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An Economic Stimulus Package for CBOs:
Ideas for Developing Financial Resources
Prepared for
By Community Financial ResourcesApril 2008
TABlE OF COnTEnTS
InTRODUCTIOn 1
FEE FOR SERVICE 3
PROCEEDS FROM lEGAl SETTlEMEnTS 5
lOCAl InITIATIVES AnD InnOVATIOnS 7
COnnECTInG COnSTITUEnTS TO ESSEnTIAl PRODUCTS/SERVICES 9
lEVERAGInG ORGAnIZATIOnAl REAl ESTATE 11
GROUP PURCHASInG 14
AFFInITY BEnEFITS PROGRAMS 17
On-lInE AFFIlIATE MARKETInG 19
RETAIl/On-lInE RETAIl 21
In-KInD DOnATIOnS 23
On-lInE DOnATIOnS 25
CHARITY MAllS 27
CElEBRITY BUREAU AnD SPECIAl EVEnTS 29
POlITICAl DOnORS AnD PHIlAnTHROPY 31
IMPlEMEnTATIOn SUPPORT 33
REFEREnCES AnD RESOURCES 34
Funding the work of community-based organizations (CBOs) is a
challenge in a marketbased economy. Progressive organizations
whose missions are to address social and economic justice issues
through advocacy and organizing often find their access to
traditional philanthropic resources limited. Nonprofit organiza-
tions’ dependence on foundation and government grants puts
them at risk of unexpected (and inevitable) revenue disrup-
tions. Yet, it is estimated that 80% of CBO budgets are funded
through these sources. CBOs must be as creative in their financial
resource development strategies as they are in executing their
organizational missions and, in fact, recognize that developing
this sort of financial independence is another way to build power.
This catalogue is based on the work of the New World Founda-
tion Resource Lab with support from the Ford Foundation. Each
catalogue entry gives a brief snap-shot of a strategy to develop
financial resources for CBOs. We hope to inspire even more
creative thinking on the part of community organizations and the
funders that support them.
The Importance of Membership Development
Membership is a key instrument in building organizational
sustainability as membership means dues, consumer power
and an ability to reduce dependence on philanthropic funding.
Ultimately, perhaps the most powerful way to sustain social
justice CBOs is through the expansion of membership within
and beyond the constituency in need. The membership base is
the political strength of an organization, therefore its expansion
is critical. If fundraising is used to support that strength, it will
address resource questions while at the same time increasing
thepolitical capacity of social justice activism. Additionally,
membership may be deployed strategically to generate revenue
beyond simple dues-paying structures.
Spheres of Influence
By increasing its membership base, an organization can better
insulate itself from the influence of outside forces, i.e. funding
sources that can be unpredictable and less sympathetic to an
organization’s work at critical moments. Organizations may have
a core of committed members in the community they serve, but
there are other spheres of influence they may not have consid-
ered in thinking about their membership. Organizations may
move beyond their core community membership to include
community service providers, small family foundations, political
donors, and local businesses when they consider increasing
membership and new fundraising strategies. When consider-
ing an expanded idea of membership, it may be useful to think
about the different roles a member can play in the work of a CBO
including paying dues, making donations, volunteer program
support, public testimonials, event participation and lobbying.
While a committed core of membership may be the group most
willing to do volunteer work and show up for events, other types
of members, such as service providers and local businesses, may
be important sources of financial support or increased community
visibility. By activating all of these connections, an organization
can maximize its impact and access to financial resources. The
strategies proposed in this resource catalogue encourage CBOs
to consolidate core membership and to test their capacity to tap
into multiple spheres of influence.
Spheres of Membership
Introduction
SERVICE PROVIDERS
FAMIlY FOUnDATIOnS
POlITICAl DOnORS
lOCAl BUSInESSES
nATIOnAl BUSInESS/CElEBRITIES
COMMUnITY BASE
1
Direct and Indirect Benefits
In considering the different programs listed in the catalogue,
CBOs can take into account both the direct and indirect ben-
efits each one offers. Besides providing financial resources and
constituent benefits, many of these programs play an important
promotional role. They build public awareness of the issues ad-
dressed by the organization, enhance the CBOs reputation and
credibility, expand contacts, and energize the organization. The
value of these benefits may not be directly quantifiable, but they
are tangible and indispensable.
Doing the Work
CBOs should be aware that financial resource development
opportunities, new revenue sources, and cost-cutting methods
pose challenges, have limitations, and require the organization’s
commitment. These efforts can be incorporated as critical ele-
ments of an organization’s strategic plan. By diversifying financial
resources a CBO achieve the strength, independence and flex-
ibility it needs to move its work forward.
A Word About Format
The listed ideas and opportunities represent a range of com-
plexity and financial return. Each financial resource program is
described briefly then broken down into a component analysis
of the organizational and financial benefits that must be weighed
against the required resources and implementation logistics. The
following rating system is used to give a quick assessment of
financial benefit and implementation complexity.
Financial Benefit and Complexity Ratings
Potential to yield a small financial benefit
Potential to yield a moderate financial benefit
Potential to yield a substantial benefit
Potential to yield a substantial financial benefit and
become a key source of revenue for the organization
Easy to implement, requiring few or no new resources
and no new skills.
Moderately complex process requiring a small amount
of new resources and skills.
Complex process requiring new resources, skills, and
substantial time.
Very complex implementation process requiring
substantial resources, funding and time.
The Importance of Cost-Benefit Analysis
A cost-benefit analysis is a process that involves weighing the to-
tal expected costs against the total expected benefits of a project
or strategy in order to choose the best or most profitable option.
A representative cost-benefit analysis is presented for each
initiative to prompt interested organizations to develop a more
in-depth analysis. It is critical for CBOs to conduct a cost-benefit
analysis for every program they consider and to incorporate the
benefits and costs that cannot necessarily be quantified. Even
when the financial result may be marginal, the intangible benefits
to either the client base or the organization may make
the program worth pursuing. On the other hand, having a posi-
tive financial result in the costbenefit analysis does not always
mean the CBO should pursue the program. For example, con-
sider the concept of opportunity costs – are there alternative pro-
grams the CBO can pursue that yield a higher financial return on
the resources utilized? Would the program be disruptive to the
organization despite its financial rewards? Cost-benefit analysis is
a very useful financial tool to assess project feasibility.
The Implementation Support section of the catalogue suggests
some innovative approaches to providing start-up funds and
technical assistance to implement financial resource development
initiatives.
Finally, the References and Resources section is a quick guide to
helpful materials and contacts that can provide more information.
