An Economic Stimulus Package for CBOs:

Ideas for Developing Financial Resources

Prepared for

By Community Financial ResourcesApril 2008

TABlE OF COnTEnTS

InTRODUCTIOn 1

FEE FOR SERVICE 3

PROCEEDS FROM lEGAl SETTlEMEnTS 5

lOCAl InITIATIVES AnD InnOVATIOnS 7

COnnECTInG COnSTITUEnTS TO ESSEnTIAl PRODUCTS/SERVICES 9

lEVERAGInG ORGAnIZATIOnAl REAl ESTATE 11

GROUP PURCHASInG 14

AFFInITY BEnEFITS PROGRAMS 17

On-lInE AFFIlIATE MARKETInG 19

RETAIl/On-lInE RETAIl 21

In-KInD DOnATIOnS 23

On-lInE DOnATIOnS 25

CHARITY MAllS 27

CElEBRITY BUREAU AnD SPECIAl EVEnTS 29

POlITICAl DOnORS AnD PHIlAnTHROPY 31

IMPlEMEnTATIOn SUPPORT 33

REFEREnCES AnD RESOURCES 34

Funding the work of community-based organizations (CBOs) is a

challenge in a marketbased economy. Progressive organizations

whose missions are to address social and economic justice issues

through advocacy and organizing often find their access to

traditional philanthropic resources limited. Nonprofit organiza-

tions’ dependence on foundation and government grants puts

them at risk of unexpected (and inevitable) revenue disrup-

tions. Yet, it is estimated that 80% of CBO budgets are funded

through these sources. CBOs must be as creative in their financial

resource development strategies as they are in executing their

organizational missions and, in fact, recognize that developing

this sort of financial independence is another way to build power.

This catalogue is based on the work of the New World Founda-

tion Resource Lab with support from the Ford Foundation. Each

catalogue entry gives a brief snap-shot of a strategy to develop

financial resources for CBOs. We hope to inspire even more

creative thinking on the part of community organizations and the

funders that support them.

The Importance of Membership Development

Membership is a key instrument in building organizational

sustainability as membership means dues, consumer power

and an ability to reduce dependence on philanthropic funding.

Ultimately, perhaps the most powerful way to sustain social

justice CBOs is through the expansion of membership within

and beyond the constituency in need. The membership base is

the political strength of an organization, therefore its expansion

is critical. If fundraising is used to support that strength, it will

address resource questions while at the same time increasing

thepolitical capacity of social justice activism. Additionally,

membership may be deployed strategically to generate revenue

beyond simple dues-paying structures.

Spheres of Influence

By increasing its membership base, an organization can better

insulate itself from the influence of outside forces, i.e. funding

sources that can be unpredictable and less sympathetic to an

organization’s work at critical moments. Organizations may have

a core of committed members in the community they serve, but

there are other spheres of influence they may not have consid-

ered in thinking about their membership. Organizations may

move beyond their core community membership to include

community service providers, small family foundations, political

donors, and local businesses when they consider increasing

membership and new fundraising strategies. When consider-

ing an expanded idea of membership, it may be useful to think

about the different roles a member can play in the work of a CBO

including paying dues, making donations, volunteer program

support, public testimonials, event participation and lobbying.

While a committed core of membership may be the group most

willing to do volunteer work and show up for events, other types

of members, such as service providers and local businesses, may

be important sources of financial support or increased community

visibility. By activating all of these connections, an organization

can maximize its impact and access to financial resources. The

strategies proposed in this resource catalogue encourage CBOs

to consolidate core membership and to test their capacity to tap

into multiple spheres of influence.

Spheres of Membership

Introduction

SERVICE PROVIDERS

FAMIlY FOUnDATIOnS

POlITICAl DOnORS

lOCAl BUSInESSES

nATIOnAl BUSInESS/CElEBRITIES

COMMUnITY BASE

1

Direct and Indirect Benefits

In considering the different programs listed in the catalogue,

CBOs can take into account both the direct and indirect ben-

efits each one offers. Besides providing financial resources and

constituent benefits, many of these programs play an important

promotional role. They build public awareness of the issues ad-

dressed by the organization, enhance the CBOs reputation and

credibility, expand contacts, and energize the organization. The

value of these benefits may not be directly quantifiable, but they

are tangible and indispensable.

Doing the Work

CBOs should be aware that financial resource development

opportunities, new revenue sources, and cost-cutting methods

pose challenges, have limitations, and require the organization’s

commitment. These efforts can be incorporated as critical ele-

ments of an organization’s strategic plan. By diversifying financial

resources a CBO achieve the strength, independence and flex-

ibility it needs to move its work forward.

A Word About Format

The listed ideas and opportunities represent a range of com-

plexity and financial return. Each financial resource program is

described briefly then broken down into a component analysis

of the organizational and financial benefits that must be weighed

against the required resources and implementation logistics. The

following rating system is used to give a quick assessment of

financial benefit and implementation complexity.

Financial Benefit and Complexity Ratings

Potential to yield a small financial benefit

Potential to yield a moderate financial benefit

Potential to yield a substantial benefit

Potential to yield a substantial financial benefit and

become a key source of revenue for the organization

Easy to implement, requiring few or no new resources

and no new skills.

Moderately complex process requiring a small amount

of new resources and skills.

Complex process requiring new resources, skills, and

substantial time.

Very complex implementation process requiring

substantial resources, funding and time.

The Importance of Cost-Benefit Analysis

A cost-benefit analysis is a process that involves weighing the to-

tal expected costs against the total expected benefits of a project

or strategy in order to choose the best or most profitable option.

A representative cost-benefit analysis is presented for each

initiative to prompt interested organizations to develop a more

in-depth analysis. It is critical for CBOs to conduct a cost-benefit

analysis for every program they consider and to incorporate the

benefits and costs that cannot necessarily be quantified. Even

when the financial result may be marginal, the intangible benefits

to either the client base or the organization may make

the program worth pursuing. On the other hand, having a posi-

tive financial result in the costbenefit analysis does not always

mean the CBO should pursue the program. For example, con-

sider the concept of opportunity costs – are there alternative pro-

grams the CBO can pursue that yield a higher financial return on

the resources utilized? Would the program be disruptive to the

organization despite its financial rewards? Cost-benefit analysis is

a very useful financial tool to assess project feasibility.

The Implementation Support section of the catalogue suggests

some innovative approaches to providing start-up funds and

technical assistance to implement financial resource development

initiatives.

Finally, the References and Resources section is a quick guide to

helpful materials and contacts that can provide more information.

2

OVERVIEWCommunity-based organizations can earn income by providing

mission-related products and services through a fee for service

model. Many CBOs provide valuable services to their constitu-

ents that in the for-profit world are only available for a fee. While

organizations want to serve the broadest population, they may

believe that the only way to do so is by offering their services

for free. However, there at least three fee-for-service options

that can optimize organizational resources and improve constitu-

ent outcomes. First, a CBO can charge clients fees for existing

services on a means-based sliding-scale. Charging clients on a

sliding-scale basis will ensure everyone receives the services they

need while providing revenue to the CBO to defray costs which

may actually allow it to serve more people. Second, the CBO

can charge for related products and services to an expanded cli-

ent base. For example, a CBO working for environmental justice

may provide an air quality testing service, organizations that own

simultaneous translation equipment can rent it out when not in

use, or an organization fighting for corporate social responsibility

could sell their research to socially responsible investment funds.

Third, a CBO with a subject matter expertise, such as setting up

community benefits agreements or land trusts or creating popu-

lar education modules can sell “how-to” consulting services to

other organizations.

Consider the following example of the revenue generation

potential of fees: A non-profit that provides low-cost grocery

shopping and prescriptions delivery service for the frail and

elderly can get grants and contracts from government entities.

But if they also charge a nominal delivery fee they can defray the

cost of their service.

$5 per delivery and 150 deliveries per week for 50 weeks of the

year will generate $37,500 per annum that can

be used to expand services.

Fee for Service

ORGAnIZATIOnAl BEnEFITS

• Generate Revenue – Charging fees using differential

pricing for services and/or organizational expertise.

• Optimize Organizational Resources – Properly

structured fees can help CBOs expand the volume of

services provided, e.g. offer more computer classes, and

induce clients to prioritize their needs which will lead to

better utilization of organizational resources. Selling the

organization’s expertise will also optimize the utilization of

staff with extraordinary skills and experience.

• Enhance Client Outcomes – By paying fees, clients

have a greater stake in ensuring that they are “getting

their money’s worth” and will be more committed to

achieving a designated goal. Revenue used to expand

services will also provide more opportunity for positive

client outcomes.

• Strengthen Community Ties – By increasing client

commitment through fees and using the income

generated to increase or improve services, the CBO will

deepen it ties with the community.

FInAnCIAl BEnEFITS

• Any fees generated through existing services will be a net

gain to the CBO once the fee collecting and management

systems are in place. Assuming a CBO already has funding

to provide a service that clients highly value; the CBO can

adopt a sliding scale fee to defray the program’s

administrative costs. Even a small fee of $5 to 250 clients

would generate $1,250 that a CBO can use to improve

or expand services.

• The CBO may also be able to tap new funding sources

based on the expansion of services or population served or

by demonstrating the organization’s economic sustainability

through fee-based revenue.

3

IMPlEMEnTATIOn PROCESS1. Conduct a Strengths, Weaknesses, Opportunities and

Threats Analysis – identify the CBO’s strengths, opportunities

and risks:

• Organization’s strengths – what does the CBO do very well;

what special skills and experience do staff have

• Weaknesses – what areas must the CBO improve to offer fees-

for-service

• Opportunities – how high is the demand for what the CBO

does (or can do), are there alternatives available

• Risks – how sensitive are constituents to fees, would fees

adversely affect any clients ability to access services, how

would funders react, would providing consulting services dis-

tract or diminish the CBO’s ability to carry out its mission

related programs.

2. Differential Pricing – is the practice of charging different

prices to different clients for the same service based on each

client’s ability to pay. Identify and establish fees for service that

can be structured as pricing tiers or through discounting.

3. Cash Management – the CBO may need to incorporate a

new cash-based revenue stream into its existing funds manage-

ment system or develop a system if none exists.

