The National
Assembly
Earned Revenue as a strategy for
diversifying income
National Center on Nonprofit Enterprise
Earned Revenues




What earned income is.
Why pursue Earned Revenues as a strategy.
Conditions of success.
Taking the right steps.
The Nonprofit Entrepreneur
Earned Revenues: terminology
Social Enterprise
Social Venture
Social Entrepreneur
Nonprofit Business
Commercial Venture
Affirmative Business
Social Business
Earned Income Initiative
Pricing a Service
Earned Revenues: definition
“…………earning income in a nonprofit
entails making products or services
available to organizations or individuals,
who pay a price that covers some, all of or
more than, the costs of these products or
services…..”
Earned Revenues: range of activities




Price for a service: Healthcare, counseling
Current service delivered to new audience
(stress counseling to for-profit employees)
Leveraging value of assets:
- reputation: cause related marketing;
- land: parking lot or natural gas
Unrelated business activity: Ben and
Jerry’s
Ben and Jerry’s
The National Park Service
Computer recycling
Charging for a service
Earned Revenues: a different type of
income?
1.
Needs
Clients
2.
Volatility
Dependency
Charity
3.
4.
Wants
Customers
Stability
Autonomy
Interdependence
Earned Revenues: Why?



More $!
More unrestricted $:
- management capacity
- independence……advocacy
To Manage Risk
- general diversification
- protecting particular activity
Earned Revenues: Why?

To Do more Mission

To Do Mission better

To Develop the skills and culture of the
nonprofit
To attract more of current types of revenue

Earned Revenues: range of activities
John Hopkins Listening Post Project
Commercial income
%t
 Improved/expanded Marketing 63
 Introduction of/raised fees
56
 Borrowed money
27
 Profit-making subsidiary
5
%e
11
15
<5
?
Earned Revenues: Why Not?

Too Expensive

Mission Drift

Management Drift

Other revenue “crowd-out”

Culture clashes/Divisions
Earned Revenues: How?
The Nonprofit Entrepreneur……..
…………who thinks economics
Earned Revenues: How?
Nonprofit readiness 1
 Clarity of Mission
 Client Focus
 Strategic Mind-Set
 Experience of Change
 Effective and Adaptable business systems
 Financial Health
Earned Revenues: How?
Nonprofit readiness 2.

Leadership:
- commitment
- consistency
- communication
- awareness of risks and opportunities
Earned Revenues: How?
Nonprofit readiness 3.

Marketing approach to work:
- focus on the 4 P’s
- ability to identify nonprofit’s assets
and their value
Ben and Jerry’s criteria












Nonprofit status
Annual operating budget of more than $5,000,000
More than 5 years in operation
Job training and life skills development programs for youth and
young adults, ages 15 - 21
Experience operating a social purpose business
Knowledge of the retail foodservice industry and/or franchising
The desire and capacity to operate a social enterprise business
A staff and board with small business expertise
An excellent credit history
Financial acumen and stability
A record of fundraising success
The willingness and the capacity to manage the complexities of
developing a new business
Earned Revenues: How?
Feasibility of strategy 1.
 Clarity of purpose
 Understanding of customers
 Customer focus
 Marketing approach


Clear business model
A product or service people are prepared to pay
for – enough to ensure achievement of purpose.
Earned Revenues: How?
Feasibility of strategy 2.
 People with appropriate experience
 Clarity of accountability
 Appropriate place in structure
 Planning
 Management
 Review and learning
10 steps to earned income heaven
1.
2.
Clarify what your nonprofit’ program and
revenue priorities.
Assess how well you raise and use
resources now: are your revenues
diverse; do you spend the right amount on
different types of fundraising; have you
assessed the efficiency of your program
staffing?
10 steps to earned income heaven
3.
Identify the most cost-effective changes that support
program and revenue priorities……and make these
happen.
Not enough unrestricted revenue…assets still underused…..
4.
Generate and select strategies:
- engage people for ownership;
- work on criteria first: assets + customer needs
= revenues; relate everything back to mission,
program and revenue priorities; risks and rewards.
10 steps to earned income heaven
5.
6.
7.
8.
9.
Assess feasibility and risk in detail, and
select options for business planning
Address structural and legal issues
Clarify accountability and reporting
protocols
Do the Business Plan
Find and secure money required for
implementation
10 steps to earned income heaven
10.
……….DO IT>>>>




Incremental steps
Testing and review
Roll-out
Communication, Communication,
Communication
Earned Revenues: How?
The Nonprofit
Entrepreneur……..
…………who thinks
economics
……to achieve mission
The National
Assembly
Earned Revenue as a strategy for
diversifying income
National Center on Nonprofit Enterprise