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88 Broad Street | 8th Floor | Boston | MA 02110 | 617.728.4446 | www.jff.org
Identity Crisis: Not-for-Profit in a Profit World Not-for-Profit in a Profit World
Working Visions ConferenceNovember 19-20, 2001
Perth, AustraliaMarlene B. Seltzer
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Slide 2
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Slide 3
The Main Themes:
• Sea change in the landscape, competition,commercialization here to stay. So arenon-profits.
• Non profits must respond to the demandsof the new economy to survive
• Leading-edge non profits are rising tothese challenges by
– implementing new partnerships forservice delivery
– creating different approaches to “scaleup”
– incubating social ventures.
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Slide 4
Changing LandscapeChanging Landscape
• Lockheed Martin IMS. Awards include:– $33 million to Washington DC
– $15 million to Dade County, Florida to runWelfare to Work programs.
• A company called Maximus achieved $220million in revenues in 1998:
– $24 million in Wisconsin– Large contracts in LA, Maryland, Pennsylvania,
and Virginia.
• The privately held Edison Project runs 51schools with 24,000 pupils. In Philadelphia:264 schools with 200,000 students.
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Slide 5
Why such a sea change?Why such a sea change?
• Belief in market competition as the solutionto efficiency and better performance
• Reinvention of government: devolution andoutsourcing.
• Sweeping reform welfare and WFD systems
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Slide 6
Challenges of the New Economy:Challenges of the New Economy:2001 and Beyond2001 and Beyond
• Now more than ever there is an economicpremium on postsecondary education andhigher technical skills.
• The rules of the economy have changed:domestic to global, employment stability tojob churning, one breadwinner to two
• There is a premium on speed, flexibility, efficiency & technology
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Slide 7Source: U.S. Census Bureau, December 2000
Increasing Premium on Postsecondary EducationIncreasing Premium on Postsecondary Education
$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000
Doctorate
Master's Degree
Bachelor's Degree
Associates Degree
Some College
High School Grad
Not High School Grad
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Slide 8
FeatureFeature Old AssumptionsOld Assumptions The New RealtiesThe New Realties
Scope of the Market Domestic Global
Work and FamilyRelationship
Clear separation ofroles; Malebreadwinner withwife at home
Work and familyroles intertwined
Employment Form Long term, full-time job
Wide variation inemployment forms;uncertain duration
EmploymentRequirements Constant Skill Base
Increasing demandfor higherskills
Challenges of the New EconomyChallenges of the New Economy
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Slide 9
There is no turning back for non profits.There is no turning back for non profits.
The real question is not whether an organization is for-profit or non-profit, but how it can adapt quickly to the demands of the knowledge-based economy and apply entrepreneurial approaches andmarket practices to achieve its social objective.
The non profits which are thriving in this new landscape have figured out how to do this.
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Slide 10
The SolutionThe Solution
• Stay on “mission”
• Use entrepreneurial approaches
• Define market niche
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Slide 11
Non-profit Approaches to the New LandscapeNon-profit Approaches to the New Landscape
Three high-leverage strategies:
• Creating new partnerships for servicedelivery
• Spread innovations through scalablesolutions
• Developing social ventures as part ofnon-profit enterprises
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Slide 12
New Partnerships for Service DeliveryNew Partnerships for Service Delivery
“Co-opetition”: potential competitorsare joining forces and competing forsocial service, job training, andplacement contracts.
– YWCA, a nonprofit in Milwaukee,Wisconsin
– Lockheed Martin, Broward County, Florida
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Slide 13
New Partnerships for Service Delivery,New Partnerships for Service Delivery,contcont’’dd
• YWCA joined with two for-profit organizations: Kaiser Group and CNR Health.
• Formed a for-profit LLC called YW-Works.
• Won the bid for Milwaukee’s job training and employment services, school-to-work and welfare-to-work programs.
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Slide 14
• In Broward County, Florida contracted out its welfare services.
• Lockheed Martin won 7 out of 12 of the contract components—all with a non-profit partner.