COST-BEnEFIT AnAlYSIS The financial cost-benefit analysis is straight forward – how

much revenue does the CBO need to generate in order to

justify the expense of initiating and maintaining a fee-for-

service model. Below is a breakeven analysis for establish-

ing a client fee-based program using CBO staff at a cost of

$50/ hour or a consultant at cost of $150/hour.

A. low Cost: In-house analysis, set-up and on-going fee

collection

First Year Cost: $5500

Second Year Cost: $2500

2-yr Total = $8000

Avg per Use Fee: $5 $10 $15

Avg per Use Fee: $5 $10 $15

Client Contacts to Breakeven in 2 years: 1,600 800 534

On-going Contacts Needed to Breakeven: 500 250 167

B. High Cost: Consultant assisted analyses and set-up,

in-house on-going fee collection.

First Year Cost: $20,000

Second Year Cost: $2500

2-yr Total = $22,500

Avg per Use Fee: $5 $10 $15

Avg per Use Fee: $5 $10 $15

Client Contacts to Breakeven in 2 years: 4,500 2,250 1,500

On-going Contacts Needed to Breakeven: 500 250 167

Clients in excess of breakeven will result in positive net

income to the CBO. The second and subsequent years

will only incur fee collection and accounting costs.

Consequently, net-income will increase substantially

once set-up fees are covered.

RESOURCES nEEDED

• Staff time – Staff time to do the analysis, development,

and implementation. Project estimate: 60 hours. Daily

processing and tracking of fee-based revenues: 50 hours

per annum.

• Consultants – If allocating existing staff time to imple-

mentation is a problem, a CBO may want to hire a con-

sultant to assist with the organizational analysis, facilitate

stakeholder meetings, plan the fees rollout and plan

marketing strategy. A consultant to assist with the various

tasks listed above would charge between $125 and $200

per hour.

PROjECT COMPlExITY

• Conducting an organizational analysis of strengths,

weaknesses, opportunities and threats should include the

involvement of diverse stakeholders and a facilitator with an

understanding of the process.

• Establishing differential pricing will require research to

learn about market rates, clients’ ability to pay and analysis

to estimate outcomes. The CBO may also need to establish

a system to manage cashbased revenue.

Fee for Service

4

OVERVIEWMany CBOs actively pursue legal strategies and litigation to

further their organizational mission, be it civil rights, environ-

mental protection, or effective government regulation. Civil

suits may result in awards or settlements that can be used

to fund mission fulfilling programs. Lawsuit settlements and

regulatory proceedings can also result in the establishment of

trust or restitution funds to compensate parties wronged by the

defendant. On occasion fulfilling the original purpose of the

settlement is impossible or impracticable. In such situations the

courts distribute “cy pres” funds to trustees who see to it that

the funds benefit the parties wronged or similarly situated

parties, or to promote the law consistent with the underlying

court case. Any organization that serves constituents that may

be subject to unfair, unethical or potentially dangerous com-

mercial practices can apply for cy pres funds. (See Implementa-

tion Process below re: guidelines for monitoring litigation.) For

CBOs, the challenge will be to identify relevant litigation and

then to clearly document the link between their constituents

and court decisions that result in restitution funds being award-

ed. A slightly different variation upon this theme is the IOLTA

(Interest on Lawyers Trust Accounts) public service program.

CBOs working on legal programs for low-income households

can apply for IOLTA funds.

FInAnCIAl BEnEFITS

• Cypres grants can range between a few thousand

to several hundred thousand dollars.

• Pro-active litigation can net settlements in excess

of $100k.

Proceeds from legal Settlements

ORGAnIZATIOnAl BEnEFITS

• Generate Revenue – Cypres funds, legal settlements,

awards and IOLTA funds are all potential funding sources

for topically related programs.

• Inform and Protect Constituents – Organization can

educate constituents about the issues at the root of the

legal settlements and prevent similar types of occurrences.

• Build membership and community support—

constituents and the general public value organizations

that do the hard work of fighting for justice.

• Enforcing Corporate Accountability—active litigation

acts as a deterrent to unlawful behavior.

PROjECT COMPlExITY

• It is easy to monitor pending class action and identify

foundations designated as trustees of cypres funds

• State IOLTA programs are listed on the web

• Becoming a trustee or pursuing a litigation strategy is

substantially more complex and will require dedicated

resources and legal knowledge

5

IMPlEMEnTATIOn PROCESS1. Monitor Pending litigation – CBOs can monitor pending

class action lawsuits and engage legal counsel to file cy pres

petitions for cases related to the organization’s mission. The

website www.classactionamerica.com provides both a free and

a subscription based service that list current and pending class

action lawsuits divided by case categories, current disposi-

tion status, the amount at issue, a brief summary, and links to

obtain additional information. An alternative mechanism for

tracking pending litigation is to set-up topic alerts through the

CourtLink, WestLaw, or Lexis-Nexis databases.

2. Apply for Grants – A CBO can identify foundations that have

set up restitution funds or consumer trusts resulting from settle-

ments and apply for grants under the foundation’s grant-making

guidelines. CBOs working on legal programs for low-income

households can apply for grants from the state IOLTA programs.

-continued next page-

3. Petition for Settlement Funds – Organizations can work

with attorneys to directly file a cy pres petition to the court

recommending the disposition of funds to their organization.

However, recent restrictions on funds administration have

pushed more cy pres funds directly to foundations as trustees

rather than individual charitable or community-based organiza-

tions. In order to be designated as a trustee, parties need to

secure an order or decision in the case at hand that stipulates:

• The recipient foundation

• Funding priorities consistent with the underlying case

and/or benefiting class

• The duration of trust

• Administrative fees

• Reporting requirements

RESOURCES nEEDED

• Staff time – An organization’s development director or

other staff can monitor class actions and then contact

designated trustees.

• Access to Databases – Subscriptions to WestLaw or

CourtLink/Lexis-Nexis databases can be fairly expensive

costing a few thousand dollars a month. However, most

law firms have contracted these services and may provide

probono support to organizations interested in a

monitoring service which involves the set-up and receipt

of topic alerts.

COST-BEnEFIT AnAlYSIS

Points to consider before pursing proceeds from legal

settlements:

• CBOs that actively pursue litigation to generate settle-

ment funds must carefully assess the expected cost of a

court case even if they can utilize pro bono legal counsel

and weigh those costs against the likely awards or settle

ment.

• Other cost factors to consider are the staff time and the

tools to actively monitor and respond to legal opportuni

ties and the cost of legal resources.

• For a CBO applying for restitution grants from trustees,

the cost-benefit will be similar to researching and apply

ing for foundation, government and corporate grants. The

cost to research and prepare grant applications should be

weighed against the likelihood of receiving the restitution

funds.

Proceeds from Legal Settlements

6

OVERVIEWThere is no denying the power of community and a “sense of

place”. Cultivating that energy is a way for CBOs to organize

neighborhoods and marshal resources to address community

needs and issues such as public safety, race relations, commer-

cial revitalization, physical improvements, education, economic

and social justice. Neighborhood improvements that evolve

into neighborhood empowerment programs will build a political

power base. The first step on a long journey may be developing

neighborhood pride by creating a special event such as a jazz

festival or an art fair or obtaining a historic district designation

or even publicizing the neighborhood’s unique assets and vital

character to make it a tourist destination. There are informal and

formal channels to fund these types of initiatives. A start can be

house parties to discuss goals and raise funds. On a larger scale,

the Federal Community Development Block Grant Programs,

redevelopment agencies, and local community foundations are a

good source of support. LISC, the Local Initiatives Support

Corporation, can help community organizations gather the nec-

essary financial resources to invest in community development.

There are city and regional programs such as the City of Seattle’s

Neighborhood Matching Fund and many programs are not pub-

licized and take some research to uncover. The key to accessing

these funds is the CBO’s ability to mobilize the community to

take ownership of the projects.

local Initiatives and Innovations

ORGAnIZATIOnAl BEnEFITS

• Build Membership – Demonstrate to residents the power

of organized action and encourage them to become perma-

nent members to address other issues.

• Generate Revenue – Tap into local funding sources both

grassroots and institutional, many of which are not regularly

publicized.

• Inform and Protect Constituents – Inform residents of

their rights and help them identify community goals and

address community issues.

• Build Organization Credibility – By addressing quality of

life issues.

• Enforce Government Accountability – Mobilize residents

to demand government action on community needs, and

help government entities become aware of community

priorities.

• Advancement of Social Goals – Create an environment

that promotes every citizen’s right to a healthy and prosper-

ous community.

FInAnCIAl BEnEFITS

•The financial resources generated will depend on the type

of project(s) selected. Targeting the appropriate funding

source. Grassroots fundraising can raise several thousand

dollars. Grants can range between a few hundred dollars

and hundreds of thousands.

•Grants will typically cover personnel expenses, supplies

and materials, services, capital expenses and overhead.

Often times the CBO will function as a contractor compen-

sated for delivering the completed project.

PROjECT COMPlExITY

• Start with small group functions and house meetings to

define scope of work.

• Projects can range from policy initiatives that take human

capital—time and research—to large-scale neighborhood

redevelopments.

• Neighborhood events can range from potlucks to street

fairs: remember even block parties require permits.

7

IMPlEMEnTATIOn PROCESS1. Research Funding Options – identify city, county, and

regional funding options including Community Development

Block Grants (CDBG) and funding available for communities

designated as redevelopment or enterprise zones. Identify local

foundations, corporations and business that can support the

project.

2. Identify Pressing Community needs – gather community

input to identify and prioritize pressing needs that are vital for

improving the neighborhood residents’ quality of life.

3. Organize Residents – set up community meetings and

publicize them to inform residents about the need for action.

Solicit community leaders’ support to inform and mobilize the

community.

4. Apply for Funding – Complete grant applications as

needed. Government funds usually become available at the

start of the fiscal year. Therefore, if working with government

entities, CBOs needs to be ready to apply for grants or funding

six months before the start of the jurisdiction’s fiscal year. Many

government entities will also hold public hearings on commu-

nity needs and proposed budgets six to nine months before the

start of the next fiscal year.

