Given the difficulties so many non-profits face when looking for project funding, the need to identify and develop sources of earned revenue is becoming increasingly important. Last week Conveners.org Member ONE WORLD partnered with the Harvard Business School to host a conversation about the best sources of earned revenue for non-profit organizations.  

Scott Saslow from ONE WORLD and Harvard Business School’s Juan Carlos Velten set the scene for the event by describing some changes in the non-profit sector, from new financial models as seen in the Boston non-profit InnerCity Weightlifting, to the new millennial mind-set where doing good doesn’t necessarily mean working in a non-profit.

The event kicked off with a fireside chat with Raquel Pinderhughes, founder of Roots of Success. With over 18,000 graduates of the program working in 125 different environmental careers internationally, it’s clear this non-profit is doing well. Having worked in other fee for service non-profits, Raquel was familiar with the model and was able to apply what she had learned.

As audience member Katie Cooney said, “Twenty first century non-profits need to find a new model. They need a new revenue stream that can provide both financial and business value.” The fee for service model employed by Roots of Success has enabled them to do this very effectively. Her advice to others wanting to do the same? Create a strong reputation, be able to iterate fast – “invent the bicycle as you’re riding it,” and have systems in place to evaluate progress.

Raquel was not the only one from an organization where iteration had played a key part of the creation of their non-profit. Mark Wexler, from Not for Sale described the evolution of Not for Sale, as “an iterative process built on partnerships.” He pointed out that while non-profits tend to be great at building relationships, they need a way of maintaining them and having an economic incentive could be the answer.

Nancy Gallegos from Ashbury Images agreed saying, “the event made me realize this is a common problem.”  Non-profits are often so busy on the ground they don’t have the time to get out there are speak to people and collaborate with others as much as businesses do. The event opened my mind and reenergized me. For Mark, the solution was the creation of, REBBL, a herbal drink that donates 2.5% of its revenue to Not for Sale. In doing so REBBL provides an additional revenue stream to help fund the Not For Sale mission.

Like Not For Sale, Doneice Sandoval from Lava Mae is on the path to a way to generate earned revenue without the help of investors.  After realizing the potential for advertising as is done on San Francisco buses, Doneice is applying the same principal to the Lava Mae fleet.  Her goal with digital advertisements is to not only create revenue, but also act as an effective communications network to contribute to spreading their message, as well as those of other likeminded organisations.

Seventy percent of Great Nonprofit’s funding comes from earned income. Perla shared the need to have a clear framework for who you are willing to take money from, saying it’s better to get ahead of the problem by defining this before the offer comes along.  For Perla, this means never accepting money from companies with values that don’t align with your own, as well as declining offers from VC’s due to their unrealistic expectations on ROI.

During the panel discussion it became clear that there are a variety of benefits that earned revenue can bring to a non-profit organization. For example, by bringing in a Head of Sales at Great Nonprofits, the mind-set has shifted from one which revolves around limited resources, to one of thinking and acting big. Less financial constraint has further enabled the possibility of scaling.

Doneice noticed a shift in leadership style with the opinions of fleet drivers being valued just as much as managers and board members while for Mark, earned revenue gave him the ability to invest in entrepreneurs that knew how to scale resulting in even bigger impact.

A number of interesting discussion points arose from the Q&A portion of the evening.  There was debate around the role of philanthropy in Silicon Valley.

A recent report, The Giving Code, found less and less philanthropic giving is going to local non-profits in Silicon Valley specifically. However, in contrast to this Raquel’s personal experience showed that despite less financial giving, people in the Bay Area are much more willing to give up their time.  Either way, the discussion highlighted this as a big opportunity to further engage community members in the Bay Area.

An interesting discussion also arose around millenials changing the way non-profits are run. Juan described millenials as the first group of people that want to “have their cake and eat it too.” Non-profit is “not the only sector to do good in now” and Perla pointed out this is leading to fewer young people wanting to work in non-profits. Therefore, a big consideration for non-profits should be the ability to offer equity when creating earned revenue. This might be one way in which non-profits can appeal to millenials and compete with the many benefits offered by large businesses.  

As well as hearing from our speakers, event attendees had plenty of opportunity to network and reflect on what they had heard.  Mary McCargar from MidPen Media Center summarised her feelings about the event: “I have run businesses and non-profits for 30 years–finding earned revenue streams is a fantastic idea!”