Not For Profit Business Ventures - The US Analysis

Facing funding cutbacks from foundations and government sources, many Not for Profits have started their own business ventures to generate new revenues, with promising results according to a new US report into charity business from consulting firm Community Wealth Ventures.

The group analysed 105 ventures and partnerships operated by seventy-two American Not for Profits and found that 69% of businesses were profitable or at least breaking even.

The report found that most are taking an average of two years to move into profit.

Called “Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability” (126 pages, PDF) also reports that 90 percent of the organisations started businesses in line with their missions.

As in Australia, the most popular enterprises are retail and thrift stores.
In Australia Not for Profit business ventures have been the domain of the larger welfare organisations…and for many it’s not such a new concept.

The retail store business initiatives of the Salvation Army stores have been operating in some form or other for the past 116 years.

Salvos Stores as they are known are aimed at developing a Donor base for gifted and new products and provide Retail Customers with goods at affordable prices.

Also The Smith Family (TSF) has a tradition of engaging in commercial activities in support of the organisation’s key aims, generating resources through its own business projects dating back to the 1960’s.

In 2001-02, its Commercial Enterprise contributed $4.7 million to The Smith Family, generated from sales and other income of $27 million.

TSF says the priority is to ensure the optimal financial return is generated from the funds the organisation has invested. It does so currently by operating a non-woven textiles manufacturing business as well as a clothing recycling and retail business. As well it has a network of stores offering good quality clothing at affordable prices.

TSF says the funds generated by the Commercial Enterprise are especially valuable because, unlike support received from many other sources, these funds have “no strings attached”.

Oxfam Community Aid Abroad Shops has 17 shops around Australia, as well as a mail order catalogue and online shop. But thrift shops are not the only business ventures.

Oxfam’s Ethical Investment Trust is designed for investors who wish to support environmental, social and humanitarian initiatives while earning a reasonable return on their money.

Oxfam Community Aid Abroad Travel Group organises community based tourism and travel tours to Indigenous Australia (Broome and the Dampier Peninsula; Lake Eyre and the Oodnadatta Track; The Kimberley; The Red Centre) .

The US report’s authors say the analysis outlines important lessons for groups looking to diversify revenue streams, provides case studies on successful ventures, and features essays from practitioners and funders in the field.

It was produced with support from Atlantic Philanthropies and the David and Lucile Packard Foundation.

If you would like an electronic version of “Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability” (126 pages, PDF) just send us an e-mail to probono@probonoaustralia.com.au.