COST-BEnEFIT AnAlYSIS

This revenue strategy offers CBOs a wide array of options,

from very simple community events costing a few hundred

dollars to construction projects costing hundreds of thou-

sands. A few points to keep in mind when conducting the

cost-benefit analysis for individual projects:

• If the project is sufficiently complex, the CBO needs to

think of it as if it were starting a new organization program.

How much staffing is required, how much executive director

oversight, how much support staff, how much office space

will be required? Keep in mind these are all costs that

should be part of the project proposal.

• As noted in the benefits section, an important compo-

nent of this project is the non-financial benefits to the CBO

and the community. Therefore, it is important for the CBO

to heavily weigh the non-tangible benefits of this type of

program, including the opportunity to derive revenue in

conjunction with some of the other strategies outlined in

this catalogue.

Following are examples of CBO initiated community

projects:

• A CBO proposed to transform an underutilized space

into a green space that invites visitors, provides educa-

tional opportunities and provides environmental benefits.

The project improvements will connect two socially and

economically different neighborhoods and provide com-

munity members the opportunity to bring their children and

families to a safer area together. Total project cost $198,000

($98,000 form the City of Seattle)

• A CBO initiated a pilot mentoring program at West

Seattle High School designed for 20 bilingual migrant

students. Eight mentors will be trained and their parents

involved in the program. Total cost $7,700 ($4,675 from the

City of Seattle)

• Nuestra Communidad Development Corporation of

Boston renovated the historic but dilapidated Dartmouth

Hotel into 65 units of affordable housing and retail space

with the help of a $625,000 loan from Boston LISC.

RESOURCES nEEDED

• Staff time – Staff time to initiate a new program, including

researching funding options and organizing the community.

The project estimate staff hours will depend on the com-

plexity of the project.

• Consultants – Special issues may require outside consul-

tants to provide subject matter expertise. Event coordina-

tors are an effective way to produce public functions, e.g.

festivals.

• Seed Money – The CBO will likely incur staff costs to

initiate the project. Usually, these funds cannot be covered

retroactively once the project is funded.

Local Initiatives and Innovations

8

OVERVIEWCommunity-based organizations’ constituencies often lack ac-

cess to essential products and services, e.g. banking services,

healthy food, or health care, and these deficits can negatively af-

fect constituents’ civic participation. CBOs can facilitate constitu-

ent access to important products or services and even though

this role may not be directly mission fulfilling, the organization

will gain the appreciation and support of the community. The

additional benefit of this type of program is that the CBO can

be compensated by the product/service supplier for acting as

a distributor. For example, a CBO organizing low-wage workers

can significantly improve their constituents personal safety and

financial management capabilities by providing a low-cost bank-

ing product like a prepaid debit card that eliminates the need

to use a high-cost check casher. The card vendor would pay the

CBO to open up card accounts.

Connecting Constituents to Essential Products/Services

ORGAnIZATIOnAl BEnEFITS

• Improve Constituents’ Quality of life – By providing

constituents with a product or service that is not readily

available to them or is a financial burden at normal market

rates.

• Strengthen Relationship with Constituents – Providing

access to important services at fair price will build an

organization’s credibility with the community creates

opportunities to build organizational membership.

• Effect Social Change – The CBO can influence the

marketplace by representing the collective needs and

purchasing power of its constituents.

• Generate Revenue – Negotiate revenue share from the

product/service provider.

PROjECT COMPlExITY

• The easiest implementation strategy is to research social

enterprises and non-profit ventures to find existing con-

sumer friendly product/service programs that a CBO can

recommend.

• This type of revenue generation program can be complex.

If an organization is customizing a new product/service of-

fering, it must have access to various business skills, includ-

ing industry research, negotiating, marketing and partner

management. It also calls for considerable knowledge

about the products and services the CBO decides to pro-

vide. This type of project will resemble running a business

and requires a business plan

RESOURCES nEEDED

• Staff or Consultants: baseline 1 FTE

- To develop a new program, the CBO will need incremental

staff or consultants with experience in research methods,

marketing and product knowledge.

– For joining existing or developing new programs, ad-

ditional staff time would be necessary to carry out the

day-to-day distribution functions e.g. contacting constitu-

ents to offer the product and/or enroll participants into new

services, on-going marketing, serving as a liaison between

constituents and vendors when help is needed, inventory

control, etc.

– Expect administrative functions to be affected and require

additional work, including management oversight, account-

ing and fundraising. Outreach and Marketing budget to

generate sufficient volume to produce material revenue.

9

IMPlEMEnTATIOn PROCESS1. Constituent needs Assessment – conduct a needs assess-

ment of the CBO’s constituency and supporters. Identify quality

of life issues that are negatively affecting constituents’ commu-

nities that could be addressed through a market-based solution,

e.g. access to health care, education, financial services, healthy

food, etc.

2. Form a Coalition – partner with other organizations to form

a significant consumer power block. Quantify your purchasing

power, e.g. number of households, dollars spent on similar

services.

3. Vendor Research – research current supplier offers and capa-

bilities to determine the best option for providing constituents

the desired products or services.

4. negotiate with Suppliers – using the collective consumer

power of the constituency base, negotiate with suppliers to

provide the products or services needed by the represented

consumers at a fair or advantageous price. Appeal to the

supplier’s interest in opening new markets to establish a

revenue share for the CBO’s role as distributor of the product

or service.

5. Market the Product or Service – the value of this distri-

bution model is that the CBO can leverage its constituency

outreach strategies into a marketing plan—the likes of which

a vendor or supplier could not replicate since they lack the

embedded relationship with the consumer.

COST-BEnEFIT AnAlYSIS

CBOs can explore a wide array opportunities to provide

services but the final decision to do so should be based on

whether the financial (and social) benefits outweigh the cost

of providing the service. Because it would be impossible to

provide sample cost-benefit analyses for every type of ser-

vice, this section provides only one example of a remittance

service. This example provides an analysis on how many

regular clients a CBO would need given certain assump-

tions to break even or make a profit providing a retail outlet

for proprietary internet-based remittance wire service.

In this example the supplier would take care of licensing

and set-up and the CBO would serve as a retail distributor.

The CBO would charges clients $8.95 per wire, pay the sup-

plier $5 and keep $3.95. Assuming a quarter time FTE staff

at an hourly staff cost of $50 (annual cost =$26,000) to staff

the project, it would generate the following results based

on various client levels and service usage:

Clients:

275 300 350 275 300 350 275 300 350

Average Monthly Transactions per Client:

2 2 2 2.5 2.5 2.5 3 3 3

Annual Revenue:

$26,070 $28,440 $33,180 $32,588 $35,550

$41,475 $39,105 $42,660 $49,770

Net Profit:

$70 $2,440 $7,180 $6,588 $9,550

$15,475 $13,105 $16,660 $23,770

As noted, an organization with a moderate-size constitu-

ency of 350 individuals would generate annual revenue of

$7,180 to $23,770 in excess of costs. The CBO must also

factor in potential revenue increases from the expansion of

membership and donor base from new contacts through

this retail service.

Connecting Constituents to Essential Products/Services

FInAnCIAl BEnEFITS

• The revenue share that CBOs can earn for connecting

consumers with needed products or services can be based

on per capita “sales” or usage volume or a combination

of these factors. The CBOs earned income is not an incre-

mental cost to the consumer but rather a revenue shift from

a for-profit distributor to a nonprofit distributor. However,

these opportunities usually involve low per unit revenue and

therefore require significant volume to generate material

revenue.

10

OVERVIEW

Many CBOs own real estate or rent office space. Strategically

managing an organization’s real estate whether owned or leased

creates many opportunities to generate additional revenue,

reduce or off-set costs. Carefully planning real-estate utilization

can effectively free up funds to use for other core service needs.

So what does this mean for a CBO? A real estate asset manage-

ment strategy means analyzing and categorizing the organiza-

tion’s current uses of real estate and setting goals for each type

of use and facility. Goals can be maximizing revenue or reducing

costs, as well as, include mission-related goals such as building

community or cultivating partnerships.

For example, if an organization has excess office space, its

strategy should extend beyond placing a “for rent” sign and

negotiating a lease. Instead the CBO should study what type

of use would produce greatest benefit to the organization and

pursue that type of user. Similarly, the CBO should study what

property improvements are viewed as beneficial enough to justi-

fy charging higher rents or attracting tenants. Even as a renter, a

CBO should consider projects such as reducing heating costs by

weatherizing a rented office itself. Or it can offer the landlord to

split the cost of replacing energy inefficient single pane windows

and then raise funds to cover its share of the cost.

As discussed below, there are many ways to actively manage

real estate. CBOs need to include property management in their

strategic plan, manage expansion effectively, adapt and reuse

facilities where possible, and pursue innovative real-estate strat-

egies that will generate funds for other uses.

leveraging Organizational Real Estate

ORGAnIZATIOnAl BEnEFITS

• Generate Revenue – by renting out under utilized space

and pursuing innovative real-estate strategies that

adapt and reuse facilities where possible.

• Reduce Administrative Costs – by negotiating cost

reductions, stabilizing premises expense, or upgrading

premises to get more for less.

• Improve Client Access to Services – By including in the

strategic real estate plan options to co-locate with other

organizations serving similar clients.

• Build Community Credibility – by providing space for

community events or expanded community services.

FInAnCIAl BEnEFITS

•Real estate holdings—property, plant, and equipment--

typically represent one of the highest-cost categories for

CBOs after salaries and benefits. Improving asset manage-

ment strategies will improve the organizations financial

position. Benefits must be analyzed on a case by case basis.

•As an example, the Silicon Valley Foundation in California

rents its conference rooms for public meetings. It charges

$675-$950 per meeting depending on room size and

number of hours used.

•Remodeling or constructing a new building should include

revenue generating opportunities such as rental office

space, retail space, etc. See Cost-Benefit section

•Local Foundations and Credit Unions are often motivated

to partner and invest in CBO real estate.