2
OVERVIEWCommunity-based organizations can earn income by providing
mission-related products and services through a fee for service
model. Many CBOs provide valuable services to their constitu-
ents that in the for-profit world are only available for a fee. While
organizations want to serve the broadest population, they may
believe that the only way to do so is by offering their services
for free. However, there at least three fee-for-service options
that can optimize organizational resources and improve constitu-
ent outcomes. First, a CBO can charge clients fees for existing
services on a means-based sliding-scale. Charging clients on a
sliding-scale basis will ensure everyone receives the services they
need while providing revenue to the CBO to defray costs which
may actually allow it to serve more people. Second, the CBO
can charge for related products and services to an expanded cli-
ent base. For example, a CBO working for environmental justice
may provide an air quality testing service, organizations that own
simultaneous translation equipment can rent it out when not in
use, or an organization fighting for corporate social responsibility
could sell their research to socially responsible investment funds.
Third, a CBO with a subject matter expertise, such as setting up
community benefits agreements or land trusts or creating popu-
lar education modules can sell “how-to” consulting services to
other organizations.
Consider the following example of the revenue generation
potential of fees: A non-profit that provides low-cost grocery
shopping and prescriptions delivery service for the frail and
elderly can get grants and contracts from government entities.
But if they also charge a nominal delivery fee they can defray the
cost of their service.
$5 per delivery and 150 deliveries per week for 50 weeks of the
year will generate $37,500 per annum that can
be used to expand services.
Fee for Service
ORGAnIZATIOnAl BEnEFITS
• Generate Revenue – Charging fees using differential
pricing for services and/or organizational expertise.
• Optimize Organizational Resources – Properly
structured fees can help CBOs expand the volume of
services provided, e.g. offer more computer classes, and
induce clients to prioritize their needs which will lead to
better utilization of organizational resources. Selling the
organization’s expertise will also optimize the utilization of
staff with extraordinary skills and experience.
• Enhance Client Outcomes – By paying fees, clients
have a greater stake in ensuring that they are “getting
their money’s worth” and will be more committed to
achieving a designated goal. Revenue used to expand
services will also provide more opportunity for positive
client outcomes.
• Strengthen Community Ties – By increasing client
commitment through fees and using the income
generated to increase or improve services, the CBO will
deepen it ties with the community.
FInAnCIAl BEnEFITS
• Any fees generated through existing services will be a net
gain to the CBO once the fee collecting and management
systems are in place. Assuming a CBO already has funding
to provide a service that clients highly value; the CBO can
adopt a sliding scale fee to defray the program’s
administrative costs. Even a small fee of $5 to 250 clients
would generate $1,250 that a CBO can use to improve
or expand services.
• The CBO may also be able to tap new funding sources
based on the expansion of services or population served or
by demonstrating the organization’s economic sustainability
through fee-based revenue.
3
IMPlEMEnTATIOn PROCESS1. Conduct a Strengths, Weaknesses, Opportunities and
Threats Analysis – identify the CBO’s strengths, opportunities
and risks:
• Organization’s strengths – what does the CBO do very well;
what special skills and experience do staff have
• Weaknesses – what areas must the CBO improve to offer fees-
for-service
• Opportunities – how high is the demand for what the CBO
does (or can do), are there alternatives available
• Risks – how sensitive are constituents to fees, would fees
adversely affect any clients ability to access services, how
would funders react, would providing consulting services dis-
tract or diminish the CBO’s ability to carry out its mission
related programs.
2. Differential Pricing – is the practice of charging different
prices to different clients for the same service based on each
client’s ability to pay. Identify and establish fees for service that
can be structured as pricing tiers or through discounting.
3. Cash Management – the CBO may need to incorporate a
new cash-based revenue stream into its existing funds manage-
ment system or develop a system if none exists.
COST-BEnEFIT AnAlYSIS The financial cost-benefit analysis is straight forward – how
much revenue does the CBO need to generate in order to
justify the expense of initiating and maintaining a fee-for-
service model. Below is a breakeven analysis for establish-
ing a client fee-based program using CBO staff at a cost of
$50/ hour or a consultant at cost of $150/hour.
A. low Cost: In-house analysis, set-up and on-going fee
collection
First Year Cost: $5500
Second Year Cost: $2500
2-yr Total = $8000
Avg per Use Fee: $5 $10 $15
Avg per Use Fee: $5 $10 $15
Client Contacts to Breakeven in 2 years: 1,600 800 534
On-going Contacts Needed to Breakeven: 500 250 167
B. High Cost: Consultant assisted analyses and set-up,
in-house on-going fee collection.
First Year Cost: $20,000
Second Year Cost: $2500
2-yr Total = $22,500
Avg per Use Fee: $5 $10 $15
Avg per Use Fee: $5 $10 $15
Client Contacts to Breakeven in 2 years: 4,500 2,250 1,500
On-going Contacts Needed to Breakeven: 500 250 167
Clients in excess of breakeven will result in positive net
income to the CBO. The second and subsequent years
will only incur fee collection and accounting costs.
Consequently, net-income will increase substantially
once set-up fees are covered.
RESOURCES nEEDED
• Staff time – Staff time to do the analysis, development,
and implementation. Project estimate: 60 hours. Daily
processing and tracking of fee-based revenues: 50 hours
per annum.
• Consultants – If allocating existing staff time to imple-
mentation is a problem, a CBO may want to hire a con-
sultant to assist with the organizational analysis, facilitate
stakeholder meetings, plan the fees rollout and plan
marketing strategy. A consultant to assist with the various
tasks listed above would charge between $125 and $200
per hour.
PROjECT COMPlExITY
• Conducting an organizational analysis of strengths,
weaknesses, opportunities and threats should include the
involvement of diverse stakeholders and a facilitator with an
understanding of the process.
• Establishing differential pricing will require research to
learn about market rates, clients’ ability to pay and analysis
to estimate outcomes. The CBO may also need to establish
a system to manage cashbased revenue.
Fee for Service
4
OVERVIEWMany CBOs actively pursue legal strategies and litigation to
further their organizational mission, be it civil rights, environ-
mental protection, or effective government regulation. Civil
suits may result in awards or settlements that can be used
to fund mission fulfilling programs. Lawsuit settlements and
regulatory proceedings can also result in the establishment of
trust or restitution funds to compensate parties wronged by the
defendant. On occasion fulfilling the original purpose of the
settlement is impossible or impracticable. In such situations the
courts distribute “cy pres” funds to trustees who see to it that
the funds benefit the parties wronged or similarly situated
parties, or to promote the law consistent with the underlying
court case. Any organization that serves constituents that may
be subject to unfair, unethical or potentially dangerous com-
mercial practices can apply for cy pres funds. (See Implementa-
tion Process below re: guidelines for monitoring litigation.) For
CBOs, the challenge will be to identify relevant litigation and
then to clearly document the link between their constituents
and court decisions that result in restitution funds being award-
ed. A slightly different variation upon this theme is the IOLTA
(Interest on Lawyers Trust Accounts) public service program.
CBOs working on legal programs for low-income households
can apply for IOLTA funds.
FInAnCIAl BEnEFITS
• Cypres grants can range between a few thousand
to several hundred thousand dollars.
• Pro-active litigation can net settlements in excess
of $100k.
Proceeds from legal Settlements
ORGAnIZATIOnAl BEnEFITS
• Generate Revenue – Cypres funds, legal settlements,
awards and IOLTA funds are all potential funding sources
for topically related programs.
