April 17, 2009 | Read Time: 2 minutes
Rubicon Programs is often held up as a model of what successful nonprofit-run business looks like.
The San Francisco Bay Area charity operates two businesses –- a landscaping and grounds-maintenance service and a bakery –- that generate about $18-million annually and provide training and employment for roughly 250 people who are poor or have disabilities.
But for the last several years, Rick Aubry, Rubicon’s long-time president, began to question just how successful the organization’s effort were, he told participants at the Social Enterprise Summit.
“I’ve really personally questioned, Given all the time and energy and sweat and worry that we’ve had, has all of that been equal to the impact that we’ve had?” he said. “And I came to the conclusion: maybe not.”
With foundation grants, Mr. Aubry and several other Rubicon employees have been able to step away from the day-to-day operation of the organization to think about how to create a business that could operate nationally and to investigate business opportunities.
The group, said Mr. Aubry, tried to answer several different questions, “Are there business opportunities that exist that a nonprofit or a hybrid actually has a competitive advantage in achieving, that scales, and that we could get the capital we need to go to scale?”
After interviewing scores of nonprofit leaders who run businesses, researching a wide range of possible businesses, and doing in-depth feasibility studies on several ideas, Rubicon National Social Innovations, as the effort is known, has identified two businesses that it is now developing: mattress recycling and an employer-based payroll advance service that would be an alternative to exploitative payday lenders.
Rubicon is already working with nonprofit organizations in San Jose, Calif., to test the mattress-recycling business, and plans to start another test in Philadelphia later this year.
In the past, Rubicon Programs, along with many other nonprofit groups, was guilty of following “the Andy Hardy school of social enterprise,” Mr. Aubry told conference participants.
“Hey guys, Let’s start a business for those men and women sitting outside our door,” he said. “Let’s go to it, kids!”
While that approach often draws on a lot of enthusiasm and energy, Mr. Aubry said, it often overlooks the basics of what makes a good business.
“Is there really a market problem that we’re solving?” he said. “Or are we setting up businesses that the bigger we get, the more difficult they are, that we have to keep subsidizing them more and more?”
