The National Assembly

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: terminology
Social 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?
Needs                                          Wants
     Clients                                       Customers

Volatility                                      Stability
Dependency                              Autonomy
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
Clarify what your nonprofit’ program and revenue priorities.
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 heaven
Identify the most cost-effective changes that support program and revenue priorities……and make these happen.

Not enough unrestricted revenue…assets still underused…..

 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 heaven
Assess feasibility and risk in detail, and select options for business planning
Address structural and legal issues
Clarify accountability and reporting protocols
Do the Business Plan
Find and secure money required for implementation

10 steps to earned income heaven
……….DO IT>>>>

Incremental steps
Testing and review
Roll-out
Communication, Communication, Communication            
Earned Revenues: How?
……to achieve mission
The National Assembly
Earned Revenue as a strategy for diversifying income
National Center on Nonprofit Enterprise