New Partnerships for Service Delivery,New Partnerships for Service Delivery, contcont’’dd
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Slide 15
In an environment of healthy competitionIn an environment of healthy competition……
…forming strategic partnerships can:
• Encourage nonprofits or for profitsto take lead
• Leverage assets of the partners
• Increase accountability
• Mitigate risks for non-profits
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Slide 16
Innovations through Scalable SolutionsInnovations through Scalable Solutions
How do you convert the innovative solutioninto the prevailing rule?
– Franchise model: YouthBuild, USA
– Sectoral model: Wisconsin RegionalTraining Partnership
– Build-to-Scale model: Origin, Inc.
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Slide 17
The Challenges of Getting to ScaleThe Challenges of Getting to Scale
• Transferring organizational culture
• Branding your services and products
• Establishing quality standards
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Slide 18
““Franchise-likeFranchise-like”” Model Model
• Supports local capacities
• Sets definition of products and services
• Brands the product through quality
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Slide 19
Franchise model: YouthBuild, USAFranchise model: YouthBuild, USA
• Helps disadvantaged youth ages 16 - 24 to complete high school and acquire constructionand leadership skills while rehabilitating low- income housing.
• Over 108 centers in 34 states serving 5,000 youth annually.
• Expansion goal: $150 million in federal funds
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Slide 20
What is a What is a Sectoral Sectoral Model?Model?
Non-profit organizations are organizingnetworks of employers within industrysectors to work on common work forcechallenges.
• Skill shortages• Upgrading skills• Modernization
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Slide 21
Sectoral Model: Wisconsin RegionalSectoral Model: Wisconsin RegionalTraining PartnershipTraining Partnership
• A multi-union, multi-employer effort to linkemployers, workers and unions to improve worker training and preserve jobs.
• Formed in 1991, it works with public institutions involved with the manufacturing industry.
– Generates more than $21 million in investments
– 6,000 people receive training each year
– Initial placement of low-income adults at $22,000 Annually
– Covers 60,000 workers, 56 firms and 14 international unions
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Slide 22
Build-to-Scale ModelsBuild-to-Scale Models
Test new scale-up strategy by creating anonprofit built for scale from beginning
• Origin
• Year-Up
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Slide 23
JFF Entered the ArenaJFF Entered the Arena
• Provide a route out of poverty & into family-supporting careers for low-income adults
• Blend commercial practices with social mission
• Test new scale-up strategy by creating anonprofit built for scale from beginning
• Build capacity of 88 CBO’s in 10 cities acrossthe nation
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Slide 24
Build-to-Scale Model: OriginBuild-to-Scale Model: Origin
• Non-profit which trains and places low-income workers in IT sector jobs.
• Competes with temp firms by leveraging public dollars, reducing employee turnover and providing advancement opportunities.
• Works with large national corporate clients suchas Chase, Solomon Smith Barney, and Citibank.
• Jobs pay between $30,000 - $40,000/yr, compared to Employment and Training placements at $14,000/yr.
• Goal: 8,000 placements in 5 years
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Slide 25
Social Ventures and Non-profit EnterprisesSocial Ventures and Non-profit Enterprises
Business enterprises that accomplish socialresults:
– Income-generating businesses– Owned/operated by non-
profits
– Employ at-risk clients
These enterprises exemplify the merging ofbusiness practices and goals and socialmission.
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Slide 26
Los Angeles: ChrysalisLos Angeles: Chrysalis
• Locating and creates employmentopportunities for homeless and other dis-advantaged people.
• 1984 budget: $25,000. 1998 budget: $4.5 million.
• Labor Connections, a staffing agency andStreetWorks, a street cleaning business, form the core of their employment brokering.
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Slide 27
Build-to-Scale Model: OriginBuild-to-Scale Model: Origin
• Non-profit which trains and places low-income workers in IT sector jobs.
• Competes with temp firms by leveraging public dollars, reducing employee turnover and providing advancement opportunities.
• Works with large national corporate clients suchas Chase, Solomon Smith Barney, and Citibank.
• Jobs pay between $30,000 - $40,000/yr, compared to Employment and Training placements at $14,000/yr.
• Goal: 8,000 placements in 5 years
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Slide 28
In Conclusion...In Conclusion...
The landscape is changing and the changeis here to stay.
Key message for nonprofits:– Critically important to “stay on mission”, BUT
– Must adopt and employ better business practices to compete and survive
– View the changing landscape as an “opportunity” And embrace the change