Nonprofit Entrepreneurship
Nonprofit Entrepreneurship – Tips for Start-Up Nonprofits by Chataun R. Denis
Nonprofit entrepreneurship sounds like an oxymoron when you say the two words together. Until recently, nonprofits have been operating on the charity business model and not the profit business model. In the past, this was enough. There were an abundance of grants and individuals who helped shoulder the burden to keep nonprofits afloat. Today, this is not the case. The gap between the nonprofit haves and the have nots is growing wider. So, I say to nonprofit start-ups, starting a nonprofit is not a question about whether or not to charge, it’s a question about how much to charge.
Don’t misunderstand, if you have deep pockets and you don’t need additional capital to operate then by all means, give your services away gratis until the end of time. However, if this is not the case and you don’t have deep pockets, you have to charge for your services. The idea is to make the product and or service more accessible. You don’t have to charge market rate, but you will charge at a level that allows you to operate, including paying yourself, generate a surplus (profit), and re-circulate the surplus back into the business so you can continue the work.
Unfortunately, there are a number of programs wherein this idea may be easier said than done. For example, providing housing for the homeless. This type of program is very expensive to operate. And, if your residents can’t afford to pay and you’re not generating any other income, then it’s likely your program will never see the light of day. You may be asking yourself, how do existing programs do it? That’s what you have to figure out. Some key characteristics are likely that they have been around for quite some time. The more successful homeless housing programs have been around for at least a decade. They have large donor populations, meaning they’ve spent years developing relationships with donors, individuals, and institutions. They likely have a special event fundraiser that generates a sizeable portion of their budget. The board is more than likely well connected. And, they likely get grant funding.
The point of sharing this information is to give you a realistic picture of the work required to start and build a successful nonprofit. Each idea will be different and will require varying levels of investment. This investment will come from your own personal resources. It’s not likely you’ll get a grant to help with start-up costs. Does this mean you do away with your idea? No, you simply reshape, or redesign your business model. Instead of operating a charity, make the decision to operate a business with a social mission.
To evaluate whether or not your idea will be profit-ABLE, ask yourself two simple questions. What are the costs to deliver my product and or service? Do I have the money to launch and effectively deliver the program? If the answer to the second question is NO, go back to the drawing board.
Have more questions, visit the Contact page and request to book a Consultation today!