11

IMPlEMEnTATIOn PROCESS1.Prepare a Real Estate Asset Management Strategy –

Categorize real estate by use (office, community, potential

surplus), develop strategy goals (maximize benefits, minimize

costs, stabilize costs, optimize returns) and gather needed

information (expenses, internal rent, market value, revenues,

value-in-use) for analyses.

2. Space needs Study – Evaluate current space usage and

future space needs based on estimated growth/contraction.

3. Implement Strategy – potential outcomes of strategy

include:

•Rent conference room/meeting space

•Consolidate multiple office locations

•Downsize space usage and rent out surplus space

•Dispose of surplus land Develop a construction and

expansion plan

•Co-locate with other organizations in new facility

•Enter into a sale-and-leaseback agreement to free capital

4. Partner with Cities/Counties and Redevelopment Agencies

– leverage resources. Municipalities have an interest in main-

taining services for CBO constituents and will likely be willing

partners in well-thought out development plans.

Leveraging Organizational Real Estate

PROjECT COMPlExITY

• A real estate asset management strategy can range from

simple to complex.

• Most CBOs should be able to complete the analyses

of some basic opportunities (e.g. renting excess space or

reducing energy costs) and carry out actions identified in

the process.

• Larger management initiatives should employ a real estate

specialist.

RESOURCES nEEDED

• Staff Time – Existing staff may be able to carry out

additional administrative functions such as advertising and

renting out meeting space. More lucrative programs could

fund additional staff resources.

• Real Estate Specialist – For more sophisticated programs,

a CBO should enlist a public interest oriented real estate

specialist to devise a real estate asset management strategy

that generates additional revenue or cost savings for the

organization. Nonprofit organizations that focus on afford-

able housing and community land-use planning programs

exist in many geographical areas. These organizations can

either informally advise a CBO or provide consulting services

for a fee. Alternatively, consulting firms and independent

consultants can provide real estate services such as highest

and best use studies for developing or redeveloping land.

Since local governments actively use these services, a CBO

can contact them to inquire about consultants they have

used for these studies.

12

COST-BEnEFIT AnAlYSIS

• A cost-benefit analysis would have to be conducted on a

project by project basis. In general, a CBO will be better off

in the long run by actively managing its real estate as an as-

set (something that produces a benefit) instead of a liability

(a cost obligation). Over time the cost saving or increased

revenue from preparing an asset management strategy will

outweigh the upfront costs.

• A real estate specialist will charge $125 - $200 per hour.

The costs of developing a strategy will depend on the

organization’s assets but should cost between $5,000 and

$25,000. The cost to carry out a real estate project will be

around 10% to 20% of hard costs.

• A word of caution, many foundations and donors are

predisposed to fund property acquisition as they see the

inherent value of real estate. However, CBOs should care-

fully study whether owning a building is the best option

for their organization. Just because the organization owns

it does not mean it occupies the space for free; there are

mortgage and insurance payments, maintenance and gen-

eral operating costs that are usually covered under a rental

agreement. Consider the opportunity costs of investing in

real estate (the alternate use of or return on investing capi-

tal instead of buying real estate).

• With real estate, a CBO needs to think about the long-

term sustainability of the asset so that it can keep generat-

ing revenue or benefits. The organization needs to consider

and plan for maintenance such as roof replacements rather

than reactively worrying about repairing a leaky roof.

Leveraging Organizational Real Estate

• The following is a sample analysis. In this case, an orga-

nization owns a building that has an old industrial kitchen

facility. It decides to upgrade this facility to meet catering

standards and then rents the space to independent catering

contractors from the community. Additionally, the organiza-

tion can now rent out its adjoining meeting for banquets.

Area realtors can quote going rental rates for your type of

property.

Construction Expense Appliances & Furnishings

Total Cost: $25,000* $20,000 $45,000

Daily Facility Rental Fee:

Days Rented: 52

Gross Revenue: $500

$26,000

Annual Operating Expenses: $11,700

Net Revenue: $14,300**

The project will break even in three to four years if it meets

its goal of 52 rental days.

*Cost below commercial prices due to access to volunteer

help and contractor price discounts.

**Does not include potential unrelated business taxes.

13

OVERVIEW

Group purchasing, or cooperative purchasing, is an expense

reduction technique in which various organizations join together

to purchase identical or similar products at a discount. Coopera-

tive purchasing can save CBOs significant time and money in the

procurement process through the power of aggregate purchas-

ing. Organizations can save an average of 10% on total purchas-

es. Savings on individual products such as recycled paper can be

as high as 78%. Every organization should research opportunities

to cut purchasing expenses through group purchasing— pooling

resources to improve economic outcomes. For most CBOs the

process will involve a small amount of research to find existing

cooperative purchasing groups. Once the CBO establishes the

relationship, it will be able to save money on most of its every-

day purchases and on many infrequent, “big-ticket” items.

Group Purchasing

ORGAnIZATIOnAl BEnEFITS

• lower Prices – By standardizing products/services, and

aggregating requirements, CBOs benefit from the com-

bined economies of scale of multiple organizations.

• lower Administrative Costs – A lead organization

prepares, negotiates, and administers a group purchase

contract. Participating organizations only need to determine

the specifications and quantities they will need.

• Higher Quality Products and Services – By leveraging

the skills and knowledge of members, cooperative purchas-

ing groups can evaluate and negotiate for higher quality

products and services.

• Convenience – Instead of searching, evaluating and

negotiating for products and services, a CBO can simply

refer to a cooperative’s contract catalog.

• Advancement of Social Goals – A purchasing coopera-

tive can decide to pursue social goals such as increasing the

purchase of recycled products or purchasing from socially

responsible businesses.refer to a cooperative’s contract

catalog.

PROjECT COMPlExITY

CBOs can easily join an existing cooperative, whether

through a local government entity or a third party aggrega-

tor.

• Most public institutions have a purchasing or procurement

department that would administer group purchasing agree-

ments.

A CBO can establish a new cooperative. Three types of

cooperative agreements exist:

•Formal Cooperative -Contractual agreements between

participants and participation obligation

•“Piggyback” Cooperatives -casual purchasing through

larger buyers

•Third-Party Aggregators - independent organization brings

together various organizations to represent their require-

ments to vendors and manages resulting contracts

14

IMPlEMEnTATIOn PROCESS1.Determine needs – determine the organization’s product

and service needs.

2a. join an Existing Purchasing Cooperative research options:

• Search for existing purchasing cooperatives. Many existing

cooperatives readily allow members to join

• Search on the Internet for “purchasing cooperative” by

location (such as city or county), field of work, and affiliations.

Check with Union Locals that may have access to national

purchasing cooperatives.

• School districts and state, county and city governments are

high volume buyers and are likely to be operating a coopera-

tive that may allow CBOs to participate. Contact the entity’s

Finance Dept.

• Regional organizations such as California Association of

Nonprofits operate cooperatives

• Search for third party aggregators. Membership is often

free for nonprofit organizations. Visit the National Institute of

Governmental Purchasing (NIGP) web site for a list of national

and regional cooperatives at http://www.nigp.org/Purch

Coop.htm or at nigp.org. Examples of third party aggrega-

tors are: US Communities Government Purchasing Alliance

and HGACBuy.com

2b. Alternatively, Establish a Formal Cooperative or Third

Party Aggregator – Identify and survey organizations about

their interest in forming a purchasing cooperative.

• Invite Cooperative Members—Identify and survey organiza-

tions about their interest in forming a purchasing cooperative

• Enter Into a Cooperative Agreement—Select the type of

cooperative agreement that best suits the needs of members

and determine how the costs of joint procurement will be

shared.

• Select a Lead Organization—Select the organization that will

be responsible for procurement and contract administration.

Group Purchasing

RESOURCES nEEDED

• Staff Time – Joining an existing cooperative requires the

upfront research to identify the appropriate group. Once

this relationship is established, little additional staff time will

be required to reap the benefits.

• new Organization – Alternatively, establishing a new

cooperative will require a material investment of resources

to establish lasting vendor relationships that will involve mul-

tiple orders. If group purchasing includes the procurement

of high-cost, complex, or highly technical products, support

staff must have sufficient knowledge to research products,

prepare appropriate RFPs, and evaluate bids. A contract

specialist would be needed to prepare contracts and man-

age vendor relationships. An attorney may be involved as

well as support staff. Assuming a 3-person start-up and pro

bono legal counsel, a new cooperative seeking to achieve

immediate economies of scale can reach first year operating

costs in the range of $250,000.

15

FInAnCIAl BEnEFITS

Save 10% on average on an organization’s total product

and services costs and more on individual products.

For example:

• Save $1,000 on purchasing budget of $10,000

• Save $10,000 on a purchasing budget of $100,000.

• Save 78% on the retail cost of paper—$20 retail vs. $4.50

cooperative purchasing costs

• Save 20% on the retail cost of a printer—$249 retail vs.

$200 cooperative purchasing costs

Group Purchasing

COST-BEnEFIT AnAlYSIS

• The cost of becoming a member of an existing group pur-

chasing cooperative is minimal. A CBO will immediately begin

saving money by purchasing goods and services through a

cooperative. A small sampling of the products an organization

can save on through group purchasing includes:

– Tires, batteries, auto parts

– Hand tools

– Appliances

– Computer hardware/software

– Telecommunications supplies and equipment

– Janitorial supplies

– Chairs, desks, filing cabinets Teaching and art supplies

– Full services contract for repair, remodeling, and renovation

of facilities

– Full line of office supplies, copiers, office equipment

– Cars, trucks, passenger vans

– Computer & Office Paper Products)

• Based on an estimated annual budget of $250,000 to create

a new cooperative, it will take the following levels of participa-

tion and purchasing for the cooperative members to break

even.

Average Savings:

10% 10% 10% 15% 15% 15% 20% 20% 20%

Total Purchasing:

$2.5 Million $2.5 Million $2.5 Million $1.67 Million

$1.67 Million $1.67 Million $1.25 Million $1.25 Million

$1.25 Million

No. Coop Members:

25 50 100 25 50 100 25 50 100

Annual Purchasing per Member:

$100,000 $50,000 $25,000 $66,667 $33,333 $16,667

$50,000 $25,000 $12,500

Another significant benefit of participating in or developing

a cooperative purchasing group, that should be factored into

any analysis, is the value of building cooperative relationships

with other organizations and networks. These collective

frameworks can leveraged for other mission-related

endeavors.

