May 29, 2015
Typically when we think about the "business" of nonprofits, we think about volunteers donating their time and donors giving money. That may have been yesterday's model, but today many forward-thinking nonprofits are diversifying their revenue streams and asserting greater control over their bottom lines. While private support and government funding will always be critical to nonprofit organizations, it is essential that nonprofits create their own opportunities for revenue, relying less on the generosity of others and more on good business strategies to support their missions.
But how do you create new and innovative revenue streams while maintaining your charitable status and staying true to your mission? The answer may not be simple, but it is straightforward: Accept that market principles apply to everyone, nonprofits and for-profits alike. Identify organizational assets that are valuable in your local market. And partner wisely with other organizations (especially for-profit companies) whenever there's a synergistic value proposition (i.e., look for the mutual win).
At The New York Foundling, we've had great success using our real estate to advance our mission and increase revenue. In 2008, we sold six floors of our Chelsea headquarters to the New York City School Construction Authority, enabling it to open an elementary school (P.S. 340). We used the proceeds from that sale for two important mission-driven projects: a charter school in the South Bronx called Mott Haven Academy, the first school of its kind tailored to children in foster care and the child welfare system; and a medical clinic that serves not only the children in our care but other disadvantaged youth as well.
And this year we again leveraged our real estate to our advantage by partnering with for-profit coffee company COFFEED. COFFEED's business model is based on partnering with local nonprofits at each of their locations. Because we have street-level space on a busy block, we were able to offer them an extremely reduced rent, enabling them to open their first location in Manhattan, where rent and overhead costs would otherwise have been prohibitive. Up to ten percent of COFFEED's gross revenue at that location goes directly to The Foundling to support our programs and services. But it doesn't stop there; they also have provided us with marketing space within their cafe that we use to highlight issues affecting underserved youth. COFFEED has also committed to hiring our clients — teens in foster care and individuals with developmental disabilities. In fact, they've employed three of our kids already. And, of course, local residents have a new cafe where they not only have access to great food and gourmet coffee, they also get to feel good about "giving back" through the simple act of ordering a cappuccino. In other words, win-win-win.