• Inform and Protect Constituents – Organization can
educate constituents about the issues at the root of the
legal settlements and prevent similar types of occurrences.
• Build membership and community support—
constituents and the general public value organizations
that do the hard work of fighting for justice.
• Enforcing Corporate Accountability—active litigation
acts as a deterrent to unlawful behavior.
PROjECT COMPlExITY
• It is easy to monitor pending class action and identify
foundations designated as trustees of cypres funds
• State IOLTA programs are listed on the web
• Becoming a trustee or pursuing a litigation strategy is
substantially more complex and will require dedicated
resources and legal knowledge
5
IMPlEMEnTATIOn PROCESS1. Monitor Pending litigation – CBOs can monitor pending
class action lawsuits and engage legal counsel to file cy pres
petitions for cases related to the organization’s mission. The
website www.classactionamerica.com provides both a free and
a subscription based service that list current and pending class
action lawsuits divided by case categories, current disposi-
tion status, the amount at issue, a brief summary, and links to
obtain additional information. An alternative mechanism for
tracking pending litigation is to set-up topic alerts through the
CourtLink, WestLaw, or Lexis-Nexis databases.
2. Apply for Grants – A CBO can identify foundations that have
set up restitution funds or consumer trusts resulting from settle-
ments and apply for grants under the foundation’s grant-making
guidelines. CBOs working on legal programs for low-income
households can apply for grants from the state IOLTA programs.
-continued next page-
3. Petition for Settlement Funds – Organizations can work
with attorneys to directly file a cy pres petition to the court
recommending the disposition of funds to their organization.
However, recent restrictions on funds administration have
pushed more cy pres funds directly to foundations as trustees
rather than individual charitable or community-based organiza-
tions. In order to be designated as a trustee, parties need to
secure an order or decision in the case at hand that stipulates:
• The recipient foundation
• Funding priorities consistent with the underlying case
and/or benefiting class
• The duration of trust
• Administrative fees
• Reporting requirements
RESOURCES nEEDED
• Staff time – An organization’s development director or
other staff can monitor class actions and then contact
designated trustees.
• Access to Databases – Subscriptions to WestLaw or
CourtLink/Lexis-Nexis databases can be fairly expensive
costing a few thousand dollars a month. However, most
law firms have contracted these services and may provide
probono support to organizations interested in a
monitoring service which involves the set-up and receipt
of topic alerts.
COST-BEnEFIT AnAlYSIS
Points to consider before pursing proceeds from legal
settlements:
• CBOs that actively pursue litigation to generate settle-
ment funds must carefully assess the expected cost of a
court case even if they can utilize pro bono legal counsel
and weigh those costs against the likely awards or settle
ment.
• Other cost factors to consider are the staff time and the
tools to actively monitor and respond to legal opportuni
ties and the cost of legal resources.
• For a CBO applying for restitution grants from trustees,
the cost-benefit will be similar to researching and apply
ing for foundation, government and corporate grants. The
cost to research and prepare grant applications should be
weighed against the likelihood of receiving the restitution
funds.
Proceeds from Legal Settlements
6
OVERVIEWThere is no denying the power of community and a “sense of
place”. Cultivating that energy is a way for CBOs to organize
neighborhoods and marshal resources to address community
needs and issues such as public safety, race relations, commer-
cial revitalization, physical improvements, education, economic
and social justice. Neighborhood improvements that evolve
into neighborhood empowerment programs will build a political
power base. The first step on a long journey may be developing
neighborhood pride by creating a special event such as a jazz
festival or an art fair or obtaining a historic district designation
or even publicizing the neighborhood’s unique assets and vital
character to make it a tourist destination. There are informal and
formal channels to fund these types of initiatives. A start can be
house parties to discuss goals and raise funds. On a larger scale,
the Federal Community Development Block Grant Programs,
redevelopment agencies, and local community foundations are a
good source of support. LISC, the Local Initiatives Support
Corporation, can help community organizations gather the nec-
essary financial resources to invest in community development.
There are city and regional programs such as the City of Seattle’s
Neighborhood Matching Fund and many programs are not pub-
licized and take some research to uncover. The key to accessing
these funds is the CBO’s ability to mobilize the community to
take ownership of the projects.
local Initiatives and Innovations
ORGAnIZATIOnAl BEnEFITS
• Build Membership – Demonstrate to residents the power
of organized action and encourage them to become perma-
nent members to address other issues.
• Generate Revenue – Tap into local funding sources both
grassroots and institutional, many of which are not regularly
publicized.
• Inform and Protect Constituents – Inform residents of
their rights and help them identify community goals and
address community issues.
• Build Organization Credibility – By addressing quality of
life issues.
• Enforce Government Accountability – Mobilize residents
to demand government action on community needs, and
help government entities become aware of community
priorities.
• Advancement of Social Goals – Create an environment
that promotes every citizen’s right to a healthy and prosper-
ous community.
FInAnCIAl BEnEFITS
•The financial resources generated will depend on the type
of project(s) selected. Targeting the appropriate funding
source. Grassroots fundraising can raise several thousand
dollars. Grants can range between a few hundred dollars
and hundreds of thousands.
•Grants will typically cover personnel expenses, supplies
and materials, services, capital expenses and overhead.
Often times the CBO will function as a contractor compen-
sated for delivering the completed project.
PROjECT COMPlExITY
• Start with small group functions and house meetings to
define scope of work.
• Projects can range from policy initiatives that take human
capital—time and research—to large-scale neighborhood
redevelopments.
• Neighborhood events can range from potlucks to street
fairs: remember even block parties require permits.
7
IMPlEMEnTATIOn PROCESS1. Research Funding Options – identify city, county, and
regional funding options including Community Development
Block Grants (CDBG) and funding available for communities
designated as redevelopment or enterprise zones. Identify local
foundations, corporations and business that can support the
project.
2. Identify Pressing Community needs – gather community
input to identify and prioritize pressing needs that are vital for
improving the neighborhood residents’ quality of life.
3. Organize Residents – set up community meetings and
publicize them to inform residents about the need for action.
Solicit community leaders’ support to inform and mobilize the
community.
4. Apply for Funding – Complete grant applications as
needed. Government funds usually become available at the
start of the fiscal year. Therefore, if working with government
entities, CBOs needs to be ready to apply for grants or funding
six months before the start of the jurisdiction’s fiscal year. Many
government entities will also hold public hearings on commu-
nity needs and proposed budgets six to nine months before the
start of the next fiscal year.
COST-BEnEFIT AnAlYSIS
This revenue strategy offers CBOs a wide array of options,
from very simple community events costing a few hundred
dollars to construction projects costing hundreds of thou-
sands. A few points to keep in mind when conducting the
cost-benefit analysis for individual projects:
• If the project is sufficiently complex, the CBO needs to
think of it as if it were starting a new organization program.
How much staffing is required, how much executive director
oversight, how much support staff, how much office space
will be required? Keep in mind these are all costs that
should be part of the project proposal.
