By Noam Kostucki
You may know a charity that makes money from selling products and services. Maybe you wonder how you can do the same, but have no background or experience in doing so? Perhaps you’re put off by the idea that it might be risky? Don’t be.
I often meet people from charities that struggle through the process of selling goods or services as a way of raising income. So, to help all those looking to take their first steps in the social entrepreneurial world, I’ve put together a short guide to help you on your way.
You might be impressed to learn that, according to the Charity Commission, charities in the UK have raised over £52 billion, of which broadly five per cent is claimed to come from trading. On the other hand, I am amazed by the Hidden Social Enterprise report from Delta, which shows that ethical and social trading represents a staggering potential contribution to the UK economy of £110 billion.
It would seem that trading in itself is no longer the savviest option. Only the organisations that can adapt to this new ethical opportunity will see a growth they could never have expected under the old paradigm. So if profit organisations are starting to realise that it pays to be nice, then why can’t charities capitalise on ‘being nice’ as a way to boost their income too?
Here are three key things to think about if you’re looking to make the most of your assets. And I’ve provided some examples too, so you can get an idea about what other people are already doing.
1. What are you best at?
What is it that your charity does best? Is it a skill, an attitude or even a specialised knowledge you have? How do you help others and what helps them most?
For example, look at the cancer charity Odyssey. This charity gives a one-week course of activities to help cancer patients boost their self-confidence and rebuild shattered spirits, but they were facing an uncertain future because of a drop in their income. Thinking outside the ‘charity’ box and with the help of some social enterprise expertise they are now developing the same course for healthy people who are looking for an injection of positivity in to their lives and who are happy to pay for the service. Odyssey have also now tapped in to the corporate market and are tailoring their course for company team building days which has a huge potential for growth and a secure source of income.
This is a great example where using your existing knowledge and charitable services along with a little commercial thinking can mean finding new sources of fundraising for your charity.
2. What is your business model?
You need to find a model in which your beneficiaries don’t lose out. You should be making money from people who want the same benefits as the groups you help by tailoring your services and products to a wider audience that is ready to pay. Your customers can be individuals and/or companies.
My favourite example is TOMS shoes: for every pair of shoes you buy, they send a new pair to a child in need. So the more they do for a good cause, the more money they make. The more money they make, the more they do for a good cause.
It is best when your charitable purpose is linked to making profit, directly or indirectly.
3. Use technology to make your life easier
Don’t do it all yourself, you can’t be an expert at everything. Social media can be a great tool for charities to make the most of the chance for free publicity and be sure to use all the free services available.
In the UK, we have initiatives like Eclector.com. This for-profit social enterprise helps you build your own bookshop online at no cost. They host the shops and manage all customer service issues. All you have to do is tell your supporters about the books. Every thousand visitors generate an average of £50, with so many charities having large donor bases it’s a great opportunity to generate new income for your charity.*
There are also a number of free services that can offer you a variety of help. Websites such as getsatisfaction.com and uservoice.com can provide you with feedback from customers; ping.fm and hootsuite.com will help you manage your social media and you can even create your own social network for free at sites like webs.com. Ultimately you need to explore what’s out there and make the most of the free technologies.
Seeducation is my own social enterprise company and we look to help individuals and organisations make money whilst having a positive social impact. Right now we are working on preparing a free eLearning tool called, ‘Making money from doing good’, thanks to a generous donation of a £40,000 eLearning platform by GrowthEngineering. We’ll keep you posted as soon as this is up and running.
In the meantime, keep an eye out for social entrepreneurship: a new era has definitely started.
Having done this extensively for a large nonprofit in Canada, generating $20 million of gross revenue in a $75 million operating budget, I feel compelled to add a couple of cautions, if I may.
ReplyDelete1. Bring in a business/marketing expert to develop the business and marketing plan. There's a huge risk hoping that nonprofit employees have the tools and skills to do this if they've never operated a business before.
2. Separate the governance of your nonprofit board from the board of the social enterprise. The skill set and background for one often doesn't translate well to the other.
3. Create a sub-brand or separate business entity for the social enterprise that can compete head-to-head with the for-profit sector. Otherwise, clients will expect you to charge less than your business competitors because you are a nonprofit. They won't care that your infrastructure costs are the same as a for-profit venture.
4. Hire new staff to work for the business unit - ones that have business experience. Trust me on this one.
5. Make sure there's a commitment to put money back into the business each year as an investment for marketing, training, growth, etc. The nonprofit board may put pressure on the business unit to fork over all its profits for charitable services and programs. That will spell the end of the business.