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By Tien Pham

Earned Income
Strategies
Increased competition among
nonprofits.
Government funding for
social programs has declined.
Philanthropic giving has
remain constant whereas
nonprofits needs have been
increasing
Diversify sources of revenue
in case things change
Helps advance missions
Partnership with corporations
not only provide revenue, but
also visibility with
partnerships
Why Earned Income?
Earned Income
Strategies
Corporate Partnerships
Licensing
Sponsorships
Cause-related marketing
Other (operational relationships,
joint ventures etc)
Business Ventures
Services
Products
Distribution and retail
Nonprofit donor lists may include corporate partners
True partnership is a relationship that advances the goals of both parties,
an arrangement in which both sides receive specific benefits related to
their goals
Not all partnerships represent Earned Income Strategies
Environmental Defense Fund (EDF) work with corporate partners to have
positive environmental impact but also bring reduced costs.
Partnerships with Business
A contract that permits a for-profit company to use the nonprofits name
or logo on its products in return for a royalty payment to the nonprofit.
Breast Cancer Awareness on NFL apparel
Benefit for nonprofit is revenue gains from royalty and increased
visibility of its name.
Benefit for company is using the nonprofits logo on its products and
presumably attract purchases from individuals
By using nonprofits name or logo on its product, the company gains
some attributes of the nonprofits brand
Controversial when it pertains to food, health, or the environment
(AHA)
Licensing
In a sponsorship, the company pays for the use of its name or logo in
connection with the nonprofits products or events
Corporate logos on scoreboards, arenas
T-Shirts worn by participants in events like the Race for the Cure and the
Olympic Games
Not the same as advertising, in which advertising communicates more
information and describes the virtues of the companys products
Sponsorship is limited to exposure of the companys name or logo
Intended to enhance companys overall look, not necessarily a certain
product
Sponsorships
Cause marketing is an arrangement under which the company
contributes either a fixed amount for each sale of a product or a specified
percentage of its sales of a product to the nonprofit, usually in
connection with a short-term promotion.
Social Marketing vs Cause Marketing
Transaction-based, directly related to the volume or amount of sales of
the companys products
Yoplait
Readers Digest
Humble Bundle
Cause Marketing
Relationships are governed by a contract between the nonprofit and the
corporate partner
How much to be paid
Length of time of promotion
Maximum sum
Rights of approval with regard to use of logo/ad copy
Disclosure of contract to customers
Standard 19 requires nonprofit organizations to clearly disclose how the
charity benefits from the sale of products or services and the terms and
conditions of its agreement with the corporate partner
Cause Marketing
Operational relationships bring the nonprofit into the heart of the
companys business operations by acting as supplier, improving
training or recruitment services, offering benefits for employees, or
serving as a test site for new products
Pioneer Human Services
Greyston Bakery
Goodwill Industries International, Inc.
Nonprofits provide services and resources that corporations need for
their operations but they also provide opportunities for companies to
achieve a social benefit with resources that are outside their
philanthropic or marketing budgets.
Double Impact advance social purpose while meeting own core operational
needs
Operational Relationships
Five obstacles that can get in the way of successful partnerships
1. Speak different language
2. Different cultures
3. Different status
4. Different world views
5. Different bottom lines
Putting Partnerships Together
Three fundamental questions
1. Does organization possess marketable assets?
2. Is there a market opportunity waiting to be seized?
3. Does it have the staffing, the skills, the access to financial resources, and a
culture that will support entrepreneurial activity?
Identifying Business Opportunities
Leverageable Assets
Things You HAVE
Physical assets
Location/Space
Distribution/Sales
network
Brand/Reputation
Patent
Access to desired
resource
Relationships
Things You Do
Continuously
innovate
Manage information
Produce low-cost
goods
Sustain privileged
assets
Interact with clients
Manufacture
products
Produce events
Things You KNOW
Understanding
specific issue
Process expertise
Market expertise
People/Key decision
makers
Feasibility Analysis looks at both the market and the organizations own capacities
The external variables that need to be considered include
Overall size of the market for the product or service that the nonprofit plans to provide
The outlook for the industry in which it will be engaged
Competitive factors
The ease of entry
Profitability
The organization needs to ask whether
The venture fits with its mission
The organization possesses the skills and expertise, or capacity to undertake it
Its facilities and other material resources are adequate to the challenge
It is prepared to undertake and manage the risk associated with the new activity
Feasibility Analysis
Elements of a Typical Business
Plan
Executive summary
Description of the business
Management, organizational structure,
key personnel
Market analysis and marketing plan
Description of products and services
Operational plan
Financial assumptions
Detailed financial plan
Uncertainties and risks
Plan for growth or exit
A business plan is a detailed,
comprehensive document that
encompasses elements of
strategic, marketing, business,
and operational plans
An important question is how
will the business venture be
related to the nonprofit itself
Business Planning
Smithsonian Institution and Showtime Networks created a joint venture
to produce documentaries using the museums archives and artifacts.
Criticism from curators, historians, and the documentary filmmaking
community
Should resources be available to those who can pay for them or should they
serve a broader public interest?
Museum of Fine Arts, Boston lent 21 Monet masterworks to Bellagio
Casino in Las Vegas for $1 million.
Is MFAs art available to the highest bidder?
Sports Illustrated was in a joint venture with Nature Conservancy for a
swimsuit issue promotion
Was this joint venture appropriate?
Sorting Out the Issues
Different views on whether
nonprofits should consider
business ventures
Some say only ventures that are
similar to the missions should be
pursued and not undertake
activities intended solely to
produce additional revenue
Others argue that nonprofits
should almost look exclusively at
whether a business venture is
financially profitable because
profits are there to support
mission related programs.

Evaluating Opportunities Against
Mission
12.1 Evaluating Earned Income Opportunities
Mission-
enhancing
Mission-
neutral
Mission-
Threatenin
g
Profitable Undertake
(fine-tune)
Undertake
(fine-tune)

Scrutinize
(adjust)
Break-
even
Undertake
(fine-tune)

Avoid (or
redesign)
Avoid (or
redesign)

Loss-
creating
Consider
(adjust)
Avoid (or
redesign)

Avoid (or
redesign)