O for Opportunity: Exploring New Revenue Opportunities for Nonprofits Produced by the Society for Nonprofit Organizations September 11, 2008.

O for Opportunity: Exploring New Revenue Opportunities for Nonprofits

Produced by the Society for Nonprofit Organizations

September 11, 2008

Copyright © 2007 — Community Wealth Ventures, Inc. — 2

Workshop Objectives

1. Introduce participants to the concept of community wealth/social enterprise

2. Share examples, risks, best-practices

3. Identify community wealth opportunities for participant organizations

4. Understand how to assess and prioritize opportunities

5. Learn about the components of a successful feasibility assessment


What do you hope to learn from this workshop?

Introduction to Community Wealth


Looking for Something Different?


What Is Community Wealth?

Revenues generated through profitable or self-sustaining enterprises to promote social change


What Is Different About Community Wealth?

Community Wealth is Not… Community Wealth is…

■ Traditional fundraising

■ Grant money

■ Gifts/donations

■ A “quick fix” out of a crisis

■ For everyone

■ Generating sustainable new resources to support mission

■ Engaging market forces to work for the nonprofit sector

■ Devising new ways to leverage existing assets

■ Allowing for greater flexibility by bringing in unrestricted revenue

■ Decreasing dependence on the external funding community


Community Wealth Examples


Which is Not a Community Wealth Enterprise?

1. Zoo Doo – compost

2. Caroline Center Upholstery – furniture upholstery

3. Greyston Bakery – manufactures brownies for Ben & Jerry’s and other ice cream manufacturers

4. Rubicon Landscape Services – landscaping

5. Freedom Wheels – used car business

6. Laser Monks – discount printer cartridges


What Factors are Necessary to Launch a Successful Community Wealth Enterprise?


Characteristics of Successful Community Wealth Enterprises

1. Planning and upfront investment

2. Clearly defined goals

3. Mission alignment

4. Leadership and skilled staff

For more information download :

Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability

at www.communitywealth.com/resources_tools.htm


Is Community Wealth Legal?

1. Nonprofits can launch community wealth enterprises and maintain 501c3 tax status

2. Income Related to Exempt Purposes No limit on amount of revenue

3. Income from Unrelated Activities Taxable as “unrelated business taxable income”(UBTI)

4. There is no standard legal structure

5. Consult an attorney to understand the most appropriate legal structure


Community Wealth Potential Risks

Financial Reputation Organizational

• Venture may cost more than expected

• Opportunity cost – resources could have been spent elsewhere

• Traditional funders may decrease funding

• Venture may lose money

• Reputation could be compromised

• Venture could fail and negatively impact reputation

• Venture may divert management and staff attention

• Increased organizational complexity and new skills required may be difficult to handle

• Culture clashes between core organization and venture

• Staff and board resentment

Major Types of Risks


The Social Venture Development Process

1.

Asset

Identification

2.

Assets

into

Opportunities

3.

Opportunity

Screening

4.

Feasibility

Assessment

5.

Select

One

Opportunity

6.

Business

Planning

Implementation

Idea Generation High Level Assessment

Detailed Market

Analysis and Operations

Plan

Today

Task 1 – Asset Identification


ASSETS

Things You HAVE:

· Physical assets· Location/space· Distribution/sales

network· Brand/Reputation· Patent· Access to desired

resource· Relationships

(membership, suppliers, etc.)

Things You DO:

· Continuously innovate

· Manage information· Produce low cost

goods

Things You KNOW:

· Understanding of specific issue

· Process expertise· Market expertise· People/key decision

makers

Task 1Assets Can Be Things You Have, Do, or Know


Assets Are a Matter of Perspective

Consider this example. . .


