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Non-Profit Business Models: The Spectrum

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Katlyn Torgerson

on 15 July 2014

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Transcript of Non-Profit Business Models: The Spectrum

blended business
The CLASSIC NON-PROFIT Model
Working Definition
A mission-driven organization that reinvests its surplus funds in the mission
Funding Model
Classic non-profit style: the organization is fully supported by donors or the government, which allows the organization to provide a good or service free of cost
Traditional Non-profit
THE SPECTRUM OF MISSION-BASED BUSINESS MODELS
The CLIENT BUY-IN Model
Working Definition
A mission-driven organization that provides a good or service that requires the support of its clients
Funding Model
Most clients pay a fee to benefit from the good or service being provided, but the organization also raises support from donors
The REVENUE-GENERATING Model
Working Definition
Mission-driven organization that has built-in revenue streams to fully support their work; can be a public or private good
Funding Model
Clients pay in full for the good or service, with no subsidies from the government or donors. Any excess revenue generating must be reinvested in the mission.
Blended Businesses
The MICRO-FINANCING Model
Working Definition
A mission-based organization that provides financial services to its clients who traditionally lack access to banking and related services
Funding Model
A donor or investor makes a small loan to a specific person or project; when that loan comes to term, the donor/investor makes back the loan plus interest, with the option to reinvest in another project. Traditional fundraising models are sometimes also used to support the organization's general operational costs.
The CROWD-FUNDING Model
Working Definition
Blended Businesses can be:
for-profit or non-profit
mission-driven or profit-driven
Funding an organization or business by raising small amounts of money from large numbers of people, typically through an online platform; for non-profits, crowd-funding is also associated strongly with awareness-building
Funding Model
Projects are funded by small gifts from large numbers of donors ("100% model"), typically through an online platform; operational funds are either raised through traditional non-profit funding models, OR through opt-in fees from each donor (a "tip").
The SOCIAL ENTERPRISE Model
Working Definition
An organization or business that applies commercial strategies to carry out its mission.
Funding Model
Varies widely, but often the business or organization will sell a service or product and use the proceeds to fund their mission. This mission is either accomplished through the social enterprise or by donating proceeds or product to a non-profit.
Traditional For-profit
The B-CORP & L3C Models
Working Definition
Designed for for-profit entities that want to consider society and the environment in addition to profit in their decision-making process. Benefit Corporations (B-Corps) and Low-Profit Limited Liability Companies (L3C) are required required to consider the impact of their decisions not only on shareholders but also on workers, community, and the environment.
Funding Model
Traditional business model for generating revenue; support or fund a social mission through regular business practices and, typically, through Corporate Social Responsibility (CSR)
The TRADITIONAL BUSINESS Model
Working Definition
Providing a good or service with the goal of maximizing profit for the benefit of its shareholders; held fully accountable to shareholders
Funding Model
Generating profit from the sale of goods and services; typically support or fund a social mission exclusively through Corporate Social Responsibility (CSR)
a community's traditional water source is polluted to the point where it can no longer be used safely
problem:
solution:
in groups, develop a 5-year strategic plan to provide this community with clean water; each group will have a different business model: classic non-profit, client buy-in, revenue-generating, microfinancing, crowdfunding, or classic social enterprise
The CLASSIC NON-PROFIT Model
Traditional Non-profit
The CLIENT BUY-IN Model
The REVENUE-GENERATING Model
Blended Businesses
The MICRO-FINANCING MODEL
The CROWD-FUNDING Model
Blended Businesses can be:
for-profit or non-profit
mission-driven or profit-driven
The SOCIAL ENTERPRISE Model
Traditional For-profit
The B-CORP Model
The TRADITIONAL BUSINESS Model
real-world solutions
Venture Philanthropy / Impact Investing / Social Venture Capital
the water problem
Things to consider:

What is your specific mission?
How are you going to accomplish your mission? Get specific!
How are you building out your funding structure?
What are the characteristics of the funders you're targeting?
What is your budget size?
What is your timeline?
How are you defining success?
Full transcript