• As noted in the benefits section, an important compo-
nent of this project is the non-financial benefits to the CBO
and the community. Therefore, it is important for the CBO
to heavily weigh the non-tangible benefits of this type of
program, including the opportunity to derive revenue in
conjunction with some of the other strategies outlined in
this catalogue.
Following are examples of CBO initiated community
projects:
• A CBO proposed to transform an underutilized space
into a green space that invites visitors, provides educa-
tional opportunities and provides environmental benefits.
The project improvements will connect two socially and
economically different neighborhoods and provide com-
munity members the opportunity to bring their children and
families to a safer area together. Total project cost $198,000
($98,000 form the City of Seattle)
• A CBO initiated a pilot mentoring program at West
Seattle High School designed for 20 bilingual migrant
students. Eight mentors will be trained and their parents
involved in the program. Total cost $7,700 ($4,675 from the
City of Seattle)
• Nuestra Communidad Development Corporation of
Boston renovated the historic but dilapidated Dartmouth
Hotel into 65 units of affordable housing and retail space
with the help of a $625,000 loan from Boston LISC.
RESOURCES nEEDED
• Staff time – Staff time to initiate a new program, including
researching funding options and organizing the community.
The project estimate staff hours will depend on the com-
plexity of the project.
• Consultants – Special issues may require outside consul-
tants to provide subject matter expertise. Event coordina-
tors are an effective way to produce public functions, e.g.
festivals.
• Seed Money – The CBO will likely incur staff costs to
initiate the project. Usually, these funds cannot be covered
retroactively once the project is funded.
Local Initiatives and Innovations
8
OVERVIEWCommunity-based organizations’ constituencies often lack ac-
cess to essential products and services, e.g. banking services,
healthy food, or health care, and these deficits can negatively af-
fect constituents’ civic participation. CBOs can facilitate constitu-
ent access to important products or services and even though
this role may not be directly mission fulfilling, the organization
will gain the appreciation and support of the community. The
additional benefit of this type of program is that the CBO can
be compensated by the product/service supplier for acting as
a distributor. For example, a CBO organizing low-wage workers
can significantly improve their constituents personal safety and
financial management capabilities by providing a low-cost bank-
ing product like a prepaid debit card that eliminates the need
to use a high-cost check casher. The card vendor would pay the
CBO to open up card accounts.
Connecting Constituents to Essential Products/Services
ORGAnIZATIOnAl BEnEFITS
• Improve Constituents’ Quality of life – By providing
constituents with a product or service that is not readily
available to them or is a financial burden at normal market
rates.
• Strengthen Relationship with Constituents – Providing
access to important services at fair price will build an
organization’s credibility with the community creates
opportunities to build organizational membership.
• Effect Social Change – The CBO can influence the
marketplace by representing the collective needs and
purchasing power of its constituents.
• Generate Revenue – Negotiate revenue share from the
product/service provider.
PROjECT COMPlExITY
• The easiest implementation strategy is to research social
enterprises and non-profit ventures to find existing con-
sumer friendly product/service programs that a CBO can
recommend.
• This type of revenue generation program can be complex.
If an organization is customizing a new product/service of-
fering, it must have access to various business skills, includ-
ing industry research, negotiating, marketing and partner
management. It also calls for considerable knowledge
about the products and services the CBO decides to pro-
vide. This type of project will resemble running a business
and requires a business plan
RESOURCES nEEDED
• Staff or Consultants: baseline 1 FTE
- To develop a new program, the CBO will need incremental
staff or consultants with experience in research methods,
marketing and product knowledge.
– For joining existing or developing new programs, ad-
ditional staff time would be necessary to carry out the
day-to-day distribution functions e.g. contacting constitu-
ents to offer the product and/or enroll participants into new
services, on-going marketing, serving as a liaison between
constituents and vendors when help is needed, inventory
control, etc.
– Expect administrative functions to be affected and require
additional work, including management oversight, account-
ing and fundraising. Outreach and Marketing budget to
generate sufficient volume to produce material revenue.
9
IMPlEMEnTATIOn PROCESS1. Constituent needs Assessment – conduct a needs assess-
ment of the CBO’s constituency and supporters. Identify quality
of life issues that are negatively affecting constituents’ commu-
nities that could be addressed through a market-based solution,
e.g. access to health care, education, financial services, healthy
food, etc.
2. Form a Coalition – partner with other organizations to form
a significant consumer power block. Quantify your purchasing
power, e.g. number of households, dollars spent on similar
services.
3. Vendor Research – research current supplier offers and capa-
bilities to determine the best option for providing constituents
the desired products or services.
4. negotiate with Suppliers – using the collective consumer
power of the constituency base, negotiate with suppliers to
provide the products or services needed by the represented
consumers at a fair or advantageous price. Appeal to the
supplier’s interest in opening new markets to establish a
revenue share for the CBO’s role as distributor of the product
or service.
5. Market the Product or Service – the value of this distri-
bution model is that the CBO can leverage its constituency
outreach strategies into a marketing plan—the likes of which
a vendor or supplier could not replicate since they lack the
embedded relationship with the consumer.
COST-BEnEFIT AnAlYSIS
CBOs can explore a wide array opportunities to provide
services but the final decision to do so should be based on
whether the financial (and social) benefits outweigh the cost
of providing the service. Because it would be impossible to
provide sample cost-benefit analyses for every type of ser-
vice, this section provides only one example of a remittance
service. This example provides an analysis on how many
regular clients a CBO would need given certain assump-
tions to break even or make a profit providing a retail outlet
for proprietary internet-based remittance wire service.
In this example the supplier would take care of licensing
and set-up and the CBO would serve as a retail distributor.
The CBO would charges clients $8.95 per wire, pay the sup-
plier $5 and keep $3.95. Assuming a quarter time FTE staff
at an hourly staff cost of $50 (annual cost =$26,000) to staff
the project, it would generate the following results based
on various client levels and service usage:
Clients:
275 300 350 275 300 350 275 300 350
Average Monthly Transactions per Client:
2 2 2 2.5 2.5 2.5 3 3 3
Annual Revenue:
$26,070 $28,440 $33,180 $32,588 $35,550
$41,475 $39,105 $42,660 $49,770
Net Profit:
$70 $2,440 $7,180 $6,588 $9,550
$15,475 $13,105 $16,660 $23,770
As noted, an organization with a moderate-size constitu-
ency of 350 individuals would generate annual revenue of
$7,180 to $23,770 in excess of costs. The CBO must also
factor in potential revenue increases from the expansion of
membership and donor base from new contacts through
this retail service.
Connecting Constituents to Essential Products/Services
FInAnCIAl BEnEFITS
• The revenue share that CBOs can earn for connecting
consumers with needed products or services can be based
on per capita “sales” or usage volume or a combination
of these factors. The CBOs earned income is not an incre-
mental cost to the consumer but rather a revenue shift from
a for-profit distributor to a nonprofit distributor. However,
these opportunities usually involve low per unit revenue and
therefore require significant volume to generate material
revenue.
