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Joanne Fritz

Is a Profit Making Venture in Your Nonprofit's Future?

By May 18, 2009

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More nonprofits than ever are considering starting or expanding business operations that can help support their core missions.

Rolfe Larson, a consultant who helps nonprofits plan and set up social ventures, is the author of a wonderful book on the topic, Venture Forth! The Essential Guide to Starting a Moneymaking Business in Your Nonprofit Organization.

Larson suggests that an organization use these criteria to pick the most likely business ideas once you have generated a list of likely possibilities:

  • What is the strategic fit? Does this venture fit with your mission and strategic plan?
  • What is the core competency fit? Will this venture help your group build valuable new core competencies?
  • Will it help your organization expand core competencies? Will this venture help you build valuable new capabilities?
  • Does the idea fit the profile of your core customer? Does it involve some of your core customers or others just like them?
  • Will customers pay? Does this idea really have the potential to generate profit?

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Comments

May 19, 2009 at 4:23 pm
(1) Ted Murphy says:

And, uh, who owns the for-profit business?

May 20, 2009 at 10:56 am
(2) nonprofit says:

Hi Ted! The nonprofit owns it. Think of a museum gift shop or the symphony’s thrift store. The profits are for the benefit of the nonprofit.

May 22, 2009 at 12:30 pm
(3) Ted Murphy says:

I see the book is highly endorsed by Paul Newman. I guess he’d know how to run a moneymaking business within a non-profit.

Thanks for this post. I couldn’t conceive of what you were suggesting, but I think I get it now.

June 12, 2009 at 7:18 pm
(4) E says:

Can a non-profit ever be sold? Who would get the selling amount? Can it be re-incorporated as a for-profit at a later date?

June 12, 2009 at 9:46 pm
(5) nonprofit says:

No, nonprofits have to be dissolved and the assets given to another nonprofit. This applies to IRS registered nonprofits. See this blog post for more info: Facing the Unthinkable

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