Enter the entrepreneur -- that dynamic, independent businessman.
He's praising the risk-taker and extolling the virtues of ingenuity, resourcefulness and plain common sense. He's talking about ventures, partnerships and marketing strategies. He's pointing the way toward self-help and financial independence.
He sounds like an expert, and he is -- but this expert is not to be found in the thick of the corporate world. This entrepreneur is firmly planted in the nonprofit sector. And he's teaching this sector how to earn money through enterprise.
"Business" and "nonprofit" may seem a contradiction in terms. Nonprofit endeavors -- although entitled to earn a profit -- have been traditionally set apart from the rest of enterprising America, barred by law from distributing their net earnings, if any, to individuals who might have control over them. Rather, all profits must be put back into the organization and used in accordance with the organization's stated purpose.
Nonprofit organizations largely depend on private and commercial philanthropy, as well as governmental sources, for their survival. However, because of government cutbacks, competition among these organizations for grants from private foundations and corporate giving programs has increased. Thus the interest in entrepreneurship.
"I believe in nonprofits earning their funds," says Richard Steckel, director and founder of AddVenture Network Inc., a Denver-based membership organization created to teach nonprofit groups how to be entrepreneurial. This is done, he says, "by marketing their goods and services in the manner of for-profit businesses, and by applying sound business management techniques to their own operating income on which to run."
Nonprofit organizations, Steckel has found, are shackled by attitudes that profit-making ventures are unseemly. "Most nonprofits can find a way to make money while doing what they were established to accomplish," claims Steckel, who, as director of the Denver Children's Museum from 1976 to 1984, was nationally recognized as having saved the struggling institution from certain extinction through a combination of creative ideas and common-sense marketing. When Steckel took over the museum it was operating on a shoestring budget dependent entirely on grants. By 1984, the museum was earning a staggering 95 percent of its nearly $1 million operating budget.
Under Steckel's stewardship, the Children's Museum struck a partnership with Citicorp to produce "Small Change," a booklet explaining banks to children. For Citicorp, the corporate partner that spent $65,000 on the project, the book turned out to be a valuable public relations tool nationwide. For the Children's Museum, the nonprofit organization that proposed and developed the book, the project was a money-maker.
"The key to successful entrepreneurial ventures," says Steckel, "is producing quality projects that are attractive to the corporate community, giving them value for their contribution."
Finding the right for-profit partner is crucial. One successful example is the National Trust for Historic Preservation. According to Steve Pike, director of marketing at the Trust, the nonprofit organization has licensed F. Schumacher & Co. of New York City to create lines of wallpapers and fabrics duplicating the original, striking patterns found in many of the properties maintained by the Trust. The Trust also has given Kindel Furniture Co. of Grand Rapids, Mich., the right to reproduce or adapt pieces owned by the Trust. The furniture and wallpaper are sold to a store customer with an information card attached. The card identifies the product as being "endorsed" by the Trust, gives pertinent historical background and describes the adaptation process, if any. The Trust, meanwhile, gets a percentage of the sales, enabling it to continue its preservation work. (The cost of the piece is set by Kindel, according to terms agreed upon by both parties.)
"There are two parts to considering a partnership," says Pike. "There's the marketing aspect -- that is, recognizing the need to do business, to try to survive in the jungle, so to speak, as available grants decline -- and there is the mission. The Trust's mission is to help the public appreciate and preserve American heritage. Because the Trust is naturally allied with our architectural heritage, earned income projects should relate to that mission."
Pike suggests that any nonprofit organization interested in earned income projects clearly think out its educational mission and then choose as a partner a for-profit organization that treats its interests and product as a priority. At the same time, it is important that the nonprofit group be active in the relationship. The nonprofit organization, says Pike, must "bring something to the marriage," a product or service that fits its partner's needs.
When considering an enterprise, nonprofit groups should think not only in terms of their marketing tangibles -- the products or services offered -- but also in terms of their intangibles. "These intangibles," says Bob Angle, vice president of development and communication at the Trust, "are the ways the organization is perceived by the public it serves. For example, a nonprofit may be perceived as a popular, educational institution or a highly academic, scholarly endeavor." Angle points out that the Smithsonian successfully popularized itself as an educational institution when it began publishing Smithsonian magazine several years back. In the same fashion, the Trust is trying to popularize the concept of preservation by showing, through the furniture reproduction program, how American heritage fits into today's living.
Developing a marketing mentality enables a nonprofit endeavor to assume control over a greater portion of its operations. Under marketing management, the more traditional goals of securing large, restricted grants and providing limited services to the community are replaced with objectives of self-sufficiency and growth.
Business' response to this newly developed marketing approach generally is enthusiastic. "It's so much more fun when somebody comes in and says 'We've got an idea here that will help you and make money for us,' " says Jay Sterling, the CitiCorp vice president who approved the Denver Children's Museum "Small Change" project. "I prefer that approach to somebody saying, 'We do good things. Do you have some money you can spare?' "
The Washington-based National Center for Neighborhood Enterprises understands how to parlay corporate receptivity into services that benefit both businesses and community associations. "The center was set up exclusively to assist low-income Americans in their efforts to expand their participation in the economy," says Robert L. Woodson, the center's president. "We bring together business leaders and grass-roots entrepreneurs to discuss ways that they can work together." For example, the center is working with American Express and the Inner City Round Table of Youth, a nonprofit group credited with reducing crime in the New York City subways, to find a way that the young people, with their knowledge of the system, can conduct subway tours for the corporation's new employes.
While the idea of nonprofit groups aggressively marketing goods and services may seem distasteful to some and downright irreverent to others, Steckel, of AddVenture, believes that getting them to act entrepreneurially is an admirable goal. "If nonprofits won't take initiative, if they won't conduct themselves in a business-like way, then it becomes too easy to dismiss them as having a secondary value."
That doesn't mean traditional avenues of fundraising will be abandoned. "The needs are just too great," says Steckel, "to ever preclude any method of procuring money. Volunteerism will always be a valued and necessary part of non-profits. At the same time, we have come to the conclusion that non-profits must develop income-producing sources.
"Now there are two pockets to pick," Steckel jokes, "the philanthropic and the advertising and marketing."