January 20, 2005 | Read Time: 1 minute
Nonprofit groups, especially those promoting “progressive” causes, need to be more aggressive in looking for ways to earn revenue to help finance their own operations, say Michael H. Shuman and Merrian Fuller in an article in The Nation (January 24). In the current political climate, say the authors, business ventures provide “one of the few avenues open for creative progressive initiative,” adding that such social entrepreneurship can be a “positive alternative to conventional fund raising.”
Examples of revenue-generating enterprises that support nonprofit groups include a New York used-book store that helps finance a homelessness charity, and a chain of restaurants in Thailand that provides revenue for an AIDS-education program.
“Every nonprofit may not be able to generate all its funding through revenue generation, but every nonprofit certainly can generate a greater percentage than it is doing now,” say the authors.
While there is concern that a nonprofit organization’s mission could be “warped by business values,” the authors say there are also dangers in seeking donations from wealthy people and foundations, both of which are increasingly “setting their own social-change agendas.”
Structurally, the authors say, a nonprofit group’s entrepreneurial endeavors can be organized as either a for-profit, a separate nonprofit group “with a clear revenue-generating mission,” or a department of the existing charity with a “strong measure of autonomy.”
“Nonprofits must operate at arm’s length from related revenue generators,” the authors say.
The authors conclude by challenging “fellow activists” to “wean” themselves from the “charity habit” and to increasingly think about pieces of their agendas that can be “framed as a revenue generator.”
The article is available online (http://www.thenation.com/doc.mhtml?i=20050124&s=shuman).
