Can Nonprofits Do Good and Make Money?

By: Yodit Mesfin Johnson, Director of Business Development

In his NEW.org blog post, Stephen notes, “Nonprofits aren’t in the business of taking risks. Sure they face risks all the time, but seldom do they choose risk. Typically, they’re in the mode of “business as usual,” endeavoring to be ever more efficient and effective in their work and finding funding to support it. Starting a for-profit venture takes determination, courage, and the commitment to step into the unknown. It requires being willing to let the market decide if the for-profit enterprise will succeed or fail.”

So, assuming that you’ve decided to move in this direction (or perhaps you already have a “selling culture” within your organization), we’d like to share some of our own experience as an evolving social enterprise here at NEW. Specifically, I wanted to share some of the nitty-gritty of engaging stakeholders and building sales infrastructure as well as tools we’ve d used to build capacity in our selling process.

Plan…

It was a little over a year ago that NEW’s Board of Directors “blessed” the formation of my position, Director of Business Development. It was about six years before that when, as part of our strategic planning process, the enterprise model was solidified. Like so many other nonprofits at the time, we had a funding portfolio that relied almost exclusively on contributed revenue (grants), with the accompanying trepidation about its sustainability. We often joke that capacity building isn’t “sexy”-- from a funding perspective. So in order to contnue our service to the nonprofit community, the development of an earned income model was imperative. NEW’s leadership was laser focused on getting us there. The need for capacity building services in the region----in our case in board leadership and IT support services----increased our confidence that this was the right direction for us at the right time, especially considering the financial downturn.

If you’ve seen one nonprofit…

NEW (Nonprofit Enterprise at Work) owns the NEW Center in Ann Arbor and has earned rent from the 20 nonprofit tenants we house in our “incubator” facility. So technically, we’ve always had some earned revenue. However, the breadth of our capacity building work, at the time, was not fee-based. We were not, for all intents and purposes, a money-making enterprise.

Diana Kern, VP of Programs and Director of the BoardConnect program at NEW, often says, “if you’ve seen one nonprofit board, you’ve seen ONE nonprofit board.” In other words, none of us operate exactly the same. That’s important to note, because as you think about your organization evolving into a more revenue-generating entity, it’s important to scale that to meet your unique organizational culture. Here’s an example: during that early strategic planning I mentioned, our leadership decided it would be important to recruit new hires that had, among other skills, business and entreprenuerial experience. Honestly, that’s likely the only reason someone like me with novice experience in the sector got hired. But we’ll keep that between us. We needed to balance the skills within our team to meet our emerging business model.

Lessons along the way…

You may see your own organization very differently from NEW, especially if your mission involves kids, animals, hunger or poverty. How do you “sell” when your mission is related to such deep social issues? For us, it was an evolution. We have always focused on helping nonprofits succeed (our tagline for years). Now, we were looking at how best to deliver the services while assuring a long life for our organization.

There was no sales process to speak of in those early years. No mechanism to really understand who our customers were, where they were and why they chose our services. We were really building the plane as we were flying it. For example, at one point we were hired by a national financial institution to provide board training to all of their middle management and top executives. For several months, they flew our staff person to their offices all over the country to deliver governance training. It was an awesome opportunity but the cost-benefit analysis proved otherwise. Since we use a very slim staff rather than consultants to deliver our world-class training, we were actually taxing the program by having someone so integral away from base camp. Lesson learned: we serve individuals, nonprofits and corporations in Southeast Michigan.

Strong Foundation; Strong House…

Last fall, I met Rob Marshall* of Performance Trek Consulting. Rob has an extensive sales background and my plea to him was to help me increase my efficiency in our selling process. I needed tools for data management, I needed to understand how to translate my work across the organization and how to align our double bottom line of mission and money. He and I worked closely for six months. We created a tool (an excel spreadsheet—keep it simple) that I could use to better understand who our customers were, where they came from (referral, existing client, new prospect), what services we offered that interested them and what opportunities existed to introduce a client to other services we offered. We also used this document to share information with staff, with our leadership team and with the board. This document will eventually be migrated into our CRM (client relationship management) system, but in the meantime is available as a shared document across the organization.

Here are some other topics Rob and I worked on together:

• Understanding the fundamentals of sales -- how nonprofits can leverage services and products to enhance earned revenue
• Understanding marketing vs. selling – how they should align
• Determining earned revenue goals and aligning them with organizational objectives
• Developing an effective sales strategy
• Setting objectives for the sales teams
• Developing and monitoring the funnel process
• What does it mean to you?
   
• Grab an opportunity to develop self-sustaining strategies to enhance earned revenue by leveraging potential or existing services or products.
• Understand effective marketing and sales strategies----how they differ and why they need to coincide.
• Gain an understanding of how to monitor, manage and motivate a team of sales ambassadors to maximize results.

Do Good. Make Money…

The answer is yes, nonprofits can do good and make money. The key is to stay true to the work. Organizational leaders need to be nimble. It is equally essential to build skilled expertise within the organization. Evaluate existing, mission-related services for earned revenue opportunities. As best you can, get buy-in from staff and volunteers.

Join Rob and me, this spring for an intensive half-day workshop on these and other topics. Keep an eye on NEW’s Notes or NEW’s Week for details. Until then, happy selling!

*Rob Marshall is a professional leadership and performance coach and consultant and founder of Performance Trek Consulting and R. Marshall Performance Coaching.