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Copyright © 2009 — Community Wealth Ventures, Inc. — 1
Funding outside the Box:
Earning Revenue through Social Enterprise
Presented by:
Charlotte Keany, Director of ConsultingCenter for Nonprofit Management
Dallas, Texas
January 23, 2012
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Welcome and Introductions
Partnership
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About The Center for Nonprofit Management (CNM)
Founded in 1980
Leading Management Support Organization
Every year we serve:– 700 members– 1,300 agencies per year– 150 consultations – 3,525 participants at our Education Seminars– 828 Job placement ads (1.5 million visit website)
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About Community Wealth Ventures (CWV)
Wholly owned, for-profit subsidiary of Share Our Strength, the nation's leading anti-hunger and anti-poverty organizations
12+ years experience in nonprofit sustainability, with core expertise in social enterprise and social franchising
Consulting services to 200+ nonprofit organizations and 50+ foundations
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Looking for Something Different?
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Objectives
Learn why and how organizations pursue community wealth (aka social enterprise)
Increase knowledge of the benefits and risks of social ventures
Provide examples of what other organizations are doing
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Social Enterprise Process
1.
Asset
Identification
2.
Assets
into
Opportunities
3.
Opportunity
Screening
4.
Feasibility
Assessment
5.
Select
One
Opportunity
6.
Business
Planning
Implementation
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What is Community Wealth?
Revenues generated by profitable or self-sustaining
enterprises to promote social change
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What is Different About Community Wealth?
Community Wealth is Not… Community Wealth is…
■ Traditional fundraising
■ Grant money
■ Gifts/donations
■ A “quick fix” out of a crisis
■ For everyone
■ Generating sustainable new resources to support mission
■ Engaging market forces to work for the nonprofit sector
■ Devising new ways to leverage existing assets
■ Allowing for greater flexibility by bringing in unrestricted revenue
■ Decreasing dependence on the external funding community
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Community Wealth Examples
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What Factors are Necessary to Launch a Successful Community Wealth Enterprise?
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Examples of Community Wealth Enterprises Based in North Texas
Christian Community Action • Venture: Expansion of ReSale Thrift
Shop
Translation & Interpretation Network (A business of Catholic charities Diocese of
Fort Worth, Inc.)
• Venture: Interpretation services, translation services, qualify and train professionals in interpretation services
Autism Treatment Center• Venture: Autism Diagnostic &
Therapy Rehabilitation Agency
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Clarity of Social Enterprise Focus
Mission Profit
A B C
Mission Focus – A venture that will
need ongoing philanthropic support
but meets key mission objectives.
Self-Sustainable Focus – A venture that generates enough
income to make it self-sustaining.
Profit Focus – A venture that
generates profits which can be re-invested in the
venture or provide unrestricted funding to
the parent organization.
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______________________________________________________
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What Are The Potential Risks?
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Stakeholder Engagement & Managing Risks
The Chorus of Nay-Sayers
“It’s selling out.”
“Nonprofits are charities and should only focus on charitable work.”
“We’ll loose foundation/donor support.”
“It will put the organization’s tax-exempt status at risk.”
“You don’t know anything about how to run a business.”
“It’s wrong for nonprofits to compete against businesses.”
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Is Community Wealth Legal?
Nonprofits can launch community wealth enterprises and maintain 501c3 tax status
Income Related to Exempt Purposes– No limit on amount of revenue
Income from Unrelated Activities– Taxable as “unrelated business taxable income” (UBTI)
There is no standard legal structure
Consult an attorney to understand the most appropriate legal structure and definition of UBTI for your organization
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Step 1 – Identifying Assets
1. Asset
Identification
2. Assets
into
Opportunities
3. Opportunity
Screening
4. Feasibility
Assessment
5. Select
One
Opportunity
6. Business
PlanningImplementation
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ASSETS
Things You HAVE:
Physical assets Location/space Distribution/sales
network Brand/reputation Patent Access to desired
resource Relationships
(membership, suppliers, etc.)
Things You DO:
Continuously innovate
Manage information Produce low cost
goods Sustain privileged
assets
Things You KNOW:
Understanding of specific issue
Process expertise Market expertise People/key
decision makers
Assets Can Be Things You Have, Do or Know
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A Wide Range of Assets Can Be Leveraged In Community Wealth Ventures
Chapel and Gardens
Attendant Care Child Abuse Prevention
HAVE DO KNOW
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Asset Identification Can Be a Matter of Perspective
Consider this example. . .
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How: Individually and In PairsTime: 10 minutes
Identify your organization’s keyassets that could be leveraged into potential opportunities
Assets can be things you have, do, or know, and are often a matter of perspective…so get creative
Greyston BakeryA venture of
Greyston Foundation
Exercise #1: Asset Identification
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PeopleWhat people are particularly valuable to the organization? (name recognition, skill sets, etc)
1.
2.
3.
4.
1.
2.
3.
4.
Audience/Special RelationshipsWhat are the key strengths of the organization’s audience (e.g.., size, demographics, psychographics, loyalty, etc). What other key relationships does it have?
1.
2.
3.
4.
Programs/Proprietary Content/EventsWhat are the key programs or content that the organization has at its disposal?
Skills/ExpertiseWhat kinds of skills and expertise does the organization’s staff have? What about the Advisory Board? Volunteers?
Tangible Assets/FacilitiesWhat does the organization own or have the right to use? Real estate? Program related equipment? Collections, stock, materials?
ReputationWhat does the organization’s name mean in the community? To whom?
1.
2.
3.
4.
1.
2.
3.
4.
1.
2.
3.
4.
Asset Identification worksheet
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Step 2 – Turning Assets into Opportunities
1. Asset
Identification
2. Assets
into
Opportunities
3. Opportunity
Screening
4. Feasibility
Assessment
5. Select
One
Opportunity
6. Business
PlanningImplementation
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Evaluating Your Assets
Is the asset unique?