16

OVERVIEWAffinity benefits programs provide organizations and their mem-

bers, staff and other constituents discounts and special access

to services by leveraging their large affinity group’s purchasing

power. An example of this type of program is the American Au-

tomobile Association’s (AAA) which offers its members car and

home-related products, services and travel discounts. Affinity

benefits programs can offer CBOs and their constituents

discounts of 10% to 60% off retail pricing Generally, CBOs gain

access to discount programs at no fee or for a nominal annual

fee.

This initiative is ideal for any type of organization that can indi-

vidually, or by partnering with other CBOs, form a large constitu-

ency of “shoppers” (e.g. organizations, staff, clients, supporters,

and other constituents). Organizational coalitions are good

candidates to put together group benefits programs. AARP and

Union Privilege are examples of programs for very large member

bases, but even a 1000 member constituency base would have

could negotiate an attractive benefits package.

Affinity Benefits Programs

ORGAnIZATIOnAl BEnEFITS

• Build Membership – Discount programs are an enticing

membership recruitment and retention tool as they help

stretch the income of constituents and/or give them access

to lower cost resources they need to achieve economic

stability.

• Reduce Organizational Expenditures – Save money by

purchasing products and services through the organization’s

affinity program.

• Staff Recruitment and Retention Tool – Include affinity

program discounts as part of staff benefit packages, saving

staff money on their purchases.

• Royalties and Rebates – Large volume programs can

generate royalties and rebates back to the sponsoring

organization.

PROjECT COMPlExITY

• Pre-packaged affinity benefits programs already exist.

The research, set-up and maintenance of these existing

programs takes some orientation but is not unduly complex.

• Alternatively, developing an expanded or customized

affinity benefits program requires some specialized skills in

vendor negotiations and marketing.

FInAnCIAl BEnEFITS

• Financial benefits primarily accrue to the organization’s

constituents and staff as cost savings.

• Organizations can reduce expenses by utilizing the

offered purchase discounts.

• Organizations can negotiate a revenue share agreement

with participating merchants.

• Affinity credit cards can produce a lucrative revenue

stream.

RESOURCES nEEDED

• Staff Time – Leveraging an existing affinity benefits

program can be implemented with a small allocation of

staff time. A large-scale or customized program requires

dedicated staff.

• Consultants – consultants are advisable to establish and

manage more complex or customized programs.

• Start-up or buy-in costs – some prepackaged affinity

programs have a buy-in, e.g. cost per discount card or

annual fee.

• Marketing budget – is necessary to inform constituents

of the program and to expand program utilization.

17

IMPlEMEnTATIOn PROCESS1. Define Program Goals – Contribution to mission, individual

or organization cost savings, membership recruitment and reten-

tion, staff recruitment/retention, and/or revenue production.

2. Identify Target Audience Size and Interests – Estimate pro-

gram utilization. If the CBO’s constituency is not large enough,

it should consider partnering with other organizations to form a

larger market. Find the types of discounts and benefits attractive

to target audience.

3. Evaluate Existing Programs – pre-packaged program, e.g.

PerksCards, may fulfill the organization’s required criteria.

4. Contact Merchants – If existing programs don meet needs,

an organization can develop its own program. Starting with

merchants in other discount programs, contact merchants to

negotiate discount levels and terms.

5. Market the Program – Market beyond immediate constitu-

encies. A strong web presence can yield more cost effective

marketing opportunities than direct mail or other media

channels.

COST-BEnEFIT AnAlYSIS

Affinity benefits programs offer cost savings to the users

which can be a CBO’s constituents, staff, or the organization

itself. The implementation and management cost needs to

be weighed against the potential of an affinity benefits

program to augment membership development, improve

staff retention and entice greater constituent/supporter

participation in mission related programs.

One way to size the potential of a benefits package is to look

at how quickly the purchasing power of a group of organiza-

tions’ constituents adds up.

As an example:

• 5 organizations with 200 members each create a 1000

member consumer base.

• If the average constituent take-home pay is $20,000 and

assuming that only 50% of members’ income is available

for discretionary expenditures, the purchasing power of the

group is still $10 million.

• Saving group members 20% through discounts and special

offers will generate a savings of $2 million for the community.

Organizations seeking to build membership will find affinity

benefits programs an attractive member benefit that helps

stretch the income of constituents and/or give them access

to resources that help them to be happier, healthier, or more

stable economically. AARP acknowledges that the provision

of insurance benefits and travel discounts has expanded its

membership which builds its political base. Union Privilege,

which is a discount program for AFL-CIO union members or

affiliates, views reducing the cost of living for its members

and expanded benefits, e.g. voluntary insurance, as mission-

fulfilling.

Examples of products and services provided through affinity

benefits programs include:

• Dell Computer

• AT&T Wireless discount

• Auto Insurance (AIG)

• VOIP

• Car Rental

• Credit Counseling

• Entertainment Discounts

• Goodyear Tire and Service

• Health Clubs

• Health care discounts (Save on out-of-pocket health care

expenses for prescriptions, dental care, vision care, diabetic

supplies and more.)

• Legal Services

• Mortgage and Real Estate – fee reductions

• Pet Insurance

Affinity Benefits Programs

18

OVERVIEWOn-line Affiliate Marketing is the promotion of products and

services of for-profit businesses (the advertiser) by placing ads

or links on an organization’s website. The advertiser compen-

sates the on-line affiliate organization for the number of visitors,

subscribers, customers, and/or sales proffered to the business by

the affiliate’s efforts. The advertising usually takes the form of

advertiser banners and links on the CBO’s website. Any type

of organization with a website can pursue an on-line affiliate

marketing program, however, the program will provide the

best results to CBOs whose website generates a high volume

of traffic and/or has visitor demographics that are desirable to

advertisers.

On-line Affiliate Marketing

ORGAnIZATIOnAl BEnEFITS

• Generate Revenue – The advertising compensation can

be used to support the organization’s programs.

• Increase Site Traffic and Engage Visitors – The products

and services advertised may generate CBO website visits in

and of themselves. By increasing website traffic, organiza-

tions will have the opportunity to further engage visitors in

other aspects of the organization’s mission.

• Build Membership – Increasing the number of new

visitors and repeat visitors to a CBO’s website gives the

organization more opportunities to encourage visitors

to become members or donors.

PROjECT COMPlExITY

• On-line affiliate marketing programs are readily available

from many different types of businesses. Set-up and main-

tenance of these relationships can be done with minimal

resource commitments, but significant web traffic is

needed to generate material revenue.

• Alternatively, establishing a new affiliate marketing coali-

tion will require dedicated resources. In addition to tasks

listed in the Implementation Process Section, the CBOs will

have to enter into contractual agreements establishing

participant obligations.

RESOURCES nEEDED

• Staff Time – A few hours a week of staff time can

leverage existing on-line affiliate marketing programs.

• Consultants – A CBO looking to establish a more

aggressive program should consider hiring a consultant to

establish and manage the marketing strategy. Typical set-up

costs are in the $15k to $20K range with additional fees for

ongoing support.

• new Staff and Tools– – An on-line affiliate marketing

coalition should expect to hire a program coordinator as

well as purchase website management tools. Expect total

annual costs of approximately $150,000 per year.

19

IMPlEMEnTATIOn PROCESS1. Identify the Market niche – Determine the organization’s

website traffic volume and the market characteristics of visitors.

Organizations can maximize revenue by identifying and selling

a well defined viewer market niche to advertisers willing to pay

for specific market demographics.

2. Identify Products and Services to Market – Find the right

combination of products and services that are reputable and

compatible with the organization’s mission, generate material

commissions, and entice visitors to explore the offer.

3a. Enter Into and Manage Relationships – Negotiate and

enter into relationships with advertisers:

• Select relationships and advertisements. Find affiliate program

opportunities by consulting on-line affiliate program directories

that list advertisers and outline compensation plans such as

affiliatething.com, clickbank.com, commissionjunction.com and

linkshare.com.

• Optimize website design to convey mission related content

and to encourage viewers to notice and act on advertisements.

• Develop strategies to drive visitors to the organization’s web-

site, e.g. reciprocal links and registering keywords with search

engines.

• Pursue additional packaged affiliate opportunities including

Google/Adsense.com, chitikia.com, blogads.com and text-link-

ads.com

3b. Form a Coalition of non-Profit Organizations to Manage

an Affiliate Marketing Pro – Sharing research and manage-

ment costs with other organizations to customize an on-line

affiliate marketing program can increase bargaining power with

advertisers.

• Share set-up and coordination costs

• Compare organizational constituent needs

• Vet merchants or product/service offers for coalition members

• Share website visitor behavior and identify effective lay-out,

messaging, and navigation techniques that appear to optimize

revenue generating behavior

• Discern current and evolving marketing trends

• Negotiate larger commissions for all CBOs participating in

the coalition, and sell packaged ad space across the coalition

members’ various websites to merchants who are interested in

the demographics of the collective readership.

COST-BEnEFIT AnAlYSIS

Cost will vary depending on the program the CBO pursues.

The following guide will help a CBO determine its best op-

tion given its web traffic potential and set-up costs. For ex-

ample, an organization that provides useful public content

that generates high visitor traffic, but whose visitors have no

other relationship to the CBO may want to pursue a CPM

advertising or pay-per-click strategy. Alternatively, if the

CBO has a relationship with a smaller but more dedicated

visitor base, it can pursue a lead generation or pay-per-sale

strategy.

Compensation Method and Rate CPM Advertising:

($2.50 per 1,000 views)

Pay per Click: (1¢ per click-through)

Lead Generation: ($6 per lead)

Pay per Sale: (10% sales commission)

Website Users: 400,000 1,000,000 2,857 4,000

Click-Through Visitors: (10%) 100,000 286 400

Sales Leads: (50% of click through) 143

Sales: (25% of click through, $100 Average Sale) 100

CBO Revenue: $1,000 $1,000 $1,000 $1,000

On-line Affiliate Marketing

FInAnCIAl BEnEFITS

Revenue varies widely by type of affiliate marketing

structure and the appeal of the organization’s web site.

