Confessions of A Social Entrepreneur
Advice for Nonprofit Start-ups
by Chataun Denis on 08/09/15
Tip #7 - Don’t give your products or services away for free! Far too many people start nonprofits and plan to offer their services and/or products for free but yet they have no means for generating revenue. This is another bad recipe. Businesses that don’t make money go bankrupt. With the right business model you can simultaneously fulfill your charitable and your financial goals.
Tip #8 - If you don’t know people with money and you don’t have a profitable business model, don’t start a nonprofit! Tax exempt status is for entrepreneurs who know people who have money to give away in exchange for a tax deduction. If everyone in your circle of influence is always crying broke, I guarantee you’ll have a hard time fundraising, and nonprofit is 80% fundraising. Instead of starting a nonprofit, start a for-profit. You can always adjust your pricing according to what your target market can afford.
Advice for Nonprofit Start-ups
by Chataun Denis on 08/03/15
Tip #4 - Be
patient with your vision. Many of us tend to dream big. Dreaming big is
not the problem. The problem is expecting the dream to realize
instantly. Developing a business takes time and when progress doesn’t
occur as quickly as you would like, don’t give up on your dream.
Persist.
Tip #5 - Work
with a nonprofit business coach. If you are new to the nonprofit scene
or you’ve never been on the managing side of a nonprofit, get some help!
Chances are you need it. Coaching helps you set goals and create an
action plan for the achievement of those goals. Coaching holds you
accountable for what you say you want to do. It’s helping you work
smart.
Tip #6 - Learn
first. Take a few classes. Attend a few workshops. Successful
nonprofits have successful business models. Learn how to develop a
profitable business model before you apply for tax exempt status. You
may find that running your business as a for-profit is the better
option. In fact, if you use a social-based business model you can help
people and make money. It’s a win-win! This is where a nonprofit
business coach is invaluable!
Advice for Nonprofit Start-ups
by Chataun Denis on 07/30/15
Tip #2 - Write
a business plan. I can’t say this enough. The cliché if you fail to
plan, you plan to fail is very true, especially as a nonprofit. As a
registered tax exempt organization you’re being held accountable by the
IRS. As a sole proprietor, Limited Liability Corporation, or Partnership
you’re not. Not only is the business plan a way to help you stay
compliant, it details your plans for recruiting partners, board members,
donors, and volunteers. It is the document that describes the course
of action to reach your goals. Trying to manage this information in your
head is a recipe for mental illness.
Tip #3 - Don’t
quit your day job!!! Since you’re likely financing your own start up,
take baby steps. Don’t let passion override rational decision making.
Don’t take out a lease on a building for a new day care if you know it
won’t pass inspection and you know you don’t have money for repairs.
This may sound insane but I see these types of mistakes made all the
time.
Advice for Nonprofit Start-ups
by Chataun Denis on 07/26/15
Tip #1 - Anticipate financing the start-up of your company with personal funds. It’s highly likely that you won’t be awarded grant funding during your first two years in business. The days of getting a grant simply because you had a good idea are long gone. Nowadays, funders want to see two years of measurable outcomes before they even consider your application. Businesses start and fail every day. If you can prove that your company has longevity, is profitable, and can make a positive difference then you’re a good candidate for a grant award.
Is My Nonprofit Idea Profit-ABLE?
by Chataun Denis on 07/23/15
Do you have a nonprofit idea but you aren't sure how to bring it to life? Are you overwhelmed with ideas? The first and most basic action in determining your next steps to starting your nonprofit is to define your business model. What is your product and/or service? Who are you selling to? When will you sell and at what frequency? Where will you sell? What channels will you use to get the word out? Why is your product/service needed? What makes it unique? How will you bring your product/service to market?
Is your nonprofit idea Profit-ABLE? The days of operating like a charity are over. In order to deliver programs and services, you need money right? Not only do you need cash, but you need a surplus of revenue in order to keep pace with inflation, cost of living, raises, etc. As you're going through this brainstorming process, figure out the price at which you can sell your product/service as well as the quantities that need to be sold.
Nonprofit Earned Revenue (part 2)
by Chataun Denis on 07/14/15
In the last blog posting we discussed earned revenue being one of THE most important nonprofit business strategies. I used one of my clients as an example of a grassroots organization that is doing it well. Now, let’s talk about other earned revenue options. One is the sale of tangible products. The American Cancer Society has mastered the art of selling products. On their website you can purchase jewelry, shirts, jackets, watches, and a myriad of other wares. They have a crystal beads bracelet that sells for $18.99. If they sell 1,000 of these in one month, they've generated $19,000.00. Their tote product sells for $12.99. Again, selling 1,000 of these will generate $13,000.00. At the time I wrote this article they reported on their website that they raised $58 million dollars through their various fundraisers and sale of products.
