o for opportunity: exploring new revenue opportunities for nonprofits produced by the society for...
TRANSCRIPT
O for Opportunity: Exploring New Revenue Opportunities for Nonprofits
Produced by the Society for Nonprofit Organizations
September 11, 2008
Copyright © 2007 — Community Wealth Ventures, Inc. — 2
Workshop Objectives
1. Introduce participants to the concept of community wealth/social enterprise
2. Share examples, risks, best-practices
3. Identify community wealth opportunities for participant organizations
4. Understand how to assess and prioritize opportunities
5. Learn about the components of a successful feasibility assessment
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What do you hope to learn from this workshop?
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What Is Community Wealth?
Revenues generated through 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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Which is Not a Community Wealth Enterprise?
1. Zoo Doo – compost
2. Caroline Center Upholstery – furniture upholstery
3. Greyston Bakery – manufactures brownies for Ben & Jerry’s and other ice cream manufacturers
4. Rubicon Landscape Services – landscaping
5. Freedom Wheels – used car business
6. Laser Monks – discount printer cartridges
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What Factors are Necessary to Launch a Successful Community Wealth Enterprise?
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Characteristics of Successful Community Wealth Enterprises
1. Planning and upfront investment
2. Clearly defined goals
3. Mission alignment
4. Leadership and skilled staff
For more information download :
Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability
at www.communitywealth.com/resources_tools.htm
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Is Community Wealth Legal?
1. Nonprofits can launch community wealth enterprises and maintain 501c3 tax status
2. Income Related to Exempt Purposes No limit on amount of revenue
3. Income from Unrelated Activities Taxable as “unrelated business taxable income”(UBTI)
4. There is no standard legal structure
5. Consult an attorney to understand the most appropriate legal structure
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Community Wealth Potential Risks
Financial Reputation Organizational
• Venture may cost more than expected
• Opportunity cost – resources could have been spent elsewhere
• Traditional funders may decrease funding
• Venture may lose money
• Reputation could be compromised
• Venture could fail and negatively impact reputation
• Venture may divert management and staff attention
• Increased organizational complexity and new skills required may be difficult to handle
• Culture clashes between core organization and venture
• Staff and board resentment
Major Types of Risks
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The Social Venture Development Process
1.
Asset
Identification
2.
Assets
into
Opportunities
3.
Opportunity
Screening
4.
Feasibility
Assessment
5.
Select
One
Opportunity
6.
Business
Planning
Implementation
Idea Generation High Level Assessment
Detailed Market
Analysis and Operations
Plan
Today
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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
Things You KNOW:
· Understanding of specific issue
· Process expertise· Market expertise· People/key decision
makers
Task 1Assets Can Be Things You Have, Do, or Know
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Assets Are a Matter of Perspective
Consider this example. . .
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Nonprofit Organizations Have Lots of Assets
Attractive Facilities,Desirable Locations
Excellent ServiceProvision
Financial Accounting,Human Resources
Management
HAVE DO KNOW
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Time: 5 minutesHow: Individually and as a
group
1. Take 1 minute to identify your organization’s key assets 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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Task 2Evaluating Your Assets
1. Is the asset unique?
2. Who would value the asset?
3. How valuable is the asset?
4. What is the customer’s willingness to pay?
5. Is the asset sustainable over time?
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Example – Leveraging Assets for Opportunities
Assets
1. Historic downtown building
Opportunities
1. Cafe
2. Market-rate housing
3. Space rental for special events
4. Day-care center
5. Thrift-store location
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Time: 5 minutesHow: Individually and as a group
1. Review lists of assets and brainstorm potential opportunities. List each opportunity and its corresponding asset (1 minute)
2. Share ideas and brainstorm new ones
Exercise # 2: Turning Assets into Opportunities
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Task 3Opportunity Screening
1) Which opportunities will enable us to achieve our goals? Financial goals
Mission goals
2) How easy or difficult will it be to implement?
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Task 3: Opportunity ScreeningFinancial Analysis
Financial Potential
1. Market demand and estimated size of the market
2. Level of competition
3. Quality of product
4. Expected growth rate
5. Cost structure
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Task 3: Opportunity ScreeningAssess Ease of Implementation
Ease of Implementation
1. Expected complexity of the project
2. Availability and skills of current staff to manage the new opportunity
3. Ability to recruit other staff quickly
4. Access to necessary capital
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Ea
se
of
Imp
lem
en
tati
on
Financial Potential
Easy
HighLow
Hard
Task 3: Opportunity ScreeningWhich Opportunities Are Most Attractive?
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■ Feasibility analysis is a high-level assessment of the
market opportunity, profitability, and fit with the
organization for a potential business venture
The goal of a feasibility analysis is to inform a Go/No Go decision on a business opportunity using impartial market research and
internal assessments
Task 4What is a Feasibility Assessment?
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Task 4: Feasibility AssessmentExternal & Internal Factors
Internal Factors
External Factors
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■ How big is the current market? Is it growing or contracting? How is it segmented?
■ Who are the key customers? What customers are willing to pay?
■ Who are the key competitors? How do they differentiate themselves?
■ What are the margins for current vendors in the market?
■ What are the barriers to market entry?
Task 4: Feasibility AssessmentExternal Factors
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■ Can you secure organizational and board buy-in for this opportunity?
■ How well does the market opportunity fit with your organization’s skills and expertise? Will you need to purchase outside expertise?
■ Do you have a potential competitive advantage?
■ What investment is needed to launch and grow the opportunity?
■ How long will it take to make the opportunity a reality?
■ What are the risk factors? What are ways to mitigate risk?
Task 4: Feasibility AssessmentInternal Factors
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Task 4: Feasibility AssessmentEvaluate & Compare Opportunities
Based on your findings, take your “top/best” three and evaluate them
Opportunity – (Low, Medium, High)
A B C
Market Size
Market Outlook
Favorable Competitive Factors
Ease of Entry
Likely Competitive Advantage
Market Profitability
Fit with Mission
Fit with Skills/Expertise
Fit with Material Resources
Ability to Manage Risk
OVERALL ATTRACTIVENESS
Internal Factors
Internal/ External
External Factors
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Ultimately, the Opportunity Needs to be Something the Organization Really Wants to Do
1. What are the potential strengths of the idea?
2. What are the potential drawbacks of the idea?
3. Is it better than the other things the organization could be doing with its time and money?
4. Is the organization willing to dedicate the management staff and financial resources necessary to make it succeed?
5. Is there someone in the organization who will wake up every morning excited to make the venture a success?
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The Social Venture Development Process
1.
Asset
Identification
2.
Assets
into
Opportunities
3.
Opportunity
Screening
4.
Feasibility
Assessment
5.
Select
One
Opportunity
6.
Business
Planning
Implementation
Idea Generation High Level Assessment
Detailed Market
Analysis and Operations
Plan
Today
Copyright © 2007 — Community Wealth Ventures, Inc. — 36
Questions?
Heather Peeler
Managing Director