Examples of revenue from different marketing techniques

are listed below:

•Website Sponsorship: Annual fees for sponsorship to be

displayed on website. Make-A-Wish Foundation charges a

$250,000 annual sponsorship fee.

• Cost-per-thousand views (CPM): 50¢ - $20 per 1,000 page

views.

• Pay per click: 1¢ per click through

• Lead Generation: $6-$10 per lead (e.g. GEICO Insurance)

•Pay per sale: 1% - 20% of dollar value of final sale

20

OVERVIEWA retail/on-line retail strategy for a CBO is based on the sale of

articles of merchandise that are ordinarily used as a part of fund

raising and awareness-raising campaigns. CBOs create these

items, imprinted with the organization’s name, and sell or give

them away to clients, supporters and other stakeholders. Most

promotional items are relatively small and inexpensive, such as

t-shirts, caps, key chains, mugs and mouse pads. New technolo-

gies are making it easier for organizations to set up on-line retail

stores and increase the sale of these items to generate greater

revenue. This strategy has the potential to generate significant

revenue for an organization that offers a niche market a desirable

name or message, for example Sierra Club calendars. However,

for most organizations the value will be in promoting the CBO,

raising public awareness or creating goodwill. CBOs can cover

program costs and generate some profit, especially if they avoid

setting up a separate physical storefront which carry too many

fixed overhead costs.

Retail/On-line Retail

ORGAnIZATIOnAl BEnEFITS

• Generate Revenue – by selling relatively inexpensive

items with high price mark-ups.

• Increase the Organization’s Visibility – use items sold

as part of guerrilla marketing campaigns to increase the

organization’s visibility. People wearing or using these prod-

ucts in public will garner publicity for the organization and

enhance the CBO’s “brand name.”

PROjECT COMPlExITY

• This business model has low barriers to entry and

e-commerce stores reduce risk even further by offering little

upfront development costs and minimum order require-

ments.

• CBO staff can select, create, source and distribute its own

promotional items. Alternatively, a CBO can work through

an e-Commerce company to design its product and launch

an online store. The e-Commerce stores will handle inven-

tory management, shipping, logistics, and billing for the

CBO. Zazzle claims it typically takes less than an hour to

open a store.

RESOURCES nEEDED

• Staff Time – Existing staff and interns have the capacity

to establish a retail project and manage a simple design

and product creation whether done in house or through an

e-commerce company. Plan on expending 5%-10% of an

FTE to carry out the necessary project work.

• Planning Inventory – E-commerce companies usually

have no minimum requirements and only produce products

when ordered; therefore there are no inventory commit-

ments or upfront costs.

• Design Consultant – A CBO may want to hire a design

consultant to create a stylish design for the organization, or

it can work with artists or art students willing to undertake

the project pro-bono or for minimal fees in order to expand

their portfolios. A design consultant would charge between

$75 and $150 per hour.

21

IMPlEMEnTATIOn PROCESS1. Select the Product(s) – promotional items are usually simple

products such as t-shirts, caps, key chains, mugs and mouse

pads. However, many other options are available such as first

class stamps, aprons, ties, greeting cards, water bottle, etc.

2. Create the Design – Find the right combination of products

and services that are reputable and compatible with the orga-

nization’s mission, generate material commissions, and entice

visitors to explore the offer.

3. Order Product(s) – the CBO can order products from local

vendors or via the Internet. Consider realistic market size and

order accordingly. Venders usually offer volume discounts when

ordering large quantities.

4. Select Distribution Channels – expand distribution channels

beyond face-to-face sales at the CBO or at events. Make the

product available through the CBO’s website and list it with an

e-Commerce company such as Zazzle/GoodStorm.

5. Other Options – MeCommerce offers a product-serving

technology allowing nonprofits to sell CDs, DVDs and books on

their own website or blog, and realize 50% of the profit.

COST-BEnEFIT AnAlYSIS

Before initiating a retail strategy, a CBO should conduct a

cost-benefit analysis of the different options it has. Should

the CBO place a large volume order with a local vender

and sell the items in person, or work through an on-line

retailer like Zazzle? How many items does the CBO believe

it can sell, and in what period of time? The CBO can select

the best strategy by estimating the total costs of different

options and weighing them against the projected revenue

based on the estimated sales volume.

Below is a simple cost-benefit analysis that shows how many

t-shirts at various price levels a CBO has to sell in order to

break even and make a profit. Assumptions:

– 40 hours of project staffing at $50 per hour (fully loaded),

– 70% profit margin (Zazzle takes a 30% cut but there are no

other upfront production or inventory management costs).

In this example, a CBO would begin earning a profit after

selling 385 t-shirts for $16.99. Selling an additional 100

t-shirts with zero additional effort will earn the CBO $519.

Basic t-shirt price: $12.99 $14.99 $16.99 $18.99 $20.99

70% CBO profit share: $2.39 $3.79 $5.19 $6.59 $7.99

T-shirt sales needed to Breakeven: 837 528 385 303 250

Retail/On-Line Retail

FInAnCIAl BEnEFITS

• Financial benefits depend on product, volume and

distribution. For example, CBOs can sell tshirts for as much

as $20 a piece. At $20 per piece, the sale of 200 shirts can

gross the CBO as much as $2,000 (excluding design and

distribution expenses). CBOs with brand name recognition

and stylish designs can easily achieve greater sales and

revenue outcomes.

22

OVERVIEWIn-Kind Donations are donations that are given in goods, com-

modities, or services rather than cash. These non-monetary

donations can help CBOs to reduce direct expenses for travel,

supplies, equipment, the use of services and facilities, and

professional expertise. Occasionally, these types of donations

can be converted into cash through re-sale or charity auctions.

Organizations should carefully consider what type of in-kind

donations would serve them well and then identify what busi-

nesses or individuals may be able to provide these resources.

CBOs can also benefit from working with in-kind donation clear-

inghouses to gain access to a broader, more efficient network of

corporations for product donations.

In-Kind Donations

ORGAnIZATIOnAl BEnEFITS

• Reduce Expenses and Conserve Cash Flow – By offering

goods, commodities, or services that must otherwise be

purchased.

• Expansion of Mission Directed Operations – Donations

of operational supplies can support an increase in

organizational activity

• Can be utilized as Incentives – For membership, fund

raising solicitations, major gift recognition, or raffles.

• Provides an Alternative to Cash Donations – When a

direct cash contribution might not be possible.

• Thinking Green – Re-allocating resources to those who

can use them instead of throwing them away. Another

mode of re-use, recycling or free cycling.

PROjECT COMPlExITY

• Ranges from easy implementation by signing up with

existing company or clearinghouse programs to a more

complex approach of cultivating relationships with business

partners for customized support.

RESOURCES nEEDED

• Staff Time – Moderate development staff involvement is

required for tracking and acknowledging in-kind donations.

If a customized approach is utilized, more time and skills are

involved in negotiating with businesses that provide, for

example, donated earnings or allowing employees to

donate earned time off.

23

IMPlEMEnTATIOn PROCESS1. Identify Products – Identify the available commodities,

goods and or services that could be donated that would serve

the needs of the CBO.

2a. Contact Clearinghouses – Contact organizations that serve

as clearinghouses for nonprofits seeking product donations

such as: Gifts In Kind International, the National Association for

the Exchange of Industrial Resources, InKindEx.org and Share

the Technology. TechSoup Stock is an online source for donated

software and hardware that can be ordered by non-profits and

educational institutions for nominal fees.

2b. negotiate – Negotiate directly with for-profit organizations

that produce goods or services that would be beneficial to a

CBO – The Foundation Center offers resources for identify-

ing corporate sponsors of in-kind gifts. Several airlines, e.g.

American and Delta/ Continental, allow organizations to register

with them to allow travelers to donate excess airline miles to a

501c3. Southwest Airlines will donate travel vouchers.

3. Register with Giftcarddonor.com – Giftcarddonor.com is a

professional fundraising business that aggregates and re-sells

unused gift cards and store credits. People can designate re-

cipient organizations on the Gift Card Donor website and then

send in their cards or credit receipts. The organizations receive

75% or the re-sale proceeds.

5. Publicize – Advertise in-kind donation needs to existing

donor base and supporters. Don’t forget to ask for expertise,

e.g. accounting, web-site support, marketing communications.

For program success and longevity make the donation process

easy for interested parties. Newsletters or websites should be

kept fresh by continually posting and acknowledging participat-

ing partners and reminding readers how to execute an in-kind

donation.

COST-BEnEFIT AnAlYSIS

• As an example, assume an hour of fundraising develop-

ment activity costs an organization $50 fully loaded (staff

time plus overhead). If the organization averaged an hour

a day sourcing in-kind donations, they will spend approxi-

mately 240 hours on this effort over a year. The organization

would need to obtain goods and services valued around

$12,000 to breakeven on this type of program.

• In-kind donations of services can save an organization

significant expense and effectively expand the organiza-

tion’s skill sets. Supporters can donate their experience and

knowledge in specialized fields including how to do cost-

benefit analyses or developing financial resources.

In-Kind Donations

FInAnCIAl BEnEFITS

• In-kind donations can have significant value. For example

donated airline miles can be used to reduce staff travel

costs and save an organization thousands of dollars.

• Technology hardware and software can be a high-value

donation.

• Goods offered as prizes for raffles and auctions, effectively

become cash.

24

OVERVIEWAn on-line donation strategy involves making it easier and/or

increasing opportunities for supporters and website visitors to

make donations to an organization. Two simple strategies are to

create a “donate” button on the organization’s own website and

to list the organization with websites called charity portals that

offer visitors a list of nonprofit organizations to which they can

donate. Each option has its benefits. Having a donate button

offers the CBO full control and collects 100% of the donation.

