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DATE GOES HERE ARIAL 16 BOLD
Non-Profit Revenue Stream AlternativesThinking Outside the Box
Tom Wilson, Campbell & CompanyDaniel Ducoff, Case Western Reserve University
September 24, 2012
A Lorman Webconference
Daniel DucoffCase Western Reserve University
Associate Dean, Case School of Engineering
Rock and Roll Hall of Fame and Museum
Playhouse Square Center in Cleveland
Jewish Community Federation of Cleveland
Board member– Beachwood Schools Foundation (Ohio)
Commissioned an Honorable Kentucky Colonel– The highest award by the Commonwealth of
Kentucky
Shtickmeister
3
1) 30 years of encouraging donors & nonprofits
2) Classical musician, conductor, teacher, jazz
3) Weblog –
4) Certified trainer Peter F. Drucker The 5 Most Important Questions
5) University vice president, executive director, facilitator for dozens of nonprofit boards for strategic planning and visioning
Tom WilsonTrusted Advisor & Coach
Diversifying Revenue Is More Important than Ever
1) Governmental operating funds are being reduced
2) Fundraising is tough
3) Proceeds from smaller endowments are lower than we planned
4) Traditional sources of earned revenue are static or reduced
Yet personnel costs are up
5) Board members are seeking better opportunities for engagement in areas of expertise
Business
First, Boost Current Revenue Streams
Re-engineer all earned income streams
– Create a task force of all staff involved with creative board members who can think out of the box
• Don’t allow incremental growth – how do you double revenue in the next 3 years
• How can you use the Internet to boost your current activities
First, Boost Current Revenue Streams
Conduct fundraising audit to determine best ROI for contributed income
– You may have cut back too far
– What investments can you make to boost contributed income by 100% ? 200% ?
– Have you benchmarked top-notch, great fundraising programs in your community, in your nonprofit niche regionally and nationally?• Why can’t you be the best?
First, Boost Current Revenue Streams
Review every fundraising special event to maximize net-net results
– Net-net: net after expenses and net after all staff time is allocated to the project
Take your events to $100,000 net-net: as fast as you can
– Focus on one, spectacular, great event rather than a lot of small, nonimpact activities
First, Boost Current Revenue Streams
Get endowment revenue to 20% of budget
– Your long-term objective is 20% to 30% of operating revenue from endowment
– Create a 5-year plan and a quarter-century vision for endowment growth• Planned estate giving must play a role
– Get going
Scour Your Operating Budget for In-kind Donation Opportunities
Don’t pay cash for anything except salaries
Corporations may have tight budgets for cash contributions, but in tough times they love to give “stuff”
• You need to make it a win for them too
• University research equipment opportunities
Some Traditional Alternative Revenue Streams
Thrift Shop
Gift Shop
Educational materials– If you’ve got something unique, market it on the
Internet
Now, Think Outside the Box
Find a way to reinforce your mission as you diversity your funding
Institutionalize Extracurricular Activities
What are people doing in their spare time?
Where are their passions?
What do your people do “on the side?”
Get the old suggestion box out of the closet
– The Google 10% Factor– University faculty 4 days
A University
ThinkBox Project
Joint patents
Business & governmental partnerships
International students
Real estate options
An Arts Organization
Taking performances to movie theaters around the world
Revenue Strategies for the Future
Ask your board members to help
• A great way to engage them in an area where they have strong expertise
• Making money
Go After Federal Funding
Find a governmental-funding consultant to match your operations and federal grants
• Don’t try this by yourself
Find a government-lobbying organization who can guide you
• Who else could join you
State, County, & City Funding
State cultural tax credit
State endowment tax credit
County property tax
Art & historical cultural district tax
17
Outsource Your Talent to Other Nonprofits
1) Who are the stars on your admin team?• CFO• Fundraising database expert• Events coordinator
2) How could other nonprofits pay for part of their time?
It won’t be a total win, you’re busy already– So how do you leverage their time with assistants to
enable them to generate revenue outside of your offices?
Playhouse Square Center
Staff going out as a consultants to other arts organizations
Subsidiary real estate company
Artistic touring productions
Developed a ticketing company
Hotels, restaurant, parking co-development
Partnering with other nonprofits on physical space and programming
Use Your Land
A private school
A medical Center
The church parking lot
Lease to a farmers market
Leveraging Partnerships
Delve deeper into the development toolkit– Tax increment– Tax credits
• New markets• Historic
– Foreign investment funds
Telling your story– Public & private lenders– The larger community
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Obtain Leasing Revenue
Lease Street Level Access to Retail Shops
Move your operations to the second floor and work with a developer to lease out ground level spaces
Partnered with local economic development corporation for tax credits
Gordon Square Arts District – the art of economic development
Lease Your Space in Off Hours
Some churches and synagogues in urban settings are leasing their Saturday and Sunday school classrooms to pre-schools during the week
Can a company or other nonprofit lease your offices for an evening calling center
What Alternative Revenues Could Apply to a New Building?
Explore tax credits and community development financing
• Harder than it used to be• Work with private developers for mutual benefit
Air rights and retail leasing should be fully considered before new construction
Find a strategic partner to run the other uses
UBITUnrelated Business Income Tax
There’s a cost of doing business• Get legal counsel to advise your organization
Be aware of our nonprofit role• Don’t cross the gray line
There Are Opportunities to Cover Overhead by Scaling Up
Set up a national federation
Join a regional & national organization
Statewide political coalitions
In Conclusion
1) Of course look for alternative revenue sourcesa) But first, have you really maximized and re-
engineered all of your current sources?
2) Seek mission-focused alternative revenue
3) Of course, do anything but understand it will take time, be complicated, and make take you off mission
Resources
Conscious Governance – http://conscious-governance.com/alternative-sources-of-revenue-streams.html
Mandel Center – Nonprofit Revenue Streams: Finding the Right Mix, Dennis R. Young, Professor, Mandel Center for Nonprofit Organizations, May 2004
St. Thomas University – http://www.massnonprofit.org/expert.php?artid=1872&catid=18
MassNonprofit.org – http://exed.stthomas.edu/ENonprofitArticle3MoneyWatch.com –
http://findarticles.com/p/articles/mi_hb3356/is_1_56/ai_n29000232/Andrew Young School of Policy Studies, Georgia State University –
http://aysps.gsu.edu/publications/2007/downloads/07-32%20FischerWilskerYoung-ExploringtheRevenueMix.pdf
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