Advancing Practices Mastering the Nonprofit Business Model - - PowerPoint PPT Presentation
Advancing Practices Mastering the Nonprofit Business Model Introduction to Nonprofit Business Models Advancing Practice Series from the Nonprofit Quarterly Why do we need a shared fluencyas staff, board, funders, and consultantsin
Introduction to Nonprofit Business Models
Advancing Practice Series from the Nonprofit Quarterly
Introduction to Nonprofit Business Models
Why do we need a shared fluency—as staff, board, funders, and consultants—in talking about nonprofit business models?
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Introduction to Nonprofit Business Models
It’s not only our missions that are different from for-profit companies,
We often “price” work below actual cost Donors can restrict funds We are not expected to be profitable, but we must be We may draw on volunteers and in-kind donations
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What are common elements of a nonprofit business model?
Resources required Stakeholders Value proposition Partnerships Activities Cost structure Metrics Outreach channels
Source: Te Nonprofit Business Model Canvas, Skylance.org
Introduction to Nonprofit Business Models #NPQAdvance
Dynamics Introduction to Nonprofit Business Models
At founding of
When recommitting to model through planning process When shifting the model
It can be articulated in a Business Plan, a Strategic Plan, or in a stand-alone document/graphic.
When do we articulate the nonprofit business model?
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Introduction to Nonprofit Business Models
Do we need a business plan? Strategy Business Model Strategic Plan Business Plan
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Introduction to Nonprofit Business Models
Key considerations in nonprofit cost structure:
Staff/Contractor/Volunteers Facility Lease or Own Equipment Purchasing In-kind Costs
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Introduction to Nonprofit Business Models
Nonprofits operate in a “muted market.”
A significant difference exists between the for-profit sector and the nonprofit sector in our accountability relationships–more specifically, “Who needs to be satisfied for us to be paid?
—Ruth McCambridge & Lester M. Salamon
“In, but not Of, the Market: Te Special Challenge of Nonprofit-ness” Nonprofit Quarterly, March 21, 2003 #NPQAdvance
Nurturing the business model requires constant consideration of:
Introduction to Nonprofit Business Models
Activities Users Payers
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Introduction to Nonprofit Business Models
Non-financial capital is a critical part of a nonprofit’s business model.
Social Capital
relationships & reputation
Intellectual Capital
knowledge & learning capacity
Cultural Capital
community involvement & awareness
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Introduction to Nonprofit Business Models
What are the nonprofit revenue streams?
Source: Brice McKeever, “Te Nonprofit Sector in Brief 2015: Public Charities, Giving, and Volunteering,” Urban Institute, October 29, 2015
47.5 24.5 13.3 8.0 4.8 1.9
Fees for services and goods from private sources Fees for services and goods from government sources Private contributions Government grants Investment income Other income
Revenue Sources for Reporting Public Charities, 2013 (Percent)
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Introduction to Nonprofit Business Models
What is revenue diversification?
Across Multiple Funding Streams Within a Single Funding Stream
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Introduction to Nonprofit Business Models
Is funding stream diversity always desirable?
Maintaining multiple, highly diverse revenue streams can be problematic when each requires, in essence, a separate business. Each calls for specific skills, market connections, capital investment, and management capacity.
—Clara Miller
“Shattering the Myth About Diversified Revenue” Te Chronicle of Philanthropy, September 2, 2010 #NPQAdvance
Introduction to Nonprofit Business Models
Does funding stream diversity drive growth?
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1. 2. 3.
—William Foster & Gail Fine
“How Nonprofits Get Really Big,” Stanford Social Innovation Review, Spring 2007
Tey developed funding in one concentrated source rather than across diverse sources. Tey built a professional organization and structure around this funding model. Tey found a funding source that was a natural match to their mission and beneficiaries.
Introduction to Nonprofit Business Models
What are nonprofit business drivers and dashboards? Examples:
# of families in active case management # of productions per season Immigrant Rights Teater
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Introduction to Nonprofit Business Models
What is nonprofit capital?
Working Capital Reserve Capital Change Capital
Source: “Kinds of Capital,” Nonprofit Finance Fund, 2015
Funding streams have varying capacities to contribute to these forms of capital.
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Te racial wealth gap extends to organizations and networks.
Introduction to Nonprofit Business Models
—Susan Taylor Batten & Nat Chioke Williams, PhD
Te Case for Funding Black-led Social Change ABFE & Hill-Snowdon Foundation, 2017
‘Foundation redlining’ of Black-led organizations— fueled by explicit and implicit bias—has been an unspoken reality for decades.
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Te racial wealth gap extends to organizations and networks.
Introduction to Nonprofit Business Models
In all of the states studied except Alaska, which was an
American organizations and causes was much lower than might be expected given Native American population size and levels of need.
—Randy Blauvelt
“New Report Highlights Gaps in Community Foundation Funding for Native American Causes” First Nations Development Institute, February 14, 2018 #NPQAdvance
Introduction to Nonprofit Business Models #NPQAdvance
Introduction to Nonprofit Business Models
Te Schedule
September 20, 2018 October 4, 2018 October 18, 2018 November 1, 2018 November 15, 2018 November 29, 2018 Introduction to Nonprofit Business Models Te Government Contracted Nonprofit Te Foundation Funded Nonprofit Te Donor Supported Nonprofit Te Fee-for-Service Nonprofit Te Membership or Association-based Nonprofit
Sessions will be available to you for view and review for a year from registration. #NPQAdvance
How this kind of money works
How this kind of money produces and draws upon forms of capital (working, reserve, etc.)
What skills and perspectives are required of senior staff and board
What staffing and systems are required for management and compliance
How organizational culture is typically impacted by this kind of money
Indicators of performance used with this kind of money
Considerations when adding or growing this funding stream
How to maximize your experience:
Introduction to Nonprofit Business Models
Participate in all participant polls and surveys. Print your Certification of Completion for each session. Leave yourself 30 minutes of preparation and focus time before each session. Attend Twitter Chats to ask questions of the Series Faculty. Print out the handout we provide BEFORE each session and use for notetaking.
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Introduction to Nonprofit Business Models
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#NPQAdvance Design: Benzamin Yi (benzaminyi.com) Art: le Versant by Sylvie Demers (saatchiart.com/sylviedemers)