10
OVERVIEW
Many CBOs own real estate or rent office space. Strategically
managing an organization’s real estate whether owned or leased
creates many opportunities to generate additional revenue,
reduce or off-set costs. Carefully planning real-estate utilization
can effectively free up funds to use for other core service needs.
So what does this mean for a CBO? A real estate asset manage-
ment strategy means analyzing and categorizing the organiza-
tion’s current uses of real estate and setting goals for each type
of use and facility. Goals can be maximizing revenue or reducing
costs, as well as, include mission-related goals such as building
community or cultivating partnerships.
For example, if an organization has excess office space, its
strategy should extend beyond placing a “for rent” sign and
negotiating a lease. Instead the CBO should study what type
of use would produce greatest benefit to the organization and
pursue that type of user. Similarly, the CBO should study what
property improvements are viewed as beneficial enough to justi-
fy charging higher rents or attracting tenants. Even as a renter, a
CBO should consider projects such as reducing heating costs by
weatherizing a rented office itself. Or it can offer the landlord to
split the cost of replacing energy inefficient single pane windows
and then raise funds to cover its share of the cost.
As discussed below, there are many ways to actively manage
real estate. CBOs need to include property management in their
strategic plan, manage expansion effectively, adapt and reuse
facilities where possible, and pursue innovative real-estate strat-
egies that will generate funds for other uses.
leveraging Organizational Real Estate
ORGAnIZATIOnAl BEnEFITS
• Generate Revenue – by renting out under utilized space
and pursuing innovative real-estate strategies that
adapt and reuse facilities where possible.
• Reduce Administrative Costs – by negotiating cost
reductions, stabilizing premises expense, or upgrading
premises to get more for less.
• Improve Client Access to Services – By including in the
strategic real estate plan options to co-locate with other
organizations serving similar clients.
• Build Community Credibility – by providing space for
community events or expanded community services.
FInAnCIAl BEnEFITS
•Real estate holdings—property, plant, and equipment--
typically represent one of the highest-cost categories for
CBOs after salaries and benefits. Improving asset manage-
ment strategies will improve the organizations financial
position. Benefits must be analyzed on a case by case basis.
•As an example, the Silicon Valley Foundation in California
rents its conference rooms for public meetings. It charges
$675-$950 per meeting depending on room size and
number of hours used.
•Remodeling or constructing a new building should include
revenue generating opportunities such as rental office
space, retail space, etc. See Cost-Benefit section
•Local Foundations and Credit Unions are often motivated
to partner and invest in CBO real estate.
11
IMPlEMEnTATIOn PROCESS1.Prepare a Real Estate Asset Management Strategy –
Categorize real estate by use (office, community, potential
surplus), develop strategy goals (maximize benefits, minimize
costs, stabilize costs, optimize returns) and gather needed
information (expenses, internal rent, market value, revenues,
value-in-use) for analyses.
2. Space needs Study – Evaluate current space usage and
future space needs based on estimated growth/contraction.
3. Implement Strategy – potential outcomes of strategy
include:
•Rent conference room/meeting space
•Consolidate multiple office locations
•Downsize space usage and rent out surplus space
•Dispose of surplus land Develop a construction and
expansion plan
•Co-locate with other organizations in new facility
•Enter into a sale-and-leaseback agreement to free capital
4. Partner with Cities/Counties and Redevelopment Agencies
– leverage resources. Municipalities have an interest in main-
taining services for CBO constituents and will likely be willing
partners in well-thought out development plans.
Leveraging Organizational Real Estate
PROjECT COMPlExITY
• A real estate asset management strategy can range from
simple to complex.
• Most CBOs should be able to complete the analyses
of some basic opportunities (e.g. renting excess space or
reducing energy costs) and carry out actions identified in
the process.
• Larger management initiatives should employ a real estate
specialist.
RESOURCES nEEDED
• Staff Time – Existing staff may be able to carry out
additional administrative functions such as advertising and
renting out meeting space. More lucrative programs could
fund additional staff resources.
• Real Estate Specialist – For more sophisticated programs,
a CBO should enlist a public interest oriented real estate
specialist to devise a real estate asset management strategy
that generates additional revenue or cost savings for the
organization. Nonprofit organizations that focus on afford-
able housing and community land-use planning programs
exist in many geographical areas. These organizations can
either informally advise a CBO or provide consulting services
for a fee. Alternatively, consulting firms and independent
consultants can provide real estate services such as highest
and best use studies for developing or redeveloping land.
Since local governments actively use these services, a CBO
can contact them to inquire about consultants they have
used for these studies.
12
COST-BEnEFIT AnAlYSIS
• A cost-benefit analysis would have to be conducted on a
project by project basis. In general, a CBO will be better off
in the long run by actively managing its real estate as an as-
set (something that produces a benefit) instead of a liability
(a cost obligation). Over time the cost saving or increased
revenue from preparing an asset management strategy will
outweigh the upfront costs.
• A real estate specialist will charge $125 - $200 per hour.
The costs of developing a strategy will depend on the
organization’s assets but should cost between $5,000 and
$25,000. The cost to carry out a real estate project will be
around 10% to 20% of hard costs.
• A word of caution, many foundations and donors are
predisposed to fund property acquisition as they see the
inherent value of real estate. However, CBOs should care-
fully study whether owning a building is the best option
for their organization. Just because the organization owns
it does not mean it occupies the space for free; there are
mortgage and insurance payments, maintenance and gen-
eral operating costs that are usually covered under a rental
agreement. Consider the opportunity costs of investing in
real estate (the alternate use of or return on investing capi-
tal instead of buying real estate).
• With real estate, a CBO needs to think about the long-
term sustainability of the asset so that it can keep generat-
ing revenue or benefits. The organization needs to consider
and plan for maintenance such as roof replacements rather
than reactively worrying about repairing a leaky roof.
Leveraging Organizational Real Estate
• The following is a sample analysis. In this case, an orga-
nization owns a building that has an old industrial kitchen
facility. It decides to upgrade this facility to meet catering
standards and then rents the space to independent catering
contractors from the community. Additionally, the organiza-
tion can now rent out its adjoining meeting for banquets.
Area realtors can quote going rental rates for your type of
property.
Construction Expense Appliances & Furnishings
Total Cost: $25,000* $20,000 $45,000
Daily Facility Rental Fee:
Days Rented: 52
Gross Revenue: $500
$26,000
Annual Operating Expenses: $11,700
Net Revenue: $14,300**
The project will break even in three to four years if it meets
its goal of 52 rental days.
*Cost below commercial prices due to access to volunteer
help and contractor price discounts.
