CHARITIES DOING CHARITIES DOING COMMERCIAL COMMERCIAL

VENTURES:VENTURES:SOCIETAL AND SOCIETAL AND

ORGANIZATIONAL ORGANIZATIONAL IMPLICATIONSIMPLICATIONS

Dr. Brenda ZimmermanDr. Brenda Zimmerman

IS IT A “GOOD” IDEA IS IT A “GOOD” IDEA FOR CHARITIES TO FOR CHARITIES TO UNDERTAKE MORE UNDERTAKE MORE

COMMERCIAL COMMERCIAL VENTURES?VENTURES?

THEMES OF THE RESEARCHTHEMES OF THE RESEARCH

MEETING NEEDS AND MEETING NEEDS AND FILLING NEEDSFILLING NEEDS

MEETING NEEDS AND MEETING NEEDS AND FILLING NEEDSFILLING NEEDS

Where charities see a need that Where charities see a need that should be met, commercial should be met, commercial

businesses see a niche that could be businesses see a niche that could be filled.filled.

CORPORATE RHETORICCORPORATE RHETORIC

CORPORATE RHETORIC CORPORATE RHETORIC PERMEATES THE SECTORPERMEATES THE SECTOR

The language of the marketplace The language of the marketplace has put management at the centre of has put management at the centre of

our organizations, corporate our organizations, corporate business at the centre of society and business at the centre of society and defined government and nonprofit defined government and nonprofit organizations a nonproductive and organizations a nonproductive and

burdensome.burdensome.

AN OLD NOVELTYAN OLD NOVELTY

AN OLD NOVELTYAN OLD NOVELTY

Charities have been selling goods Charities have been selling goods and services forever and yet it is an and services forever and yet it is an “invisible” option to many charities.“invisible” option to many charities.

SELF-SUFFICIENCY AND SELF-SUFFICIENCY AND ECONOMIC DEPENDENCEECONOMIC DEPENDENCE

SELF-SUFFICIENCY AND SELF-SUFFICIENCY AND ECONOMIC DEPENDENCEECONOMIC DEPENDENCE

““Unless you invent the next pet rock, Unless you invent the next pet rock, you are not going to replace the you are not going to replace the government funding with your government funding with your

business profits. Sorry.” business profits. Sorry.” (Brinckerhoff, 1994c)(Brinckerhoff, 1994c)

SEPARATION OR INTEGRATION SEPARATION OR INTEGRATION OF COMMERCIAL AND SOCIAL OF COMMERCIAL AND SOCIAL

VENTURESVENTURES

SEPARATION OR INTEGRATION SEPARATION OR INTEGRATION OF COMMERCIAL AND SOCIAL OF COMMERCIAL AND SOCIAL

VENTURESVENTURES

There are practical and There are practical and philosophical arguments for both philosophical arguments for both

integration and separation of integration and separation of commercial and social venturescommercial and social ventures

THE AMBIDEXTROUS THE AMBIDEXTROUS ENTREPRENEURENTREPRENEUR

THE AMBIDEXTROUS THE AMBIDEXTROUS ENTREPRENEURENTREPRENEUR

It takes a special person to succeed It takes a special person to succeed as a commercial entrepreneur. Even as a commercial entrepreneur. Even

fewer can combine commercial fewer can combine commercial entrepreneurship with a focus on entrepreneurship with a focus on

meeting charitable needs meeting charitable needs

TRANSACTION POTENTIALTRANSACTION POTENTIAL-FEE FOR SERVICE-FEE FOR SERVICE

TRANSACTION POTENTIALTRANSACTION POTENTIAL-FEE FOR SERVICE-FEE FOR SERVICE

Profitable fee-for-service depends on Profitable fee-for-service depends on the client base served and the nature the client base served and the nature

of the goods or services producedof the goods or services produced

TRANSACTION POTENTIAL TRANSACTION POTENTIAL BASED ON THE NATURE OF THE BASED ON THE NATURE OF THE

ACTIVITYACTIVITY

THE EMERGENT OUTCOMES OF THE EMERGENT OUTCOMES OF COMMERCIAL VENTURESCOMMERCIAL VENTURES

THE EMERGENT OUTCOMES OF THE EMERGENT OUTCOMES OF COMMERCIAL VENTURESCOMMERCIAL VENTURES

Although there are intended or Although there are intended or planned outcomes of commercial planned outcomes of commercial

ventures, many emergent outcomes ventures, many emergent outcomes result from the activityresult from the activity

EMERGENT OUTCOMES:EMERGENT OUTCOMES:ResourcesResources

• cannibalization

• shifts away from intentional giving

• synergies/decreased financial risk

• increased financial risk

• using more energy to get fewer dollars

• burning charitable dollars

• volunteers

• cost of hiring “business” managers

• reward structures would have changed

• commercial activities can be undermined by the mission and values of a charity

TOP LINE THINKING TOP LINE THINKING VERSUS BOTTOM LINE VERSUS BOTTOM LINE

THINKINGTHINKING

Top Line Thinking Bottom Line Thinking

• Revenue = money available for charitable work • Revenue profits

• Costs (must not exceed revenues) • Costs (required to create revenues)

• Revenues determine future costs • Costs are incurred to create revenues

• Timeline revenues precede costs • Timeline costs precede revenues

EMERGENT OUTCOMES:EMERGENT OUTCOMES:RelationshipsRelationships

• boards of directors

• recipients/beneficiaries/clients

• donors/funders

• volunteers

• organized labour

• professional staff

EMERGENT OUTCOMES:EMERGENT OUTCOMES:ReputationReputation

• community perception

• market perception-unfair competition

• shifting definition of success

TYPOLOGY FRAMEWORK FOR TYPOLOGY FRAMEWORK FOR CHARITIESCHARITIES

EMERGENT OUTCOMES:EMERGENT OUTCOMES:ResponsivenessResponsiveness

• increased productivity

• change to less hierarchical more adaptable structure

• “low-hanging” fruit

• customer focus

• mission and values of charity are undermined by business venture

THEMES OF THE RESEARCHTHEMES OF THE RESEARCH

KEY QUESTIONS TO ASK:KEY QUESTIONS TO ASK:

Is this avoidance?Is this avoidance?

Will it change the fundamental Will it change the fundamental nature of the charity?nature of the charity?

Abandon form, Abandon form, but preserve but preserve substancesubstance