Thinking like an entrepreneurGeorgia Nonprofit NOW, Summer 2016
Nonprofit funding traditionally comes from foundations, grants, or individual donors. But more and more, nonprofits are looking to fill out their portfolios with earned revenue—that is, a social enterprise that acts like a for-profit business in support of the mission. To help nonprofits learn to think and operate like entrepreneurs, GCN piloted its Nonprofit Entrepreneurial Accelerator program this spring, in partnership with The Coca-Cola Foundation. The Accelerator facilitators, Nonprofit Consulting Group VP Sir José Bright, and Senior Consultants Karin Douglas and Jeanne Drake Ward, spoke recently about the concepts behind this endeavor, and how nonprofit leaders can broaden their economic outlook.
What’s different about an entrepreneur’s mindset?
Sir José Bright: Entrepreneurs are different because they see a world filled with opportunities. Thinking like an entrepreneur means looking all around you for the opportunity to bring in financial resources by providing a product or service. It’s a hard transition for a nonprofit leader: Where a typical nonprofit mindset says, “Let’s go for funding,” an enterprising leader will think, “What can we do with our assets to bring money in?”
Karin Douglas: Another part of entrepreneurship is the ability to generate ideas that solve a problem or answer a need. Nonprofits tend to think about fulfilling the mission by delivering programs, while entrepreneurs fulfill the mission by delivering new ways to look at things.
Earned revenue is a wonderful way of answering donors’ newest question, “How do you plan to be sustainable?”
Bright: Nonprofits need to consider a social enterprise as resources become more competitive and donors look for more self-sufficient prospects. Earned revenue is a wonderful way of answering donors’ newest question, “How do you plan to be sustainable?” Earned revenue can also serve as the operational funding that’s hard to get from donors.
Can you name a few of the Georgia nonprofits riding this entrepreneurial trend?
Douglas: Lifecycle Building Center, a participant in GCN’s Momentum: Westside, takes building materials from tear-downs and donates some of them to nonprofits that need renovation supplies. The rest they sell to the public and use in building workshops that people pay to attend. They’re grabbing stuff that someone has cast off, and are using it not just for the mission and for education, but also for revenue.
Bright: The Atlanta Center for Self Sufficiency runs Cafe 458 here in town. Part of their work with homeless people is workforce development, so Cafe 458 serves their clients with training in hospitality and food service while generating revenue.
When approaching new ideas for creating revenue, how can nonprofit leaders think more like entrepreneurs?
Douglas: Because all earned revenue is business, you have to treat it like a business.
Bright: That means you need a business plan. First, conduct a feasibility study that asks, “Will this idea fit within the organization? Do we have the people, resources, and space to tackle it? Have we done the research to see if there’s a demand for this particular product or service?” Next, assess the existing providers for that product or service, knowing it’s going to be more challenging to compete with brands that already have loyal customers.
Jeanne Drake Ward: Make sure you have access to people with the expertise you need. For example, The Giving Kitchen is made up of people in the restaurant industry, so they clearly had the expertise to open the restaurant, Staplehouse, that’s currently bringing money in to the nonprofit.
Bright: If you don’t have the operational expertise in-house, it’s important to get it from either an advisor or a strategic partnership.
Ward: A good example of that is Moving in the Spirit, who is working on a line of dance wear through our Accelerator. To supplement their in-house knowledge, they recruited a technical designer from Spanx, a former buyer for Macy’s, and a digital marketing director with his own firm.
Douglas: If you’re going to start a business, you have to be willing to invest in it, but you have to be realistic about what it’s going to cost and what you can afford. Marketing and PR are also critical: You have to let people know what you are doing.
Bright: And because nonprofits often don’t have the budget to go on television or radio, you’re going to have to be entrepreneurial in looking for other opportunities to get the word out—online and on the ground.
How can nonprofits learn entrepreneurial skills?
Ward: There are plenty of resources available, including our Accelerator. We also have consultants to provide hands-on guidance and Nonprofit University courses that can help. Resources are also available through Coursera online classes; SCORE, a mentoring service for young entrepreneurs; and the Social Enterprise Alliance.
Douglas: Those in the nonprofit world can benefit by developing relationships with people outside of their particular area, and outside the sector altogether. You don’t know what’s going to spark that revenue-generating idea.
Too often, we don’t look at a failed venture as something to be understood and re-attempted. …An entrepreneur understands that an idea you believe in is worth another try.
Is it useful for a nonprofit to think like an entrepreneur, even if it doesn’t have a product or service to sell?
Ward: Absolutely. All nonprofits are in the business of selling solutions, and they all have a target market beyond their service population: the people they rely on to fund those solutions. To reach them, nonprofits need to use many of the same prospecting and pitching techniques as entrepreneurs.
Bright: Entrepreneurial skills are required for nonprofits to remain relevant and competitive in their ability to harness resources. Given increasing competition for funding, donors’ interest in sustainability alone should push nonprofit leadership to start thinking more entrepreneurially.
The nonprofits that survived the great recession adopted entrepreneurial skills to become more sustainable and push themselves to the next stage in their development. One example of that is investing in technology like apps and social media. If nonprofits stuck with 20th century communication methods, they’d find it challenging just to reach people.
Douglas: All nonprofits would benefit from another way entrepreneurs think differently: being willing to fail.
Ward: And to learn from it!
Douglas: Too often in the nonprofit world, we don’t look at a failed venture as something to be understood and re-attempted. Maybe the issue was the wrong market, or the wrong time of year, or another factor—an entrepreneur understands that an idea you believe in is worth another try.
Facilitated by David Terraso, communications director for GCN.