**Does not include potential unrelated business taxes.
13
OVERVIEW
Group purchasing, or cooperative purchasing, is an expense
reduction technique in which various organizations join together
to purchase identical or similar products at a discount. Coopera-
tive purchasing can save CBOs significant time and money in the
procurement process through the power of aggregate purchas-
ing. Organizations can save an average of 10% on total purchas-
es. Savings on individual products such as recycled paper can be
as high as 78%. Every organization should research opportunities
to cut purchasing expenses through group purchasing— pooling
resources to improve economic outcomes. For most CBOs the
process will involve a small amount of research to find existing
cooperative purchasing groups. Once the CBO establishes the
relationship, it will be able to save money on most of its every-
day purchases and on many infrequent, “big-ticket” items.
Group Purchasing
ORGAnIZATIOnAl BEnEFITS
• lower Prices – By standardizing products/services, and
aggregating requirements, CBOs benefit from the com-
bined economies of scale of multiple organizations.
• lower Administrative Costs – A lead organization
prepares, negotiates, and administers a group purchase
contract. Participating organizations only need to determine
the specifications and quantities they will need.
• Higher Quality Products and Services – By leveraging
the skills and knowledge of members, cooperative purchas-
ing groups can evaluate and negotiate for higher quality
products and services.
• Convenience – Instead of searching, evaluating and
negotiating for products and services, a CBO can simply
refer to a cooperative’s contract catalog.
• Advancement of Social Goals – A purchasing coopera-
tive can decide to pursue social goals such as increasing the
purchase of recycled products or purchasing from socially
responsible businesses.refer to a cooperative’s contract
catalog.
PROjECT COMPlExITY
CBOs can easily join an existing cooperative, whether
through a local government entity or a third party aggrega-
tor.
• Most public institutions have a purchasing or procurement
department that would administer group purchasing agree-
ments.
A CBO can establish a new cooperative. Three types of
cooperative agreements exist:
•Formal Cooperative -Contractual agreements between
participants and participation obligation
•“Piggyback” Cooperatives -casual purchasing through
larger buyers
•Third-Party Aggregators - independent organization brings
together various organizations to represent their require-
ments to vendors and manages resulting contracts
14
IMPlEMEnTATIOn PROCESS1.Determine needs – determine the organization’s product
and service needs.
2a. join an Existing Purchasing Cooperative research options:
• Search for existing purchasing cooperatives. Many existing
cooperatives readily allow members to join
• Search on the Internet for “purchasing cooperative” by
location (such as city or county), field of work, and affiliations.
Check with Union Locals that may have access to national
purchasing cooperatives.
• School districts and state, county and city governments are
high volume buyers and are likely to be operating a coopera-
tive that may allow CBOs to participate. Contact the entity’s
Finance Dept.
• Regional organizations such as California Association of
Nonprofits operate cooperatives
• Search for third party aggregators. Membership is often
free for nonprofit organizations. Visit the National Institute of
Governmental Purchasing (NIGP) web site for a list of national
and regional cooperatives at http://www.nigp.org/Purch
Coop.htm or at nigp.org. Examples of third party aggrega-
tors are: US Communities Government Purchasing Alliance
and HGACBuy.com
2b. Alternatively, Establish a Formal Cooperative or Third
Party Aggregator – Identify and survey organizations about
their interest in forming a purchasing cooperative.
• Invite Cooperative Members—Identify and survey organiza-
tions about their interest in forming a purchasing cooperative
• Enter Into a Cooperative Agreement—Select the type of
cooperative agreement that best suits the needs of members
and determine how the costs of joint procurement will be
shared.
• Select a Lead Organization—Select the organization that will
be responsible for procurement and contract administration.
Group Purchasing
RESOURCES nEEDED
• Staff Time – Joining an existing cooperative requires the
upfront research to identify the appropriate group. Once
this relationship is established, little additional staff time will
be required to reap the benefits.
• new Organization – Alternatively, establishing a new
cooperative will require a material investment of resources
to establish lasting vendor relationships that will involve mul-
tiple orders. If group purchasing includes the procurement
of high-cost, complex, or highly technical products, support
staff must have sufficient knowledge to research products,
prepare appropriate RFPs, and evaluate bids. A contract
specialist would be needed to prepare contracts and man-
age vendor relationships. An attorney may be involved as
well as support staff. Assuming a 3-person start-up and pro
bono legal counsel, a new cooperative seeking to achieve
immediate economies of scale can reach first year operating
costs in the range of $250,000.
15
FInAnCIAl BEnEFITS
Save 10% on average on an organization’s total product
and services costs and more on individual products.
For example:
• Save $1,000 on purchasing budget of $10,000
• Save $10,000 on a purchasing budget of $100,000.
• Save 78% on the retail cost of paper—$20 retail vs. $4.50
cooperative purchasing costs
• Save 20% on the retail cost of a printer—$249 retail vs.
$200 cooperative purchasing costs
Group Purchasing
COST-BEnEFIT AnAlYSIS
• The cost of becoming a member of an existing group pur-
chasing cooperative is minimal. A CBO will immediately begin
saving money by purchasing goods and services through a
cooperative. A small sampling of the products an organization
can save on through group purchasing includes:
– Tires, batteries, auto parts
– Hand tools
– Appliances
– Computer hardware/software
– Telecommunications supplies and equipment
– Janitorial supplies
– Chairs, desks, filing cabinets Teaching and art supplies
– Full services contract for repair, remodeling, and renovation
of facilities
– Full line of office supplies, copiers, office equipment
– Cars, trucks, passenger vans
– Computer & Office Paper Products)
• Based on an estimated annual budget of $250,000 to create
a new cooperative, it will take the following levels of participa-
tion and purchasing for the cooperative members to break
even.
Average Savings:
10% 10% 10% 15% 15% 15% 20% 20% 20%
Total Purchasing:
$2.5 Million $2.5 Million $2.5 Million $1.67 Million
$1.67 Million $1.67 Million $1.25 Million $1.25 Million
$1.25 Million
No. Coop Members:
25 50 100 25 50 100 25 50 100
Annual Purchasing per Member:
$100,000 $50,000 $25,000 $66,667 $33,333 $16,667
$50,000 $25,000 $12,500
Another significant benefit of participating in or developing
a cooperative purchasing group, that should be factored into
any analysis, is the value of building cooperative relationships
with other organizations and networks. These collective
frameworks can leveraged for other mission-related
endeavors.
16
OVERVIEWAffinity benefits programs provide organizations and their mem-
bers, staff and other constituents discounts and special access
to services by leveraging their large affinity group’s purchasing
power. An example of this type of program is the American Au-
tomobile Association’s (AAA) which offers its members car and
home-related products, services and travel discounts. Affinity
benefits programs can offer CBOs and their constituents
discounts of 10% to 60% off retail pricing Generally, CBOs gain
access to discount programs at no fee or for a nominal annual
fee.
This initiative is ideal for any type of organization that can indi-
vidually, or by partnering with other CBOs, form a large constitu-
ency of “shoppers” (e.g. organizations, staff, clients, supporters,
and other constituents). Organizational coalitions are good
candidates to put together group benefits programs. AARP and
Union Privilege are examples of programs for very large member
bases, but even a 1000 member constituency base would have
could negotiate an attractive benefits package.
