The "1-Minute Tuneup" is a regular feature of the npEnterprise Forum. Its purpose is to offer you a quick shot of useful information for your nonprofit enterprise work. It's written by Rolfe Larson and Andy Horsnell. We welcome your input and suggestions.
News and Events
Check out Social Edge's current online event, What Does It Take to Be a Social Entrepreneur? Most of the discussion addresses opportunities for socially-motivated "innovation," in all sectors, which is much broader than the earned income focus of this Forum. Yet many of the insights and perspectives offered are interesting, and some are downright inspirational. The live event runs until October 5. www.socialedge.org
Statistics - "On average, survey respondents currently operating ventures say that their enterprises generate 12% of annual net revenue." Source: Massarsky & Beinhacker, www.nonprofitquarterly.org/section/343.html "For 501(c)3 nonprofits, earned income accounts for 64% of nonprofit revenues, or $486 billion." Source: Michael O'Neill's book Nonprofit Nation. Posted by David Rendall 9/19/03.
Definitions - Earned income: "The quid pro quo exchange of a product or service for monetary value.... includes such elements as tuition, membership dues (when dues purchase tangible benefits), sale of intellectual property, rental or consulting fees, and commercial services." Earned Income Strategies: "Attempts to capitalize on the earned income potential of a program or other organizational asset in order to cover more of the program's costs or to offset a portion of the organization's overall expenses." Social Enterprise: "Any earned income business or strategy undertaken by a nonprofit for the dual purpose of generating revenue and achieving the nonprofit's stated social mission." Sustainability: "The ability of a nonprofit to pursue its mission indefinitely through a combination of earned income, charitable contributions and public sector subsidies." Self-sufficiency: "The ability of a nonprofit to pursue its mission indefinitely through earned income alone without relying in whole or in part on charitable contributions or public sector subsidies." Posted by Jim McClurg 9/18/03
Suggested ReadingThe most comprehensive, overall textbook on nonprofit marketing is Andreasen & Kotler's Strategic Marketing for Nonprofit Organizations, 6th edition (2003). It's thorough coverage of just about everything under the sun regarding nonprofit marketing strategies makes it a useful reference manual. (Caveat: it can be dense at times.) Copies are often available for ~$50 at amazon.com and half.com
Did You KnowYou can access a searchable database of npEnterprise archives, just by getting a Yahoo ID (free at www.yahoo.com) and "associate" your Yahoo ID to your npEnterprise subscription. Email us if you have any problems doing this.
Do you know of a useful tool, a book or magazine article, or an upcoming event that you'd like to share with other members? Let the group know by emailing your idea to npEnterprise@yahoogroups.com
From the moderators of the npEnterprise Forum:
- GOOD MORNING!
The 1-Minute Tuneup is a regular feature of the npEnterprise Forum, the
official listserv of the Social Enterprise Alliance. SEA is supported by
contributions from members like you. Support the social enterprise movement
by becoming a member at http://www.se-alliance.org/membership.cfm
SPREAD THE WORD
Want to let a friend or colleague know about the npEnterprise Forum? Send
them to our web site: www.npEnterprise.net
STAND UP AND BE COUNTED
If you are connected to an existing social enterprise, please take this
survey to help the Social Enterprise Alliance explore the topic of market
research, specifically whether or not any was performed prior to starting a
social enterprise. Go to: http://www.surveymonkey.com/s.asp?u=33291700452
The results will be shared via this listserv.
(1) Re: Toronto Enterprise Fund -- Posted November 29 by Janet Murray
Since its inception in 2000, the Toronto Enterprise Fund has supported the
development of 15 social purpose enterprises working with homeless and
low-income people. TEF has also invested in research and evaluation to
document and disseminate our learning about effective practices in
developing enterprises and to assess what happens to the low-income people
who are involved in those enterprises.
We've been following the recent conversation thread that discussed the
evaluation of social returns in this work. Over the past five years we've
been using an asset-based Sustainable Livelihoods framework to explore five
critical dimensions of results. We've had a great deal of success using
participatory and collaborative research methods to document outcomes
(particularly the harder to measure qualitative indicators).
The Business of Inclusion explores both sides of the double bottom line.
Some papers look at the business side of the equation, supporting
feasibility assessment and business planning, but it is the papers that look
at the social side of the equation that we think provided the most
significant learning. [More info at http://www.torontoenterprisefund.ca/%5d
(2) Re: Valuation of Knowledge Assets -- Posted November 1 by Warren
Valuation of knowledge assets is a tricky business. The true "bottom line"
is that an asset is worth "what someone is willing to pay for it". That
being said, benchmarks are a good place to start in thinking about what you
might want to ask of a buyer. There are four approaches that we have used in
similar situations. Generally, we try to do as many of these as are
applicable and use the range of values to guide negotiation:
A) If there is a revenue / profit stream attached to the asset (such as a
earned income business), then there are pretty standard methods for valuing
cash flow that can be found in any finance text book. This is standard
B) Think of the opportunity cost of what it would take to recreate the
knowledge asset if the buyer just replicated the work instead of purchasing
it (including the value of lost time)
C) Think of the opportunity cost of doing something different that
accomplishes the same social / financial result
D) Look at the price of other assets or situations that are similar in
I think B and C are of particular value for a non-profit to non-profit sale.
A is the gold standard for a non-profit to for-profit sale. It is generally
a good idea to have a third party do this analysis.
(3) Re: Legal Structure for an Enterprise -- Posted November 2 by Allen
You can see a basic description and comparison of different types of
corporate entities at http://www.allbusiness.com/articles/content/9932.asp.
It's a basic overview, and a good place to start depending on your level of
knowledge. Generally, there are two primary considerations when choosing a
corporate structure in a situation such as yours: limiting liability and
avoiding unnecessary taxation. Flexibility of decision-making and governance
and minimizing the burdens of management and compliance are also important.
I know it sounds trite, but every situation really is different, depending
on the type of business and charitable activities you plan to conduct and
their degree of relatedness, the capital structure of the enterprise and the
expectations of investors, how funds will flow between the two
organizations, the levels of risk involved, etc. So there is no "right" or
"wrong" way to structure the enterprise. It is more a matter of making
trade-offs between the advantages and disadvantages of each form of entity
and devising a combination that fits your needs. Experience is very helpful
in this regard, because there are many subtleties, and just knowing the
right questions to ask makes a big difference in getting a result that will
allow you to go forward in the way that you want.
Any subscriber can email a message to the npEnterprise Forum. Just send it
to npEnterprise@yahoogroups.com, or click "reply" to an existing message,
editing the subject to fit your subject. Please send your message as
"plaintext," without attachments. Be sure to include your name and
organizational affiliation. If you want to send a message DIRECTLY to the
author of a posting, be sure to cut and paste his/her email address into the
"to" portion of your email.
Also, if you wish to get at most one email per day from npE, you can choose
to receive the daily digest. That can be done by going to
www.yahoogroups.com and signing in under your yahoo id (if you have
one),then click on npEnterprise and finally Edit My Membership. Or you can
just ask us to do it for you - our email addresses are listed below.
The moderators reserve the right to select messages for distribution to the
list, to combine messages, and to publish distributed messages (with proper
attribution) in other venues.
Thanks! From the moderators of the npEnterprise Forum:
Rolfe Larson, Rolfe Larson Associates (Rolfe@...) and
Andy Horsnell, Authenticity Consulting LLC (andy@...