Making A Way Housing, Inc. earns the majority of its revenues through the rental of real estate. The organization's core activity is providing affordable housing for homeless persons and those undergoing treatment for alcohol and substance abuse. The residents pay rent that is subsidized by grants. Rental fees are not market rate, but they're not free either. They have 70 two-bedroom units. Each unit is occupied by two residents who may pay between $100-350 per month. At these occupancy rates, they can generate between $14,000 and $49,000 per month.
When asked how much of a nonprofit’s budget should be earned revenue. I like to use the illustration of the pie chart. A pie has multiple slices. For the nonprofit, each slice represents a revenue source. I propose that the most important and the largest slice of any nonprofit's revenue pie should be earned revenue. My rule of thumb is 60%. The wise person is the one who develops their nonprofit business model with earned revenue as the cornerstone.
Nonprofit Earned Revenue
by Chataun Denis on 07/10/15
Especially in the current economy, if you manage a nonprofit or are on the board of directors, I highly encourage you to pursue diversifying your nonprofit's revenue sources. Having multiple streams of revenue will increase the likelihood that your business will sustain over the long term.
A common misconception about nonprofits is that they can't and shouldn't make a profit. This is totally untrue. A nonprofit is a business and it should make a profit. It is unfortunate that the majority of people who start nonprofits don't fully understand how to develop a nonprofit business model that generates sufficient revenue to make a profit. It's fairly simple, you create a product and you sell it.
Let's look at a real life example so you have a
better idea of what I'm talking about. The Quicksilver Track Club, a small
grassroots nonprofit based in Atlanta, GA, is an elite track and field training
program that works with at risk youth. Their mission is to train kids, build
their athletic ability so they can get college scholarships. They have a
registration fee of $235 per year. The program is not free. Yes, they're
serving economically disadvantaged kids, but it costs money to deliver this
service. Far too many people who start nonprofits want to give their services
away for free and you just can't operate a business without revenue. And,
without a clear understanding of this basic concept, you cannot build a
successful nonprofit.
Is Your Nonprofit Idea Profit-ABLE?
by Chataun Denis on 07/05/15
Do you have a nonprofit idea but you aren't sure how to bring it to life? Are you overwhelmed
with ideas? The first and most basic action in determining your next
steps is to define your business model. What is your product and/or
service? Who are you selling to? When will you sell and at what
frequency? Where will you sell? what channels will you use to get the
word out? Why is your product/service needed? What makes it unique? How
will you bring your product/service to market?
Is
your nonprofit idea Profit-ABLE? The days of operating like a charity
are over. In order to deliver programs and services, you need money
right? Not only do you need cash, but you need a surplus of revenue in
order to keep pace with inflation, cost of living, raises, etc. As
you're going through this brainstorming process, figure out the price at
which you can sell your product/service as well as the quantities that
need to be sold.
How long before my nonprofit can start applying for grants?
by Chataun Denis on 04/21/14
A big misconception when applying for 501c3 federal tax exemption is that people think once they receive approval from the IRS, they can begin applying for grants. Applying for grants is more than just being recognized by the IRS as 501c3. What's more is that many funders require that the organization be in business for two years before they meet eligibility requirements.
In order to effectively compete for grants, your organization must show itself worthy of foundation investment. Meaning, it should be able to demonstrate that it can be sustainable without grant funding and that it is effective at its mission; that it can FIRST stand on its own two feet without the help of grants.
I know this is disappointing. However, it is reality. If you would like to, in the near future, win grants for your nonprofit, you will have to get to work turning your nonprofit into a thriving social enterprise. If you need help doing that, schedule one of our Coaching sessions. Help is just a phone call away!
Dollar General Grants
by Chataun Denis on 03/19/14
For those of you involved with literacy programs, Dollar General is now accepting grant applications. I have gotten two clients grants from Dollar General. If you decide to apply, here are a few
strategies that worked for us!
Dollar
General gives grants to nonprofits that provide literacy programs that
target K-12th grade students. You can be 501c3 or a school to be
eligible. More specifically, your program must target:
- below grade level readers;
- readers with learning disabilities;
- English Language Learners; or
- Students with Individualized Education Plans (IEP)
Their grants are generally pretty small between $1,500-$3,000. DO NOT ask for general operating support. If you have a specific project in mind that fits within the guidelines, go for that instead. It will also improve your chances if you have other funders that have committed to the project. If you can state that you have 75% or more of the project funded already, that's a WIN for you and them.
If you're interested in applying for a grant, you must submit an application using their online system at http://www2.dollargeneral.com/dgliteracy/Pages/grant_programs.aspx. Deadlines are in May and August.
If you would like to apply for Dollar General funding and you want help writing a Winning grant proposal, I am here to help!
Book a Grants Planning Coaching session by March 31st and get $25 off. You can book your appointment on the "Apply for Grants" page.
