A Recession-Proof Nonprofit Business Model by Chataun Denis
Today, someone sent me a quote that was so simple, yet so profound. "Nonprofit is a tax structure, not a business model". Not sure who to give credit, but I will be using it from now on! Definitely relevant in the current economy, if you manage a nonprofit, or you are thinking of starting one, I highly encourage you to diversify your revenue sources. If you plan on your business being around for a while, you don't want to over-rely on any one source of income, especially grants. Having multiple streams of revenue will increase the likelihood that your nonprofit enterprise will sustain over the long term.
A common misconception about nonprofits is that the tax structure doesn't allow for a profit to be made. This isn't true. Nonprofits can and should generate more revenue than they spend. The proper term for that profit is "surplus".
Is your nonprofit generating sufficient profit? 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. Your business strategy must consider inflation, expected and unexpected expenses, personnel costs, etc. Do you have a nonprofit business strategy? Does your current strategy consider these costs?
If not, now is the time to get specific about your strategic direction. Getting specific means defining: 1) Your product and/or service; 2) Who you will sell to; 3) The frequency at which you will sell; 4) Where you will sell; 5) The channels you will use to get the word out; 6) The gap or need your product/service will fill; and 7) Your plan for getting your product/service to market.
Yes, even nonprofits have products and services to sell. And yes, this thought process is a paradigm shift. However, it is necessary for survival. As you progress through the planning process, you will have a good sense wether or not your nonprofit has competitive advantage and whether or not it can survive in the marketplace.