NonProfit Revenue Stream Alternatives Thinking Outside the Box

Non-Profit Revenue Stream Alternatives Thinking Outside the Box Tom Wilson, Campbell & Company Daniel Ducoff, Case Western Reserve University September 24, 2012 DATE GOES HERE ARIAL 16 BOLD A Lorman Webconference

Daniel Ducoff Case 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

Tom Wilson Trusted Advisor & Coach 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 3

Diversifying Revenue Is More Important than Ever 1) Governmental operating funds are being reduced 2) Fundraising is tough 3) Proceeds from smaller endowments lower than we planned are 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 -kind Donation Opportunities In 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 Think. Box 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 21

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

UBIT Unrelated 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 sources a) But first, have you really maximized and reengineered 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: //consciousgovernance. com/alternativesources-of-revenuestreams. 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/ex pert. php? artid=1872&catid=18 Mass. Nonprofit. org – http: //exed. stthomas. edu/ENonp rofit. Article 3 Money. Watch. com – http: //findarticles. com/p/articles/ mi_hb 3356/is_1_56/ai_n 290002 32/ Andrew Young School of Policy Studies, Georgia State University – http: //aysps. gsu. edu/publication s/2007/downloads/0732%20 Fischer. Wilsker. Young. Exploringthe. Revenue. Mix. pdf