The benefits of listing with a charity portal, on the other hand,

is that they have marketing programs to attract traffic to their

websites and they eliminate the process of setting up a system

to accept on-line donations. Websites have also been set-up

to give people the opportunity to make donations to specific

charitable programs or projects, e.g. Seva.org, or as a gift for

someone else, e.g. Changing the Present. Finally, though not

exactly an on-line donation method but in the realm of mak-

ing it easy for people to give, don’t forget workplace giving

campaigns which include matching grants for donations made

by employees or the automatic payroll deduction programs like

United Way or Community Shares. Remind your supporters that

they can often “write in” or designate specific 501c3 organiza-

tions to receive their donations when they fill out the annual

Pledge Card. Almost every CBO can utilize some variation of this

strategy because participation choices range from lowcost,

easy-to-use options to complex management systems (see Cost

Benefit Analysis section).

On-line Donations

ORGAnIZATIOnAl BEnEFITS

• Generate Revenue – by making it easier for supporters to

make donations through the organization’s website and by

increasing the frequency of donation opportunities.

• Increase the Organization’s Visibility – people visiting

on-line charity portals often learn about organizations they

may not have previously known.

PROjECT COMPlExITY

• It is easy to list an organization with a charity portal to

reach new donors or to set-up a “donate” button on an

organization website.

• Alternatively an organization can build a customized

donor relationship management system that meets its exact

needs. This effort is typically more complex and costly.

RESOURCES nEEDED

• Staff Time – Computer and internet savvy staff to sort

through the online charity portals and evaluate and install

integrated member application software packages. Consul-

tants are available to help with this process.

FInAnCIAl BEnEFITS

• Incremental revenue once the CBO has modified its

website and/or listed with charity portals or programs.

• Revenue generated through charity portals is a function of

marketing and website traffic. For example, the Dance

Theater of Harlem reported raising $27,864 through the

charity portal www.networkforgood.org.

25

IMPlEMEnTATIOn PROCESS1. Research Options – Be sure to research online giving

thoroughly before deciding on your organization’s preferred

method. Differences in costs and benefits vary greatly.

2. Create a Website “Donate” Button – There are several

full-service solutions provided as part of packaged donation and

membership management software that provide a defined set

of features covering a number of common membership needs,

including the ability to receive on-line donations. Software

packages include Wild Apricot, ETapestry, GivenGain and Mem-

berClicks. Online packages include Network for Good’s Suite,

Democracy in Action, Entango.com and Acteva.com. These

packages, known as donation engine providers, do not require

in-depth technical skills or substantial set-up. Alternatively, a

CBO can contract with a backend donation collection service

connected to an existing charity portal or a standalone service

which would provide the website link (donation button) to feed

into their funds collection platform.

3. list the CBO with a Charity Portal – Examples of charity

portals include NetworkForGood.org, GreaterGood.com,

Groundspring.org (formerly eGrants.org) and justgive.org.

Individuals interested in donating to charities often use charity

portals to help them with their research. It is important that an

organization’s listing in Guidestar’s database be up-to-date.

4. list the CBO with Search Engines – List with search engines

that donate advertising revenue to charities, e.g. Goodsearch.

com. Donations occur every time a user clicks on a sponsored ad

that comes up in a search. In order to leverage this fundraising

tool, a CBO could install a link from its website to the

search engine which will pre-populate the organization’s name

as the selected cause.

COST-BEnEFIT AnAlYSIS

• The simplest solution for a CBO with limited resources is to

list the organization with a charity portal. Listing is free and

there are no monthly charges. However charity portals will

charge a fee between 2.5 and 5 percent of the total

contribution upon accepting the contribution for the CBO.

• A slightly more complicated option is setting up the

on-line donation capability on the CBOs own website using a

program from an existing charity portal. Processed donations

appear on the donor’s credit card statement with the portal’s

name, however.

A sample scenario:

– 40 hours of staff time costing $50/ hour (fully loaded) to

review options, set up an online package, and perform

on-going maintenance, and

– 3% processing fee on each donation.

– The CBO would need just over one hundred $25

donations to break even. Donations beyond that level would

result in a net profit to the CBO. The table below provides

various breakeven scenarios based on different average dona-

tion amounts.

Average Donation: $25 $50 $75 $100 $150 $200

Donors Needed to Breakeven: 103 52 35 26 17 13

• Purchasing and installing a membership and donation

management software package can be accomplished for as

little as $50 (e.g. ClickandPledge’s Trio) or as much as $7,500

(e.g. Blackbaud’s Net Community software license compo-

nent of required integrated package). There is usually some

combination of a set up fee, monthly fee, transaction fee and

credit card processing fee. The ability to receive donations is

only one feature of the software which includes various useful

membership and organizational management systems.

A sample scenario:

– First year cost with consultant assisted analyses and set-up

(approximately 20 hours @ $150/hour),

– in-house maintenance of the software application

(approximately 30 hours @ $50/hour),

– $100 monthly subscription fee, and

– 3% processing fee for each donation.

In this example, it would take 226 $25 donations to break

even. The CBO would reach the breakeven point much faster

the second year since it has already installed the software

package. This solution works best for CBOs that expect high

volume website traffic and plan to initiate a donor relationship

management program.

Average Donation: $25 $50 $75 $100 $150 $200

Donors Needed to Breakeven: 236 118 79 59 39 30

On-Line Donations

26

OVERVIEWThe Charity Mall concept can take several forms. One version

is the online shopping website that returns a commission to

an organization when members or supporters make purchases

through the mall’s network of online stores. There are also pro-

grams where consumers can register their loyalty, debit or credit

cards with a charity mall. When the consumer uses that card to

make purchases at participating on-line or physical storebased

merchants, the retailers pay a sales commission to the charity

mall card program operator, and all or part of that commis-

sion is then passed on to a nonprofit. Retail store managers or

retail store chains are often willing to set-up discount-donation

programs whereby an organization’s constituents making pur-

chases at a store receive a discount and the store also donates a

percentage of the purchase to a designated non-profit. Another

version of retail store donation programs is to allow shoppers

the option of “rounding up” their bill with the additional money

going to a charitable fund or a designated nonprofit. Some

retailers will match the shopper donations. These programs work

best if they can be tied to a card that can track purchases, like a

grocery store loyalty card.

Almost every CBO can utilize this strategy because the level of

complexity and cost ranges between very easy to carry out and

costing virtually nothing to taking on a sophisticated develop-

ment effort that is moderately expensive but can generate a

good return.

Charity Malls

PROjECT COMPlExITY

• It is easy for organizations to list with existing charity

malls. Organizations must create a marketing and commu-

nication strategy to remind supporters to link through the

CBO website for on-line shopping or register their purchase

cards with a designated charity portal. Though it may take

more effort to convince supporters to register their loyalty,

debit and credit cards to support the CBO, once it’s done

supporters will be automatically contributing to the CBO

without any extra effort on their part.

• Organizations can set up their own charity mall but much

more work is involved, including: designing the mall, estab-

lishing relationships with retailers and administering account

set-up. This option works best for organizations with a large

base of supporters and/or resources to heavily market the

mall. A large volume of transactions makes in-house pro-

cessing cost-effective and eliminates 3rd-party fees.

RESOURCES nEEDED

• Staff Time – Development staff can easily register the

CBO with charity portals. Depending on the desired finan-

cial results, the CBO can minimally or aggressively publicize

this option to supporters through its ongoing communica-

tions and other marketing efforts.

• new Staff and Consultants – Creating a new Charity

Mall will require a team that includes business development

and relationship management resources, marketing strate-

gists, website designers, and operations support.

27

IMPlEMEnTATIOn PROCESS1a. Register with a Charity Mall – Register with a shopping

portal, such as escrip.com, ShopForChange.com, and eBay Giv-

ing Works. Lesser-known groups can participate at sites like,

iGive.com and MyCause.com. which let shoppers choose from

their database of organizations or add their own, including

groups that lack 501(c) 3 status.

1b. Create a Charity Mall – By administering a charity mall

in-house, the organization receives 100 percent of the commis-

sions from purchases, it can select the appropriate retailers and

match web pages to the CBO’s existing web site.

2. Set-up up a store-based donation program – Contact

local retail store managers and discuss what discounts-donation

arrangement could be set for purchases made by the organi-

zation’s constituent base. Or explore a “round-up” donation

program.

COST-BEnEFIT AnAlYSIS

• A CBO would incur minor costs to identify and sign up

with an existing charity mall. However, the organization

would have to make some effort to market the program to

encourage people to either shop at the mall or registers

their cards. If this marketing were included in existing com-

munications, even this cost can be minimized. Therefore,

financial benefits would immediately accrue to the CBO.

Additionally, supporters will often think about the CBO

when conducting purchases.

• Creating an in-house charity mall will require significantly

more work. First year cost for in-house analysis, set-up and

on-going maintenance (based on 48 hours of project staff-

ing @$2400—about an hour a week, plus $600 incremental

marketing expense) would cost about $3,000. The table be-

low provides the number of transactions necessary at given

commission rates and purchase levels to recapture the cost

of staff time investment.

Average Purchase $50 $100 $50 $100

Commission Rate 5% 5% 10% 10%

Transactions Needed to Breakeven: 1,200 600 600 300

Charity Malls

FInAnCIAl BEnEFITS

• Depending on the charity mall and the retailer, the charity

mall forwards commissions ranging from 2% to 30% of con-

sumer spending to the shoppers’ charity of choice.

• One charitable portal estimates that 50 supporters spend-

ing $400 per month at participating merchants would gen-

erate $12,000 per year, 200 supporters would generate

$48,000 per year.

ORGAnIZATIOnAl BEnEFITS

• Generate Revenue – Ask supporters to raise funds for the

CBO by shopping on-line through the organization’s charity

mall links or by registering their loyalty, debit or credit cards

and using them at designated merchants.

• Increase Supporter Opportunities to Participate – Give

supporters an easy way to regularly participate and raise

revenue for your organization through their regular shop-

ping activities.

