Cultivating the Business Side of Charity

A growing number of nonprofit groups seek ‘social entrepreneurs’ to start money-making ventures

Debra Bruce has become accustomed to the strange looks she receives from people when she reveals what

she does for a living. “You know when a dog cocks his head in a sort of a confused way? That’s what I usually get,” says Ms. Bruce, whose title of senior director of business development for the Center for the Homeless, in South Bend, Ind., constantly throws people off.

“When I tell people where I work, some automatically think I’m a social worker,” she says. “Others think I’m a fund raiser. I’ve even had some people think that my job is to help drum up more homeless people, since that’s our ‘business.’”

Ms. Bruce’s job involves none of the above. She was hired about two years ago to oversee the center’s for-profit business venture, CFH Landscaping — and perhaps more importantly, to research and analyze the viability of new social-enterprise opportunities and sources of revenue for the charity. With a background that includes work as a financial consultant and a community-foundation program officer, Ms. Bruce had what her employers considered the perfect mix of for-profit and nonprofit experience. Since being hired by the center, she has helped it start its second venture, CFH Painting, a commercial painting business that began last April. Both enterprises have not only generated money for the organization — $228,000 from the landscaping business and $41,000 from the painting effort last year, according to Ms. Bruce — but also helped it fulfill the charity’s mission to help homeless people find skills training and jobs.

The position Ms. Bruce holds is still a rare find at nonprofit organizations, but one that is becoming more common. With government and foundation grants increasingly tough to win, more charities are rethinking their fund-raising efforts and creating their own for-profit business ventures. Some organizations have also begun dedicating resources to hire business-minded managers of those efforts, often creating positions along the way — and creating opportunities for job candidates with significant for-profit experience.

An Emerging Trend

Job descriptions vary — “director of business development,” “director of creative enterprises,” and “vice president of social enterprise” are among the titles bestowed on these managers. But with more academic institutions offering programs in social entrepreneurship and more community groups offering consulting services to charities looking to start such ventures, this type of position is emerging as one of the hottest jobs in the nonprofit world.

Samantha Beinhacker, deputy director of the Yale School of Management’s Goldman Sachs Foundation Partnership on Nonprofit Ventures, says a trend is clearly under way. She points to her group’s membership directory of people interested in social entrepreneurship, 70 percent of whom are employees of nonprofit organizations. Of those, 7 percent currently hold titles such as “director of business development,” “director of social enterprise,” or the like. She notes that while that percentage may seem small, her group’s polls also show that 43 percent of its 4,200 nonprofit members’ organizations are already operating a revenue-generating business and an additional 47 percent plan to start one in the near future. “Clearly, with nearly half of our nonprofit members saying that they plan to start a business soon,” she says, “there will be an increase in job opportunities available in this field.”

Connecting to Local Businesses

With such jobs still being defined, the duties of people who oversee money-making ventures vary depending upon the types and number of businesses being operated, and at what stage those businesses have reached in their evolution.

Ms. Bruce’s daily activities vary widely. One day, she may be creating financial projections for either or both of her charity’s businesses. The next, she may be dealing with a personnel issue, or writing a business plan for a potential new venture. She works very closely with the fund-raising staff but says that her job is very different from that of the director of development. While she may help write grant proposals, she doesn’t very often solicit donors directly. Instead, she spends a lot of her time building relationships with community leaders and business owners in the painting and landscaping industries.

For example, Ms. Bruce is a member of the local homebuilders’ association and sits on several committees, which offers her the chance to rub elbows with builders on a regular basis. These contacts often need painters or landscapers, or they know of others who do. “Being at that table where discussions about the construction market are happening is key for keeping a grasp on the needs of the market,” she says.

The ability of Ms. Bruce to operate smoothly in both the business and nonprofit arenas was one of the qualities that landed her the job, says Brian Connor, the Center for the Homeless’s interim executive director.

“In our minds, her mix of experience in both worlds was ideal because most other candidates we saw fit only on one side or the other,” says Mr. Connor. “The business skills of someone from a purely corporate environment might be better than someone with just a nonprofit background, but a lot of times, I’ve found that those people just don’t understand the culture of nonprofit organizations. And if they don’t understand how we operate, they can’t be effective here. So, for us, it was better to find someone with both types of experience.”

Serving Two Missions

Indeed, one of the biggest struggles of this type of job is balancing the social mission of one’s charity against the business mission of turning a profit, says Hope Spruance, vice president of social enterprise at the Chicago Children’s Choir. Ms. Spruance was hired almost three years ago to help the organization develop new ways for the charity to earn income. She now oversees a singing-telegram business, a consulting arm, the sales and marketing of the choir’s CD’s and other merchandise, bookings for concerts, and all corporate sponsorships.

