Nonprofit Organizations Look to Build Recession-Proof Business Ventures

With the economy making it challenging for nonprofit organizations to start or expand businesses that provide revenue for their programs, many groups are looking for ventures that will still be popular no matter how long the recession lasts.

For instance, now that it is harder to sell produce elsewhere, more farmers are expressing an interest in growing fruits and vegetables for Appalachian Harvest, an organic-produce business run by Appalachian Sustainable Development, in Abingdon, Va.

Finding enough growers to meet demand has been the business’s biggest challenge, according to Kathlyn A. Terry, business operations manager at the charity.

Sustainable Woods, the organization’s other venture, helps local landowners log responsibly and then processes the timber that is cut into flooring. Despite the slowdown in construction, sales are up slightly, and in the next few months the business expects to receive certification of its environmental practices from the Forest Stewardship Council.

The certification should make the business’s products more attractive to environmentally conscious people.

“It’s almost a defensive move,” says Ms. Terry. “We were managing our forests sustainably anyway. We’re just trying to make sure that we have more access to markets by getting someone else independently to say, ‘Yes, they’re managing their forests sustainably.’”

Going Green

Hope Services, a charity in San Jose, Calif., that provides assistance to people with developmental disabilities, has started recycling mattresses.

Early in the downturn, customers of the charity’s doggie day care declined, and Hope Services closed the business. The number of contracts the organization has with companies for packaging, manufacturing, and data destruction have also decreased.

“What we’re doing is trying to focus on recession-proof activities,” says John M. Christensen, the charity’s chief operating officer.

The Doe Fund, in New York, runs many businesses to provide job training to people who are returning from prison, recovering from addiction, or homeless. The group’s street-sanitation and extermination businesses are both growing despite the difficult economy, and while a small direct-mail venture the organization has run since 1990 is losing business, the Doe Fund is in the process of transitioning it to scanning, in anticipation of increased demand for converting paper medical records.

A little more than a year ago, the organization started a business that collects waste cooking oil from restaurants and other institutions that prepare a lot of meals; the Doe Fund then sells the oil to be converted into biodiesel fuel. This year the business expects to collect about a million gallons with an eventual goal of three million gallons a year.

The Doe Fund is a minority partner in a new company, Legacy Oil, which is trying to raise $14-million to build a biodiesel refinery in the Brooklyn Navy Yard.

George McDonald, founder of the Doe Fund, says that even though capital for new ventures is scarce, particularly now, he is confident that federal incentives combined with the prospects for sustainable energy will attract investors.

“If you were trying to finance something normal — a dry-cleaning store, a restaurant, or something like that — oh, my Lord,” he says. “It’s very difficult to go into a new business that doesn’t have some angle to it.”