Affinity Benefits Programs
ORGAnIZATIOnAl BEnEFITS
• Build Membership – Discount programs are an enticing
membership recruitment and retention tool as they help
stretch the income of constituents and/or give them access
to lower cost resources they need to achieve economic
stability.
• Reduce Organizational Expenditures – Save money by
purchasing products and services through the organization’s
affinity program.
• Staff Recruitment and Retention Tool – Include affinity
program discounts as part of staff benefit packages, saving
staff money on their purchases.
• Royalties and Rebates – Large volume programs can
generate royalties and rebates back to the sponsoring
organization.
PROjECT COMPlExITY
• Pre-packaged affinity benefits programs already exist.
The research, set-up and maintenance of these existing
programs takes some orientation but is not unduly complex.
• Alternatively, developing an expanded or customized
affinity benefits program requires some specialized skills in
vendor negotiations and marketing.
FInAnCIAl BEnEFITS
• Financial benefits primarily accrue to the organization’s
constituents and staff as cost savings.
• Organizations can reduce expenses by utilizing the
offered purchase discounts.
• Organizations can negotiate a revenue share agreement
with participating merchants.
• Affinity credit cards can produce a lucrative revenue
stream.
RESOURCES nEEDED
• Staff Time – Leveraging an existing affinity benefits
program can be implemented with a small allocation of
staff time. A large-scale or customized program requires
dedicated staff.
• Consultants – consultants are advisable to establish and
manage more complex or customized programs.
• Start-up or buy-in costs – some prepackaged affinity
programs have a buy-in, e.g. cost per discount card or
annual fee.
• Marketing budget – is necessary to inform constituents
of the program and to expand program utilization.
17
IMPlEMEnTATIOn PROCESS1. Define Program Goals – Contribution to mission, individual
or organization cost savings, membership recruitment and reten-
tion, staff recruitment/retention, and/or revenue production.
2. Identify Target Audience Size and Interests – Estimate pro-
gram utilization. If the CBO’s constituency is not large enough,
it should consider partnering with other organizations to form a
larger market. Find the types of discounts and benefits attractive
to target audience.
3. Evaluate Existing Programs – pre-packaged program, e.g.
PerksCards, may fulfill the organization’s required criteria.
4. Contact Merchants – If existing programs don meet needs,
an organization can develop its own program. Starting with
merchants in other discount programs, contact merchants to
negotiate discount levels and terms.
5. Market the Program – Market beyond immediate constitu-
encies. A strong web presence can yield more cost effective
marketing opportunities than direct mail or other media
channels.
COST-BEnEFIT AnAlYSIS
Affinity benefits programs offer cost savings to the users
which can be a CBO’s constituents, staff, or the organization
itself. The implementation and management cost needs to
be weighed against the potential of an affinity benefits
program to augment membership development, improve
staff retention and entice greater constituent/supporter
participation in mission related programs.
One way to size the potential of a benefits package is to look
at how quickly the purchasing power of a group of organiza-
tions’ constituents adds up.
As an example:
• 5 organizations with 200 members each create a 1000
member consumer base.
• If the average constituent take-home pay is $20,000 and
assuming that only 50% of members’ income is available
for discretionary expenditures, the purchasing power of the
group is still $10 million.
• Saving group members 20% through discounts and special
offers will generate a savings of $2 million for the community.
Organizations seeking to build membership will find affinity
benefits programs an attractive member benefit that helps
stretch the income of constituents and/or give them access
to resources that help them to be happier, healthier, or more
stable economically. AARP acknowledges that the provision
of insurance benefits and travel discounts has expanded its
membership which builds its political base. Union Privilege,
which is a discount program for AFL-CIO union members or
affiliates, views reducing the cost of living for its members
and expanded benefits, e.g. voluntary insurance, as mission-
fulfilling.
Examples of products and services provided through affinity
benefits programs include:
• Dell Computer
• AT&T Wireless discount
• Auto Insurance (AIG)
• VOIP
• Car Rental
• Credit Counseling
• Entertainment Discounts
• Goodyear Tire and Service
• Health Clubs
• Health care discounts (Save on out-of-pocket health care
expenses for prescriptions, dental care, vision care, diabetic
supplies and more.)
• Legal Services
• Mortgage and Real Estate – fee reductions
• Pet Insurance
Affinity Benefits Programs
18
OVERVIEWOn-line Affiliate Marketing is the promotion of products and
services of for-profit businesses (the advertiser) by placing ads
or links on an organization’s website. The advertiser compen-
sates the on-line affiliate organization for the number of visitors,
subscribers, customers, and/or sales proffered to the business by
the affiliate’s efforts. The advertising usually takes the form of
advertiser banners and links on the CBO’s website. Any type
of organization with a website can pursue an on-line affiliate
marketing program, however, the program will provide the
best results to CBOs whose website generates a high volume
of traffic and/or has visitor demographics that are desirable to
advertisers.
On-line Affiliate Marketing
ORGAnIZATIOnAl BEnEFITS
• Generate Revenue – The advertising compensation can
be used to support the organization’s programs.
• Increase Site Traffic and Engage Visitors – The products
and services advertised may generate CBO website visits in
and of themselves. By increasing website traffic, organiza-
tions will have the opportunity to further engage visitors in
other aspects of the organization’s mission.
• Build Membership – Increasing the number of new
visitors and repeat visitors to a CBO’s website gives the
organization more opportunities to encourage visitors
to become members or donors.
PROjECT COMPlExITY
• On-line affiliate marketing programs are readily available
from many different types of businesses. Set-up and main-
tenance of these relationships can be done with minimal
resource commitments, but significant web traffic is
needed to generate material revenue.
• Alternatively, establishing a new affiliate marketing coali-
tion will require dedicated resources. In addition to tasks
listed in the Implementation Process Section, the CBOs will
have to enter into contractual agreements establishing
participant obligations.
RESOURCES nEEDED
• Staff Time – A few hours a week of staff time can
leverage existing on-line affiliate marketing programs.
• Consultants – A CBO looking to establish a more
aggressive program should consider hiring a consultant to
establish and manage the marketing strategy. Typical set-up
costs are in the $15k to $20K range with additional fees for
ongoing support.
• new Staff and Tools– – An on-line affiliate marketing
coalition should expect to hire a program coordinator as
well as purchase website management tools. Expect total
annual costs of approximately $150,000 per year.
19
IMPlEMEnTATIOn PROCESS1. Identify the Market niche – Determine the organization’s
website traffic volume and the market characteristics of visitors.
Organizations can maximize revenue by identifying and selling
a well defined viewer market niche to advertisers willing to pay
for specific market demographics.
2. Identify Products and Services to Market – Find the right
combination of products and services that are reputable and
compatible with the organization’s mission, generate material
commissions, and entice visitors to explore the offer.
3a. Enter Into and Manage Relationships – Negotiate and
enter into relationships with advertisers:
• Select relationships and advertisements. Find affiliate program
opportunities by consulting on-line affiliate program directories
that list advertisers and outline compensation plans such as
affiliatething.com, clickbank.com, commissionjunction.com and
linkshare.com.
