the research. The market we thought was interested was not or already had the need taken care of. It's teaching us the value of research and continuing to dig deeper on our ideas. Most of all, it's showing us to follow where the research leads.”

Zack Wilson, PR/DevelopmentHigh Plains Food Bank, Amarillo Texas


Burning Questions?


Competitive Analysis

Step 4 - Venture Market Research Part 2:

The Competition Direct Competition Indirect Competition Competition’s strengths and weaknesses Market Differentiation – How will you compete?


Costing AnalysisStep 5 - Costing, Financing and UBIT

Define costs - direct, indirect, variable, fixed, start up and recurring.

Break Even Point - Profit Margin.

Definition of UBIT – IRS Publication 598 It is a trade or business, It is regularly carried on, and It is not substantially related to furthering the exempt

purpose of your organization. Get professional advice at this stage in the planning process.


Sales Planning

Step 6 - Elements in a Sales Plan

Customer Profiles Competitive Advantage Market Positioning Distribution Methods Pricing Promotion


Write a Business Plan

Step 7 – Write the Business Plan How does the venture support your mission? What are mission and dollar goals for the venture? Describe the target customers and end users. What customer needs are addressed? What will motivate customers to buy your venture? Define your competition and your competitive advantage. Pricing strategy. Promotional strategy. Start up costs. Ongoing venture costs. Annual financial projections. Financing required. Plan to repay financing.


Burning Questions?


Examples of Social Enterprise

Existing Physical Assets Rental program for the agency’s party supplies. An agency serving persons with disabilities

becomes a certified organic greenhouse business. Remodel ineffective space, adds general support

services and rents space to small businesses and other nonprofits.

Revamped thrift store to attract a higher-end market with special programs and services.

Commercial kitchen provides hospital meals. Opens camp to corporate and private users.



Technical/Knowledge Assets

Opens training classes to other agencies and for profits.

Lead abatement training for contractors. A food bank expands its product line to include non-

food items. A counseling agency develops continuing education

credit programs for psychologists and counselors. Training programs for small businesses. Fee-for-service energy audits for private and

commercial clients.



New Ventures

An agency takes over management of its car donation program, previously operated through an out-of-state for profit company.

An agency holds an on line auction in partnership with a for profit business.


…and a quote…“During these challenging times [we] had to face

the hard truth that our regular funders are unable to fund at past levels - sometimes not at any level.

If it were not for our Give Hope a Ride vehicle donation program, [we] could not continue the excellent programs and services for our guest families.

The time and money our social enterprise team invested in training five years ago has certainly proved to be well worth it!"

Eileen Casey Cook, CEOCasa Esperanza, Inc. & Casa Esperanza Foundation, Inc.


Let’s Talk!

How Can I Help You?www.socialenterpriseventures.com505.899.1520ean@socialenterpriseventures.com

Thank you!

Let’s Get Started on Building Your Organizational Capacity!


charity? or tax exempt business?

Documents

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social enterprisenonprofits

comsocial enterprise

taxexempt business

business plan

successful social entrepr

business opportunities