Should Nonprofits Consider Business Ideas to Sustain Their Resources?
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Sharif Shamroukh
February 21, 2022
There is a common understanding among the activists of the philanthropy sector that occupied the vast majority of the time, which is the continuity or availability of resources that the nonprofit organizations need to stay active, and their doors open to potential clients. Therefore, when discussing random issues with leaders of any nonprofit organization, the need for continuous flow of financial resources takes up a pretty significant chunk of the discussion. Thus, the importance of writing about this issue is to help leaders and activists of the philanthropy sector stimulate their active thinking to look around for alternative resources other than the typical list of resource development approaches that they might already use.
My focus here is on resource development that, unfortunately, is not very common among nonprofit organizations. It is the development of for-profit businesses to increase their resources and build a protective shield that may help sustain the organization sustained for longer than anticipated, especially if the mission of the organization is necessary and long-lasting.
Throughout the history of nonprofit organizations, there hasn’t been much focus on developing for-profit businesses to raise funds for their resource needs. However, over the years, some ideas for resource development practices have emerged and played an exceptional role in helping nonprofit organizations meet their funding needs. For example, some organizations implemented the idea of conducting for-profit business activities within their facilities and were very limited in business scope. In contrast, other organizations established partnerships with other for-profit businesses as a possible method to increase their resources. Also, some organizations formed a joint entity to run some business activities that aim to raise funds for their partner organizations. Furthermore, a group of healthcare nonprofit organizations established a stand-alone entity that seeks to save their partner organizations from financial hardship and help them sustain their services and resources.
Other business practices of nonprofit organizations became similar to running business stores, such as second-hand households. Through this model, they achieved a great deal of financial sustainability. Still, this model was the focus of the nonprofit managerial resources. It became the whole organization running like a business, which raised concerns that this kind of model might alter an organization’s mission. Nonprofit organizations, in general, are established for the public good and should always focus on a nonprofit mission. When it comes to running in a business-like fashion, the mission and the purpose of the organization may be put in question.
On the other hand, over the past few decades, the nonprofit sector has experienced a growing need for alternative resources due to scarcity and increased competition. The need for new potential solutions was always a top concern for the leadership of nonprofit organizations.
Accordingly, since the focus here is on business entities ability to help nonprofits sustain their existence and meet their resource development goals, the question becomes: What business ideas do nonprofit leaders need to implement?
To answer this question, nonprofit leaders need not limit themselves to only one business idea category. There are plenty of successful businesses running in every state, and different industries may work well. Therefore, nonprofit leaders should be open to any successful business idea that does not contradict their mission. If the nonprofit organization advocates for the health and well being of communities, then the business idea they elect should exclude any business that has the potential to negative effect those communities.
Let me conclude by listing some of the benefits of establishing business entities by the nonprofit organizations:
First, once the nonprofits can establish their separate for-profit businesses, they will secure a steady income on their own. They would then be able to discharge themselves from relying on other sources that may not guarantee them long-term resources.
Second, nonprofit organizations would save themselves the hassle of competing with limited resources and do not have to experience the stress of this fight if they developed businesses that could earn them income.
Third, nonprofit organizations should not rely solely on government assistance since the government policies may change anytime and the budget for program grants may also change based on the government’s priorities. Therefore, the establishment of viable business side-by-side to the nonprofit organization could support the long-term sustainability goals of the organization.
As a final thought, for-profit business activities by nonprofit organizations would increase organizations’ revenues and support their goals of long-term sustainability.
Author: Dr. Sharif Shamroukh is a Senior Lecturer at the American Institute for Philanthropy Advancement and frequently writes about various public policy issues. Also, Dr. Shamroukh provides consulting services to nonprofit organizations covering a wide range of topics that help achieve their missions. Contact Dr. Shamroukh via e-mail: [email protected] or Facebook / LinkedIn / Twitter @DrShamroukh
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Should Nonprofits Consider Business Ideas to Sustain Their Resources?
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Sharif Shamroukh
February 21, 2022
There is a common understanding among the activists of the philanthropy sector that occupied the vast majority of the time, which is the continuity or availability of resources that the nonprofit organizations need to stay active, and their doors open to potential clients. Therefore, when discussing random issues with leaders of any nonprofit organization, the need for continuous flow of financial resources takes up a pretty significant chunk of the discussion. Thus, the importance of writing about this issue is to help leaders and activists of the philanthropy sector stimulate their active thinking to look around for alternative resources other than the typical list of resource development approaches that they might already use.
My focus here is on resource development that, unfortunately, is not very common among nonprofit organizations. It is the development of for-profit businesses to increase their resources and build a protective shield that may help sustain the organization sustained for longer than anticipated, especially if the mission of the organization is necessary and long-lasting.
Throughout the history of nonprofit organizations, there hasn’t been much focus on developing for-profit businesses to raise funds for their resource needs. However, over the years, some ideas for resource development practices have emerged and played an exceptional role in helping nonprofit organizations meet their funding needs. For example, some organizations implemented the idea of conducting for-profit business activities within their facilities and were very limited in business scope. In contrast, other organizations established partnerships with other for-profit businesses as a possible method to increase their resources. Also, some organizations formed a joint entity to run some business activities that aim to raise funds for their partner organizations. Furthermore, a group of healthcare nonprofit organizations established a stand-alone entity that seeks to save their partner organizations from financial hardship and help them sustain their services and resources.
Other business practices of nonprofit organizations became similar to running business stores, such as second-hand households. Through this model, they achieved a great deal of financial sustainability. Still, this model was the focus of the nonprofit managerial resources. It became the whole organization running like a business, which raised concerns that this kind of model might alter an organization’s mission. Nonprofit organizations, in general, are established for the public good and should always focus on a nonprofit mission. When it comes to running in a business-like fashion, the mission and the purpose of the organization may be put in question.
On the other hand, over the past few decades, the nonprofit sector has experienced a growing need for alternative resources due to scarcity and increased competition. The need for new potential solutions was always a top concern for the leadership of nonprofit organizations.
Accordingly, since the focus here is on business entities ability to help nonprofits sustain their existence and meet their resource development goals, the question becomes: What business ideas do nonprofit leaders need to implement?
To answer this question, nonprofit leaders need not limit themselves to only one business idea category. There are plenty of successful businesses running in every state, and different industries may work well. Therefore, nonprofit leaders should be open to any successful business idea that does not contradict their mission. If the nonprofit organization advocates for the health and well being of communities, then the business idea they elect should exclude any business that has the potential to negative effect those communities.
Let me conclude by listing some of the benefits of establishing business entities by the nonprofit organizations:
First, once the nonprofits can establish their separate for-profit businesses, they will secure a steady income on their own. They would then be able to discharge themselves from relying on other sources that may not guarantee them long-term resources.
Second, nonprofit organizations would save themselves the hassle of competing with limited resources and do not have to experience the stress of this fight if they developed businesses that could earn them income.
Third, nonprofit organizations should not rely solely on government assistance since the government policies may change anytime and the budget for program grants may also change based on the government’s priorities. Therefore, the establishment of viable business side-by-side to the nonprofit organization could support the long-term sustainability goals of the organization.
As a final thought, for-profit business activities by nonprofit organizations would increase organizations’ revenues and support their goals of long-term sustainability.
Author: Dr. Sharif Shamroukh is a Senior Lecturer at the American Institute for Philanthropy Advancement and frequently writes about various public policy issues. Also, Dr. Shamroukh provides consulting services to nonprofit organizations covering a wide range of topics that help achieve their missions. Contact Dr. Shamroukh via e-mail: [email protected] or Facebook / LinkedIn / Twitter @DrShamroukh
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