Who would value the asset?
How valuable is the asset?
What is the customer’s willingness to pay?
Is the asset sustainable over time?
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How: Individually and in PairsTime: 10 minutes
Review lists of assets and brainstorm potential opportunities. List each opportunity and its corresponding asset (10 minutes)
- Is the asset unique?- Who would value the asset?- How valuable is the asset?- What is the customer’s willingness to pay?- Is the asset sustainable over time?
Exercise #2: Leveraging Assets Into Opportunities
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Potential Opportunities Worksheet
10
11
12
13
14
15
16
17
18
1
2
3
4
5
6
7
8
9
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Ease of Implementation
Expected complexity of the project
Availability and skills of current staff to manage the new opportunity
Ability to recruit other staff quickly
Access to necessary capital
Financial / Market Potential
Market demand and estimated size of the market
Start-up costs
Level of competition
Expected profit margin
Expected growth rate
Opportunity Screening Goal: To Choose The Top Three Ideas For Further Analysis
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Ease of Implementation
Financial/Market Potential
Easy
HighLow
Hard
Case Study – CCDoFWExample: Opportunity Screening
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Step 2 – Turning Assets into Opportunities
1. Asset
Identification
2. Assets
into
Opportunities
3. Opportunity
Screening
4. Feasibility
Assessment
5. Select
One
Opportunity
6. Business
PlanningImplementation
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A high-level assessment of the market opportunity,
profitability, and fit with the organization for a
potential business venture
Informs a “Go or No Go” decision on a business
opportunity using impartial market research and
internal assessments
What is a Feasibility Assessment?
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Feasibility: External & Internal Factors
Internal Factors
External Factors
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External and Internal Factors
• Market Size – How big is the current market? Is it growing or contracting?
• Customers – Who are the key customers? What are they willing to pay?
• Competitors – Who are the key competitors? How do they differentiate themselves?
• Margins – What are current vendor’s margins in the market? What is their profit?
• Barriers to Entry – How difficult will it be to enter this market? What are the barriers?
External Factors
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External and Internal Factors
• Internal Support – Will your organization enthusiastically support this opportunity?
• Buy-In – Can you secure board and staff buy-in?
• Fit – How well does the opportunity fit with your organization’s skills and expertise? Will you need to obtain outside expertise?
• Competitive Advantage – Do you have a potential competitive advantage in the market?
• Initial Investment – What investment is needed to launch and grow the opportunity?
• Risks – What are the risk factors? What are ways to mitigate these risks?
• Timing – How long will it take to make the opportunity a reality? Will you have sufficient financial resources to support the opportunity until then?
Internal Factors
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Each opportunity is ranked by the following criteria…
CriteriaOpportunity
A B C
Market Size: How large is the potential customer base?
Market Outlook: How favorable are the trends that are affecting the marketplace?
Favorable Competitive Factors: How competitive is the market?
Ease of Entry: How easy will it be to launch a venture?
Likely Competitive Advantage: How easy will it be to differentiate your services?
Market Profitability: What are the costs and potential revenues?
Fit with Mission: How closely does the venture align with your mission?
Fit with Skills/Expertise: How closely does the venture align with staff capabilities?
Fit with Material Resources: How closely does the venture align with facilities and financial resources?
Ability to Manage Risk: How easy will it be to protect against unnecessary risk?
OVERALL ATTRACTIVENESS
Internal Factors
Internal/ External
External Factors
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Step 2 – Turning Assets into Opportunities
1. Asset
Identification
2. Assets
into
Opportunities
3. Opportunity
Screening
4. Feasibility
Assessment
5. Select
One
Opportunity
6. Business
PlanningImplementation
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Business Plan Goal: To Prove That Your Venture Will Be Successful
Risk Analysis
Marketing Plan
Operational Plan
Management & Personnel Plan
Financial Plan
BusinessBusinessPlanPlan
Industry Analysis
Competitive Analysis
Executive Summary
Intro &Summary
Market
Contingency Strategy
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Implementation: Keys to Success
A Strategic Direction Sufficient planning behind it
Clearly defined goals
Mission alignment with the parent organization
For more information download :
Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability
at www.communitywealth.com/resources_tools.htm
Human & Financial Capital A champion or leader that passes the
“shower test” Support from the entire staff and board Appropriate staffing Autonomy for quick decision making
Adequate capitalization
The venture should have:
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Social Enterprise Alliance North Texas Chapter
What is the Social Enterprise Alliance?The Social Enterprise Alliance is the only member organization in North America to bring together the diverse field of social enterprise. It serves as advocate for the field, hub of information and education, and builder of a vibrant and growing community of social enterprises.
What is the Social Enterprise Alliance?The Social Enterprise Alliance is the only member organization in North America to bring together the diverse field of social enterprise. It serves as advocate for the field, hub of information and education, and builder of a vibrant and growing community of social enterprises.
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Opportunities to Learn MoreResources
For more information on Social Enterprise download :
Powering Social Change: Lessons on Community Wealth Generation for Nonprofit
Sustainability at www.communitywealth.com/resources_tools.htm
For more information on Social Enterprise download :
Powering Social Change: Lessons on Community Wealth Generation for Nonprofit
Sustainability at www.communitywealth.com/resources_tools.htm
To Learn More about Social Innovation Programs offered by the Center for Nonprofit Management
and Community Wealth Ventures visit: http://www.communitywealth.com/CWC_North_Texas.html
To Learn More about Social Innovation Programs offered by the Center for Nonprofit Management
and Community Wealth Ventures visit: http://www.communitywealth.com/CWC_North_Texas.html
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Questions?
Charlotte Keany214-580-1744