Almost a year ago, the charity also became involved in running a Ben & Jerry’s ice-cream franchise, and it is this venture that often tests Ms. Spruance’s dexterity at walking the fine line between her organization’s social and financial goals. For example, she says, while many for-profit ice-cream parlors in the Midwest might cut back on staff during the slow winter months, her charity has other concerns besides the store’s profitability. Because it runs the parlor not only to earn money, but also to provide job training to local youngsters, Ms. Spruance has opted not to lay off workers when the weather turns cold.

Coming up with the money for extra wages and operational costs during such lean times is solely her responsibility. “It isn’t easy to make these types of decisions,” she says. “And someone with only a for-profit background might have an even harder time making them.”

Jennifer Shewmake, director of creative enterprises at the Latin American Youth Center, in Washington, finds that her dedication to her charity’s mission has been a much bigger asset to her success than her minimal business experience has been a liability. While Ms. Shewmake did spend a few years as an assistant manager of a coffee shop while in college, she has had no formal business training. Most of her career has been spent running nonprofit programs and fund raising.

And yet, in her four years at the Latin American Youth Center, she has managed her organization’s two Ben & Jerry’s franchises, and has led the efforts of its new venture, the LAYC Art and Media House. This complex, set to open its doors on April 1, will offer educational instruction in the arts, and will generate revenue by the rental of its photography darkroom, video- and audio-production equipment, graphic-design computer facilities, fine-arts studio time, and art-gallery space.

Ms. Shewmake says she has been able to pick up on the job all she needs to know to do her job effectively, such as how to read a profit-and-loss statement and how to write a business plan.

“I sort of fell into this position,” she says, explaining how she started off as a “special-projects coordinator” and just happened to be in the right place at the right time when the Ben & Jerry’s opportunity came about. “While it’s worked out great for me, I could see, given how we’ve grown with our social enterprises, how the organization may have made a different hiring decision — gotten someone with an M.B.A. or stronger business experience — if they had to do it all over again.”

Key Credentials

As nonprofit organizations become more sophisticated in their social-enterprise activities, they will — and should — become more discriminating when they hire managers for those efforts, says Evan Hochberg, managing director of Community Wealth Ventures, in Washington.

Mr. Hochberg’s organization, a for-profit subsidiary of Share Our Strength, an antipoverty charity, provides training and support to nonprofit organizations that want to start business ventures. He says that charities looking to hire someone for a “director of social enterprise” or similar position should ideally seek out a candidate with the following qualifications:

• The ability to strategize and analyze. “You need someone who is capable of identifying new business opportunities and knows how to evaluate whether or not those opportunities are truly promising,” Mr. Hochberg says. These are skills that come from having a master’s in business administration or from having been a financial consultant or venture capitalist, he adds.
• Experience operating a business. “If you can find someone who understands the obstacles you are likely to run into when you open the doors to a business and has experience dealing with those obstacles, that’s key,” he says. But he adds that it is often difficult to find both analytical skills and in-the-trenches business experience in a single candidate.
• Devotion to a charitable mission. While some directors of social enterprise say that this is the most important qualification, Mr. Hochberg disagrees, saying that it often isn’t much of an issue because very few people would apply for such a position at a charity unless they are at least somewhat committed to its cause.

Committing Staff Resources

While hiring the right person to lead a charity’s business ventures is crucial, probably more imperative is finding someone at all, says Mr. Hochberg.

“With all the business-planning and market-research consulting we give, the single biggest piece of advice we give our clients is to make sure that if they are going to be involved in business activities they have someone totally dedicated to those business activities,” he says.

And that doesn’t mean just throwing the additional responsibilities onto a staff member’s already full plate. Mr. Hochberg says that to save money, often an organization’s chief financial officer or head fund raiser will take on these duties — or, worse, they will give them to a program manager who may have some interest, but not a clue about business matters.

Mr. Hochberg’s organization polled 72 nonprofit organizations engaged in businesses and found that almost half (43 percent) asked people on their staffs to start their ventures. Thirty-nine percent also acknowledged that these staff members had little or no business experience. When it comes to maintaining business ventures, he says, “getting nonprofits to dedicate human resources, let alone the right human resources, is the biggest challenge.”

Ms. Bruce, from the Center for the Homeless, echoes his concerns. “My impression from my peers is that many nonprofits are still trying to figure out whether or not they should make a business investment at all, and haven’t really gotten around to thinking about who might oversee those efforts,” she says.

Still, she says she believes that charities will begin to seek more people like her.

“This job is a huge juggling act that is really the marriage of two sectors, and it can get pretty complicated,” she says. “I don’t think jobs like mine are going to increase overnight, but I would say that in 20 or so years, we’ll definitely be a force to be reckoned with.”

Cassie J. Moore contributed to this article.