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 fluency—as staff, board, funders, and consultants—in talking about nonprofit business models? Introduction to Nonprofit Business Models #NPQAdvance

It’s not only our missions that are different from for-profit companies, our money works differently, too. We may draw on volunteers We often “price” work and in-kind donations below actual cost We are not expected to be Donors can restrict funds profitable, but we must be Introduction to Nonprofit Business Models #NPQAdvance

What are common elements of a nonprofit business model? Value proposition Activities Resources required Stakeholders Partnerships Outreach channels Cost structure Metrics Source: Te Nonprofit Business Model Canvas, Skylance.org Introduction to Nonprofit Business Models #NPQAdvance

When do we articulate the nonprofit business model? At founding of When recommitting to model When shifting organization through planning process the model It can be articulated in a Business Plan, a Strategic Plan, or in a stand-alone document/graphic. Introduction to Nonprofit Business Models #NPQAdvance Dynamics

Do we need a business plan? Strategy Strategic Plan Business Model Business Plan Introduction to Nonprofit Business Models #NPQAdvance

Key considerations in nonprofit cost structure: Staff/Contractor/Volunteers Facility Lease or Own Equipment Purchasing In-kind Costs Introduction to Nonprofit Business Models #NPQAdvance

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 Introduction to Nonprofit Business Models #NPQAdvance

Nurturing the business model requires constant consideration of: Activities Users Payers Introduction to Nonprofit Business Models #NPQAdvance

Non-financial capital is a critical part of a nonprofit’s business model. Social Capital Intellectual Capital Cultural Capital relationships & reputation knowledge & learning capacity community involvement & awareness Introduction to Nonprofit Business Models #NPQAdvance

What are the nonprofit revenue streams? Revenue Sources for Reporting Public Charities, 2013 (Percent) 47.5 24.5 13.3 8.0 4.8 1.9 Fees for services Fees for services Private Government Investment Other and goods from and goods from contributions grants income income private sources government sources Source: Brice McKeever, “Te Nonprofit Sector in Brief 2015: Public Charities, Giving, and Volunteering,” Urban Institute, October 29, 2015 Introduction to Nonprofit Business Models #NPQAdvance

What is revenue diversification? Within a Single Across Multiple Funding Stream Funding Streams Introduction to Nonprofit Business Models #NPQAdvance

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 Introduction to Nonprofit Business Models #NPQAdvance

Does funding stream diversity drive growth? “ 1. Tey developed funding in one concentrated source rather than across diverse sources. 2. Tey found a funding source that was a natural match to their mission and beneficiaries. 3. Tey built a professional organization and structure around this funding model. ” —William Foster & Gail Fine “How Nonprofits Get Really Big,” Stanford Social Innovation Review, Spring 2007 Introduction to Nonprofit Business Models #NPQAdvance

What are nonprofit business drivers and dashboards? Examples: Teater Immigrant Rights # of productions # of families in active per season case management Introduction to Nonprofit Business Models #NPQAdvance

What is nonprofit capital? Working Capital Reserve Capital Change Capital Funding streams have varying capacities to contribute to these forms of capital. Source: “Kinds of Capital,” Nonprofit Finance Fund, 2015 Introduction to Nonprofit Business Models #NPQAdvance

Te racial wealth gap extends to organizations and networks. ‘Foundation redlining’ of Black-led organizations— “ fueled by explicit and implicit bias—has been an ” unspoken reality for decades. —Susan Taylor Batten & Nat Chioke Williams, PhD Te Case for Funding Black-led Social Change ABFE & Hill-Snowdon Foundation, 2017 Introduction to Nonprofit Business Models #NPQAdvance

Te racial wealth gap extends to organizations and networks. “ In all of the states studied except Alaska, which was an outlier, the dollar amount of grants given to Native 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 Introduction to Nonprofit Business Models #NPQAdvance

Introduction to Nonprofit Business Models #NPQAdvance

Te Schedule Introduction to Nonprofit Business Models September 20, 2018 Te Government Contracted Nonprofit October 4, 2018 Te Foundation Funded Nonprofit October 18, 2018 Te Donor Supported Nonprofit November 1, 2018 Te Fee-for-Service Nonprofit November 15, 2018 Te Membership or Association-based Nonprofit November 29, 2018 Sessions will be available to you for view and review for a year from registration. Introduction to Nonprofit Business Models #NPQAdvance

Dynamics How this kind of money works

Capital How this kind of money produces and draws upon forms of capital (working, reserve, etc.)

Leadership What skills and perspectives are required of senior staff and board

Infrastructure What staffing and systems are required for management and compliance

Culture How organizational culture is typically impacted by this kind of money

Metrics Indicators of performance used with this kind of money

Diversification Considerations when adding or growing this funding stream

How to maximize your experience: Leave yourself 30 minutes of preparation Print out the handout we provide BEFORE and focus time before each session. each session and use for notetaking. Participate in all participant Print your Certification of Attend Twitter Chats to ask polls and surveys. Completion for each session. questions of the Series Faculty. Introduction to Nonprofit Business Models #NPQAdvance

Please complete the evaluation survey coming your way shortly. Design: Benzamin Yi (benzaminyi.com) Art: le Versant by Sylvie Demers (saatchiart.com/sylviedemers) Introduction to Nonprofit Business Models #NPQAdvance