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The National Assembly. Earned Revenue as a strategy for diversifying income National Center on Nonprofit Enterprise. Earned Revenues. What earned income is. Why pursue Earned Revenues as a strategy. Conditions of success. Taking the right steps. The Nonprofit Entrepreneur. - PowerPoint PPT Presentation
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The National Assembly
Earned Revenue as a strategy for diversifying income
National Center on Nonprofit Enterprise
Earned Revenues What earned income is. Why pursue Earned Revenues as a strategy. Conditions of success. Taking the right steps.
The Nonprofit Entrepreneur
Earned Revenues: terminologySocial Enterprise Social Venture
Social Entrepreneur
Nonprofit Business
Commercial Venture
Affirmative Business
Social Business
Earned Income Initiative
Pricing a Service
Earned Revenues: definition
“…………earning income in a nonprofit entails making products or services available to organizations or individuals, who pay a price that covers some, all of or more than, the costs of these products or services…..”
Earned Revenues: range of activities Price for a service: Healthcare, counseling Current service delivered to new audience
(stress counseling to for-profit employees) Leveraging value of assets: - reputation: cause related marketing; - land: parking lot or natural gas Unrelated business activity: Ben and Jerry’s
Ben and Jerry’s
The National Park Service
Computer recycling
Charging for a service
Earned Revenues: a different type of income?
1. Needs Wants
Clients Customers
2. Volatility Stability
3. Dependency Autonomy
4. Charity Interdependence
Earned Revenues: Why? More $! More unrestricted $:
- management capacity
- independence……advocacy To Manage Risk
- general diversification
- protecting particular activity
Earned Revenues: Why? To Do more Mission
To Do Mission better
To Develop the skills and culture of the nonprofit
To attract more of current types of revenue
Earned Revenues: range of activities
John Hopkins Listening Post Project
Commercial income % t % e Improved/expanded Marketing 63 11 Introduction of/raised fees 56 15 Borrowed money 27 <5 Profit-making subsidiary 5 ?
Earned Revenues: Why Not? Too Expensive
Mission Drift
Management Drift
Other revenue “crowd-out”
Culture clashes/Divisions
Earned Revenues: How?
The Nonprofit Entrepreneur……..
…………who thinks economics
Earned Revenues: How?
Nonprofit readiness 1 Clarity of Mission Client Focus Strategic Mind-Set Experience of Change Effective and Adaptable business systems Financial Health
Earned Revenues: How?Nonprofit readiness 2.
Leadership: - commitment - consistency - communication - awareness of risks and opportunities
Earned Revenues: How?
Nonprofit readiness 3.
Marketing approach to work:
- focus on the 4 P’s
- ability to identify nonprofit’s assets
and their value
Ben and Jerry’s criteria Nonprofit status Annual operating budget of more than $5,000,000 More than 5 years in operation Job training and life skills development programs for youth and
young adults, ages 15 - 21 Experience operating a social purpose business Knowledge of the retail foodservice industry and/or franchising The desire and capacity to operate a social enterprise business A staff and board with small business expertise An excellent credit history Financial acumen and stability A record of fundraising success The willingness and the capacity to manage the complexities of
developing a new business
Earned Revenues: How?Feasibility of strategy 1. Clarity of purpose Understanding of customers Customer focus Marketing approach
Clear business model A product or service people are prepared to pay
for – enough to ensure achievement of purpose.
Earned Revenues: How?
Feasibility of strategy 2. People with appropriate experience Clarity of accountability Appropriate place in structure Planning Management Review and learning
10 steps to earned income heaven
1. Clarify what your nonprofit’ program and revenue priorities.
2. Assess how well you raise and use resources now: are your revenues diverse; do you spend the right amount on different types of fundraising; have you assessed the efficiency of your program staffing?
10 steps to earned income heaven3. Identify the most cost-effective changes that support
program and revenue priorities……and make these happen.
Not enough unrestricted revenue…assets still underused…..
4. Generate and select strategies: - engage people for ownership; - work on criteria first: assets + customer needs = revenues; relate everything back to mission, program and revenue priorities; risks and rewards.
10 steps to earned income heaven5. Assess feasibility and risk in detail, and
select options for business planning6. Address structural and legal issues7. Clarify accountability and reporting
protocols8. Do the Business Plan9. Find and secure money required for
implementation
10 steps to earned income heaven
10. ……….DO IT>>>>
Incremental steps Testing and review Roll-out Communication, Communication,
Communication
Earned Revenues: How?
The Nonprofit Entrepreneur……..
…………who thinks economics
……to achieve mission
The National Assembly
Earned Revenue as a strategy for diversifying income
National Center on Nonprofit Enterprise