28

OVERVIEWHarness the power of the Stars! A celebrity is a widely-recog-

nized or famous person who commands a high degree of public

and media attention. The celebrity can be an author, politician,

sports star, artist, entertainer, journalist, business leader or a key

community figure. Their connection to a cause can help raise

money in a number of ways. However, individual community

organizations may find that contacting and cultivating a fundrais-

ing relationship with a celebrity challenging. A more effective

approach might be to pool the collective networking resources

of foundations and their grantees to enlist a group of celebrities

willing to make periodic public appearances, speak out, or give

their endorsements to progressive causes and the organizations

that “do the work”--thus creating a celebrity bureau. While many

organizations can handle smaller events, producing gala events

take a material amount of time and money. Large events must

be augmented with a diverse set of related income producing

promotions to produce a good return upon investment. How-

ever, there are a number of smaller-scale special events that can

be effective fundraisers, e.g. restaurants that donate a portion of

their receipts during a set time period or theatre performances

or music events that donate proceeds to a specified nonprofit. A

bit of brainstorming can produce several good fundraising ideas

that can be built around the concept of interesting activities

that make it fun, easy and attractive for people with disposable

income to contribute to a good cause.

Celebrity Bureau and Special Events

PROjECT COMPlExITY

• Like all fundraising, establishing contacts and cultivating

a commitment can take time and requires persistence and

patience. Using network contacts is key.

• A less complicated approach to leveraging a celebrity’s

fame is to create a marketing campaign using various

advertising media and promotional collateral emphasizing

the celebrity’s endorsement.

• Organizing events usually take several months of planning

and typically require a team of people to plan and execute

the production.

RESOURCES nEEDED

• Staff and Directors Time – Existing development staff,

executive director and/or board members to establish

contacts and execute program.

• Marketing Expertise – To develop marketing campaign

and “brand” management resources.

• Marketing Budget—to support outreach.

• Consultant and Meeting Space – If program is event

oriented, the CBO will need a meeting place, production

support, and an event planning consultant.

• Volunteer Coordinator – The CBO will need a person to

manage volunteer resources needed to facilitate program

and events

ORGAnIZATIOnAl BEnEFITS

• Generate Revenue – Increase public profile of cause or

organization. Engage the celebrity’s fan base and capture

the attention of the media and the general public.

• Energize the Organization – the celebrity halo or a

special event can create excitement among the organiza-

tion’s members, donors, and constituents, particularly

around a major event.

29

IMPlEMEnTATIOn PROCESS1a. Identify Potential Celebrity Supporters:

• Survey members and Board members of the coalition of CBOs

and Funders to determine existing connections to mission

aligned VIPs.

• Identify regional or geographic ties that may be important to

particular celebrities, e.g. Bruce Springsteen and New Jersey.

• Research public statements made by VIPs that indicate

mission alignment.

• Research celebrity interests and personal background to

determine connection to causes

• Review Speaker Bureau lists.

2. Establish Contacts with Celebrities:

• Network through member and Board member social and

business contacts

• Talk to business managers, agents, editors

• Use tools: Celebrity Black Book 2008, www.contactanyceleb-

rity.com ($20/mo. database usage fee)

3. Cultivate Celebrity Relationships:

• Suggest modes of participation—public endorsement, public

appearances, performances, talks, book signings, donating

mementos for charitable auctions or raffles, private engage-

ments with major donors, using their image or related graphics

on T-shirts, posters, etc.

• Solicit celebrities’ suggestions as to how they may contribute

to the cause.

• Agree upon scope of commitment. Document the offer, e.g.

a certain number of public appearances in a year.

4. Develop Marketing Campaign Templates – how-to guides

for organizations wanting to use the celebrity bureau.

• Producing events

• Selling memorabilia

• Leveraging endorsements in donation appeals

COST-BEnEFIT AnAlYSIS

Given the many variables that go into a celebrity based

marketing campaign or event, it is important to carefully

assess the revenue potential of the plan and then carefully

control production expenses. It may be possible to cover

some production costs through pro bono support.

A sample analysis:

Planned Proceeds

Ticket Sales: 300 @$50 …………………………… $15,000

Silent Auction: 5 items avg. at $250 ………………. 1,250

Commemorative Posters/T-shirts: 100@ $15 ……...1,500

Total Proceeds: ……………………………….........$17,750

Example costs:

Staff time – 60 hrs @$50 per ………………..……. $3,000

Consultant—40 hrs@ $150 per ………....….……… 6,000

Marketing Expense …………………………………. 2,500

Location Expense ………………………….…….….. 3,000

Total Costs: ………………………………..….…… $14,500

Net Revenue ………………………….…….......….. $3,250

Ancillary revenue:

Projected expansion of membership base = $x

Projected expansion of donor base = $y

Celebrity Bureau and Special Events

FInAnCIAl BEnEFITS

•Generate revenue form event ticket sales and themati-

cally tied complementary fundraising activity. Donation

campaigns based on celebrity endorsements and sale of

celebrity related memorabilia also can produce funds.

30

OVERVIEWPolitical giving can go beyond the traditional contributions to

candidates and electoral campaigns. To advance a political

agenda or effect social change, political donors may also want to

fund the on-the-ground organizations that are doing the work for

the cause. Advocacy organizations do the research and build

consensus to formulate policy. Community organizers educate

and mobilize voters, train candidates, and get officials elected

to office. A host of community-based organizations execute mis-

sions to strengthen the civil society and promote social,

economic and environmental justice.

There are at least three ways for CBOs to harness the financial

resources of politics. One is to become part of the investment

portfolio of newly developing “political mutual funds”--struc-

tured contribution programs that bring new financial resources

to community-based organizations while satisfying the donors’

desire for a “political return upon investment”. Secondly, CBOs

need to cultivate their relationships with political candidates,

elected officials and key government operatives and demon-

strate their organization’s value and influence by developing and

mobilizing their constituent base as they address social issues.

Thirdly, CBOs can research who is donating to political cam-

paigns that align with their organizational missions and approach

these parties with additional options to make their money work

for social change. Potential local donors in your area can be eas-

ily identified through some of the online databases listed below.

Political Donors and Philanthropy

PROjECT COMPlExITY

• Connecting to regional political entities is classic

community organizing coupled with donor development.

•Connecting to large-scale or national political funds is

comparable to developing national foundation relationships.

RESOURCES nEEDED

• Community organizing program staff—may involve no

incremental cost or time if the community organizing

agenda already addresses cultivating political officials.

• Development Staff –for networking, presentations, and

proposals.

• Marketing strategy support

ORGAnIZATIOnAl BEnEFITS

• Raises public awareness of organizational mission –

either as a selected investment target or by partnering with

political officials.

• Facilitates fundraising – A new way to connect with

donors who are already contributing to political campaigns.

• Create opportunities – to leverage governmental

resources.

• Advances policy agenda – that supports the

organization’s mission.

31

IMPlEMEnTATIOn PROCESS1. Identify local or regional political entities that would

recognize the mutual benefit of directing financial support

to mission aligned CBOs.

2. Ask for endorsements or referrals to their contributor base.

3. Actively work to elect progressives and make these efforts

visible.

4. Contact a political fund such as the New Progressive

Coalition or the Democracy Alliance to discuss inclusion in

their social agenda prospectus.

5. Use on-line political contribution tracking databases, e.g.

FundRace, to identify potential funding sources.

6. Use the Voter Action Network www.voteractivationnetwork.

com to data mine voter lists.

COST-BEnEFIT AnAlYSIS

• Assuming 5 hours a week or 240 hours per annum of

staff time @$50/hr =$12K per year plus $3000 marketing

expense

• Need to gross $16.5K for a 10% return upon investment.

Political Donors and Philanthropy

FInAnCIAl BEnEFITS

•Potentially, a new source of donor relationships which can

provide incremental funding.

•May open access to government resources or contracts.

32

There are several ways for CBOs to obtain assistance

in implementing the ideas outlined in this guide.

The first step is to contact the program officers of

the funders supporting your organization to discuss

what technical assistance resources may be available.

These discussions should consider the following

types of support.

Technical Assistance

Most CBOs are resource constrained and don’t necessarily have

the skill sets to identify, develop, or put financial resource devel-

opment programs in place. There are consultants that specialize

in developing business opportunities, e.g. Internet marketing,

or are specifically oriented towards supporting non-profits in the

development of revenue sources. The References and Resources

section of this catalogue cites a few consulting organizations that

can support these types of projects.

Some foundations fund organizational capacity building

programs and are starting to develop formal and informal

technical assistance programs that pull together a network of

consultants and staff that can provide:

• Market research and feasibility analyses

• Program design

• Business plan development

• Implementation strategies

• Implementation support

• Post-implementation follow-up, and even some

• Centralized program management for projects, programs, and

initiatives that will actualize a foundation’s strategic mission.

Some examples of these initiatives include the New World

Foundation’s Resource Lab and the French American Charitable

Trust’s (FACT) Capacity Building Program for its grantees. To

identify these resources at other foundations, CBOs should

discuss what resources may be available with their own networks

of foundation funders.

loans for Revenue Generating Programs

Most existing loan programs for nonprofits focus on financing

capital assets, particularly real estate, or providing emergency

funds during a cashflow crisis. Larger Program Related Invest-

ment (PRI) loans are beginning to support social enterprise

initiatives. The revenue stream generated from these types of

projects, either through cost savings or new income can make

this an economically viable approach.

The projects outlined in this catalogue have short breakeven

time horizons (1-3 years) if the program can reach appropriate

scale. Micro-loan terms should reflect this reality offering

12-24 months initial deferred payments, low interest rates, and

up to 5-year payback. A $20,000 loan at 0% interest, 12-month

payment deferral and 5 year payback would commit a CBO to

a manageable $417 a month payment in years 2 through 5.

Venture philanthropy investments, which can be structured as

equity participation as well as loans, may be the next step once

a CBO or a CBO coalition determines they have a scalable social

enterprise requiring growth capital.

loans for Revenue Generating Programs

Another discussion that CBOs can have with foundation program

officers is the value of funders providing organizational capacity

building grants as seed money for CBOs to expand their fund-

raising capabilities. Whether the project is as basic as setting up

a membership and donor tracking database or developing one

of the expanded fundraising opportunities outlined in this

catalogue, these types of grants economically empower CBOs.

In addition to traditionally structured grants, a funder may want

to consider “pay for performance” grants that are usually larger

in size, with funds released as fundraising benchmarks

are achieved.

Implementation Support

33

FOOTnOTESi New World Foundation President Colin Greer, February 2008.

References and Resources

34