Why Nonprofits Struggle
by Chataun Denis on 10/12/12
I like to use my social media outlets as a means of passing along educational tidbits that I hope will help nonprofit entrepreneurs along their journey. A recent tweet was “Starting a nonprofit with a $0 budget is an uphill battle. Launch your biz as a social enterprise to increase the likelihood of success.”
A woman responded, How do you do this? What is the difference? I get this question a lot when speaking about social enterprising. Traditional nonprofit business models rely on donations and grants. Social enterprises focus on profit generation to fund programs and services. I know I talk a lot about income generation. What can I say, it is my soapbox. But, far too often the people I encounter along my consulting journey think that donors and foundations are going to rush to their aid to support their work and most often this just does not happen. They underestimate the time and effort that will be required for fundraising. And, they overestimate the willingness and the number of people who will actually donate to their cause on a consistent basis.
The best way to avoid this common mistake is to take your destiny into your own hands and establish the nonprofit business on solid enterprise principles. My definition of social enterprise is a business that uses traditional business principles to accomplish a social mission. So, instead of giving ALL of the services away for free, the social enterprise offers some services for a fee. The income earned from these activities then subsidizes the free programs and services.
For many, this is a hard pill to swallow and mentally, they just do not automatically think profit in the context of nonprofit. Well, I am here to tell you, the old nonprofit way of doing business is over. To survive, nonprofits must be innovative and have a competitive advantage in the market place. Furthermore, the girls mentoring program that allowed their mentees to participate for free, must now require monthly dues. The temporary housing program that permitted homeless men and women to live for free while they got their lives on track, must now require residents to have a job and pay up to 30% of their income towards their housing expenses. The arts program that allowed visitors to attend exhibits for free, must now charge admission. Transitioning from the old model to the new is not an easy task, but a required one. If you intend for your nonprofit to sustain itself into the future, social enterprising is the way to go!