Nonprofit Organizations Have Lots of Assets

Attractive Facilities,Desirable Locations

Excellent ServiceProvision

Financial Accounting,Human Resources

Management

HAVE DO KNOW


Time: 5 minutesHow: Individually and as a

group

1. Take 1 minute to identify your organization’s key assets that could be leveraged into potential opportunities. Assets can be things you have, do, or know, and are often a matter of perspective…so get creative

Greyston BakeryA venture of

Greyston Foundation

Exercise # 1: Asset Identification

Task 2 – Opportunity Identification


Task 2Evaluating Your Assets

1. Is the asset unique?

2. Who would value the asset?

3. How valuable is the asset?

4. What is the customer’s willingness to pay?

5. Is the asset sustainable over time?


Example – Leveraging Assets for Opportunities

Assets

1. Historic downtown building

Opportunities

1. Cafe

2. Market-rate housing

3. Space rental for special events

4. Day-care center

5. Thrift-store location


Time: 5 minutesHow: Individually and as a group

1. Review lists of assets and brainstorm potential opportunities. List each opportunity and its corresponding asset (1 minute)

2. Share ideas and brainstorm new ones

Exercise # 2: Turning Assets into Opportunities

Task 3 – Opportunity Screening & Prioritization


Task 3Opportunity Screening

1) Which opportunities will enable us to achieve our goals? Financial goals

Mission goals

2) How easy or difficult will it be to implement?


Task 3: Opportunity ScreeningFinancial Analysis

Financial Potential

1. Market demand and estimated size of the market

2. Level of competition

3. Quality of product

4. Expected growth rate

5. Cost structure


Task 3: Opportunity ScreeningAssess Ease of Implementation

Ease of Implementation

1. Expected complexity of the project

2. Availability and skills of current staff to manage the new opportunity

3. Ability to recruit other staff quickly

4. Access to necessary capital


Ea

se

of

Imp

lem

en

tati

on

Financial Potential

Easy

HighLow

Hard

Task 3: Opportunity ScreeningWhich Opportunities Are Most Attractive?


■ Feasibility analysis is a high-level assessment of the

market opportunity, profitability, and fit with the

organization for a potential business venture

The goal of a feasibility analysis is to inform a Go/No Go decision on a business opportunity using impartial market research and

internal assessments

Task 4What is a Feasibility Assessment?


Task 4: Feasibility AssessmentExternal & Internal Factors

Internal Factors

External Factors


■ How big is the current market? Is it growing or contracting? How is it segmented?

■ Who are the key customers? What customers are willing to pay?

■ Who are the key competitors? How do they differentiate themselves?

■ What are the margins for current vendors in the market?

■ What are the barriers to market entry?

Task 4: Feasibility AssessmentExternal Factors


■ Can you secure organizational and board buy-in for this opportunity?

■ How well does the market opportunity fit with your organization’s skills and expertise? Will you need to purchase outside expertise?

■ Do you have a potential competitive advantage?

■ What investment is needed to launch and grow the opportunity?

■ How long will it take to make the opportunity a reality?

■ What are the risk factors? What are ways to mitigate risk?

Task 4: Feasibility AssessmentInternal Factors


Task 4: Feasibility AssessmentEvaluate & Compare Opportunities

Based on your findings, take your “top/best” three and evaluate them

Opportunity – (Low, Medium, High)

A B C

Market Size

Market Outlook

Favorable Competitive Factors

Ease of Entry

Likely Competitive Advantage

Market Profitability

Fit with Mission

Fit with Skills/Expertise

Fit with Material Resources

Ability to Manage Risk

OVERALL ATTRACTIVENESS

Internal Factors

Internal/ External

External Factors


Ultimately, the Opportunity Needs to be Something the Organization Really Wants to Do

1. What are the potential strengths of the idea?

2. What are the potential drawbacks of the idea?

3. Is it better than the other things the organization could be doing with its time and money?

4. Is the organization willing to dedicate the management staff and financial resources necessary to make it succeed?

5. Is there someone in the organization who will wake up every morning excited to make the venture a success?


The Social Venture Development Process

1.

Asset

Identification

2.

Assets

into

Opportunities

3.

Opportunity

Screening

4.

Feasibility

Assessment

5.

Select

One

Opportunity

6.

Business

Planning

Implementation

Idea Generation High Level Assessment

Detailed Market

Analysis and Operations

Plan

Today


Questions?

Heather Peeler

Managing Director

[email protected]

O for Opportunity: Exploring New Revenue Opportunities for Nonprofits Produced by the Society for Nonprofit Organizations September 11, 2008.

Documents

community wealth slide

community wealth ventures

community wealth opportunities

community wealth legal

community wealth examples

community wealth generation

social change slide

new revenue opportunities