April 21, 2016 | Read Time: 5 minutes
Ken Davenport was volunteering with the Armed Services YMCA and other veterans charities when he noticed a troubling pattern. Smart nonprofit leaders who were experts in their organizations’ services were getting so bogged down by administrative problems they couldn’t devote enough time to carrying out their groups’ missions.
He was also shocked by how many charities were running successful programs but struggling from month to month just to keep their lights on.
“They know a lot about their field but they don’t know a lot about running a business, or IT, or hiring people, or accounting — a lot of that infrastructure that becomes a challenge as you grow,” he says.
Mr. Davenport knows a thing or two about grappling with back-office challenges. A serial entrepreneur who has created four businesses, he now leads Mission Edge, a nonprofit that provides core back-office and other services to San Diego-area charities.
Nonprofits often get outside operational help, hiring for-profit tech, accounting, or payroll firms to assist with specific tasks. Some nonprofits also provide these services to other charities.
Mission Edge differs in the breadth of services it provides, allowing nonprofits to get most or all of their administrative help from a single source at low cost.
Finding a Lifeline
A Reason to Survive, a 15-year-old charity that helps youths facing adversity, used Mission Edge’s services for the first time two years ago. The nonprofit was thriving, creating new programs and serving more youths, but it had a small staff, and as it was settling into a new office its chief operating officer quit. Founder Matt D’Arrigo had to hire a new head of operations while dealing with growing administrative needs.
“We didn’t have the luxury of going through a long hiring process, so I called [Mission Edge] and got them in here that week,” Mr. D’Arrigo says.
Mission Edge sent in a human resources employee and someone to help manage finances, and it conducted an audit to determine what other office services the charity needed most.
“In addition to helping with the day-to-day, they were able to build our long-term policies and systems,” says Mr. D’Arrigo. “If I’d had to dive into all of the finances and human resources when I was trying to hire a COO, I would’ve drowned.”
New Career
After 20 years of starting and growing mostly technology-related companies, Mr. Davenport decided in 2010 that he wanted to do something different with his life — something where he could use his entrepreneurial expertise to help others.
He joined the San Diego chapter of Social Venture Partners, a network of donors that provides free consulting and other services to nonprofits. There he found a group of like-minded businesspeople who were devoting themselves to helping local charities, and who were spotting the same struggles among charity leaders that he had seen.
Four years ago Mr. Davenport and several of his Social Venture Partners friends started Mission Edge. The organization has since worked with more than 140 nonprofits, providing human resources and accounting services, leadership coaching and mentoring, a fiscal sponsorship program, and other services. It provides back-office services to about 18 nonprofits right now, and is a fiscal agent for 32 organizations.
How It Works
Mission Edge’s model works on the premise that many nonprofits can’t afford to hire full-time accountants or CFOs with nonprofit expertise. It hires human resources and accounting officers and assigns them to multiple nonprofits that sign on for back-office services. The setup saves charities money on benefits and other overhead because the workers are employees of Mission Edge, not the charities themselves.
“We provide the staff and oversight and quality control so they don’t have to worry about who’s sitting at their QuickBooks on a week-to-week basis, and they’re focusing on their mission,” says Mr. Davenport.
Taxing Process
Mission Edge also can help a prospective start-up charity do a test run of its operations before going through the hassle of securing nonprofit status. A start-up can sign on with Mr. Davenport’s group and use its tax-exempt status to test ideas and programs. If the results are good, Mission Edge can help with the paperwork needed for 501(c) 3 status. If not, the new group can close up shop without a lot of fuss.
Mission Edge started out with a $100,000 grant over eight years from San Diego’s Parker Foundation. About 95 percent of its revenue comes from fees; it charges its nonprofit clients about 7 to 9 percent of what the charity raises.
Like most of its nonprofit clients, Mission Edge operates with little financial wiggle room.
“When we started Mission Edge we assumed the [nonprofit] community would help subsidize our fees with donations,” Mr. Davenport says. “What we found is that it’s difficult to find individuals or organizations that will fund overhead, so we’ve had to figure out a way to do this on almost exclusively earned revenue.”
Still, he continues to work to find outside financing that will help Mission Edge increase the number of nonprofits it serves and expand its services for returning customers like A Reason to Survive.
Mr. D’Arrigo’s youth charity is growing again and has hired Mission Edge a second time to help create new human resources and operations plans.
“Having them as part of that process brings a level of security and trust,” says Mr. D’Arrigo. “I always have so much going on running a nonprofit and programs; they help us do our jobs better so we can focus on what we do best.”