• Optimize website design to convey mission related content
and to encourage viewers to notice and act on advertisements.
• Develop strategies to drive visitors to the organization’s web-
site, e.g. reciprocal links and registering keywords with search
engines.
• Pursue additional packaged affiliate opportunities including
Google/Adsense.com, chitikia.com, blogads.com and text-link-
ads.com
3b. Form a Coalition of non-Profit Organizations to Manage
an Affiliate Marketing Pro – Sharing research and manage-
ment costs with other organizations to customize an on-line
affiliate marketing program can increase bargaining power with
advertisers.
• Share set-up and coordination costs
• Compare organizational constituent needs
• Vet merchants or product/service offers for coalition members
• Share website visitor behavior and identify effective lay-out,
messaging, and navigation techniques that appear to optimize
revenue generating behavior
• Discern current and evolving marketing trends
• Negotiate larger commissions for all CBOs participating in
the coalition, and sell packaged ad space across the coalition
members’ various websites to merchants who are interested in
the demographics of the collective readership.
COST-BEnEFIT AnAlYSIS
Cost will vary depending on the program the CBO pursues.
The following guide will help a CBO determine its best op-
tion given its web traffic potential and set-up costs. For ex-
ample, an organization that provides useful public content
that generates high visitor traffic, but whose visitors have no
other relationship to the CBO may want to pursue a CPM
advertising or pay-per-click strategy. Alternatively, if the
CBO has a relationship with a smaller but more dedicated
visitor base, it can pursue a lead generation or pay-per-sale
strategy.
Compensation Method and Rate CPM Advertising:
($2.50 per 1,000 views)
Pay per Click: (1¢ per click-through)
Lead Generation: ($6 per lead)
Pay per Sale: (10% sales commission)
Website Users: 400,000 1,000,000 2,857 4,000
Click-Through Visitors: (10%) 100,000 286 400
Sales Leads: (50% of click through) 143
Sales: (25% of click through, $100 Average Sale) 100
CBO Revenue: $1,000 $1,000 $1,000 $1,000
On-line Affiliate Marketing
FInAnCIAl BEnEFITS
Revenue varies widely by type of affiliate marketing
structure and the appeal of the organization’s web site.
Examples of revenue from different marketing techniques
are listed below:
•Website Sponsorship: Annual fees for sponsorship to be
displayed on website. Make-A-Wish Foundation charges a
$250,000 annual sponsorship fee.
• Cost-per-thousand views (CPM): 50¢ - $20 per 1,000 page
views.
• Pay per click: 1¢ per click through
• Lead Generation: $6-$10 per lead (e.g. GEICO Insurance)
•Pay per sale: 1% - 20% of dollar value of final sale
20
OVERVIEWA retail/on-line retail strategy for a CBO is based on the sale of
articles of merchandise that are ordinarily used as a part of fund
raising and awareness-raising campaigns. CBOs create these
items, imprinted with the organization’s name, and sell or give
them away to clients, supporters and other stakeholders. Most
promotional items are relatively small and inexpensive, such as
t-shirts, caps, key chains, mugs and mouse pads. New technolo-
gies are making it easier for organizations to set up on-line retail
stores and increase the sale of these items to generate greater
revenue. This strategy has the potential to generate significant
revenue for an organization that offers a niche market a desirable
name or message, for example Sierra Club calendars. However,
for most organizations the value will be in promoting the CBO,
raising public awareness or creating goodwill. CBOs can cover
program costs and generate some profit, especially if they avoid
setting up a separate physical storefront which carry too many
fixed overhead costs.
Retail/On-line Retail
ORGAnIZATIOnAl BEnEFITS
• Generate Revenue – by selling relatively inexpensive
items with high price mark-ups.
• Increase the Organization’s Visibility – use items sold
as part of guerrilla marketing campaigns to increase the
organization’s visibility. People wearing or using these prod-
ucts in public will garner publicity for the organization and
enhance the CBO’s “brand name.”
PROjECT COMPlExITY
• This business model has low barriers to entry and
e-commerce stores reduce risk even further by offering little
upfront development costs and minimum order require-
ments.
• CBO staff can select, create, source and distribute its own
promotional items. Alternatively, a CBO can work through
an e-Commerce company to design its product and launch
an online store. The e-Commerce stores will handle inven-
tory management, shipping, logistics, and billing for the
CBO. Zazzle claims it typically takes less than an hour to
open a store.
RESOURCES nEEDED
• Staff Time – Existing staff and interns have the capacity
to establish a retail project and manage a simple design
and product creation whether done in house or through an
e-commerce company. Plan on expending 5%-10% of an
FTE to carry out the necessary project work.
• Planning Inventory – E-commerce companies usually
have no minimum requirements and only produce products
when ordered; therefore there are no inventory commit-
ments or upfront costs.
• Design Consultant – A CBO may want to hire a design
consultant to create a stylish design for the organization, or
it can work with artists or art students willing to undertake
the project pro-bono or for minimal fees in order to expand
their portfolios. A design consultant would charge between
$75 and $150 per hour.
21
IMPlEMEnTATIOn PROCESS1. Select the Product(s) – promotional items are usually simple
products such as t-shirts, caps, key chains, mugs and mouse
pads. However, many other options are available such as first
class stamps, aprons, ties, greeting cards, water bottle, etc.
2. Create the Design – Find the right combination of products
and services that are reputable and compatible with the orga-
nization’s mission, generate material commissions, and entice
visitors to explore the offer.
3. Order Product(s) – the CBO can order products from local
vendors or via the Internet. Consider realistic market size and
order accordingly. Venders usually offer volume discounts when
ordering large quantities.
4. Select Distribution Channels – expand distribution channels
beyond face-to-face sales at the CBO or at events. Make the
product available through the CBO’s website and list it with an
e-Commerce company such as Zazzle/GoodStorm.
5. Other Options – MeCommerce offers a product-serving
technology allowing nonprofits to sell CDs, DVDs and books on
their own website or blog, and realize 50% of the profit.
COST-BEnEFIT AnAlYSIS
Before initiating a retail strategy, a CBO should conduct a
cost-benefit analysis of the different options it has. Should
the CBO place a large volume order with a local vender
and sell the items in person, or work through an on-line
retailer like Zazzle? How many items does the CBO believe
it can sell, and in what period of time? The CBO can select
the best strategy by estimating the total costs of different
options and weighing them against the projected revenue
based on the estimated sales volume.
Below is a simple cost-benefit analysis that shows how many
t-shirts at various price levels a CBO has to sell in order to
break even and make a profit. Assumptions:
– 40 hours of project staffing at $50 per hour (fully loaded),
– 70% profit margin (Zazzle takes a 30% cut but there are no
other upfront production or inventory management costs).
In this example, a CBO would begin earning a profit after
selling 385 t-shirts for $16.99. Selling an additional 100
t-shirts with zero additional effort will earn the CBO $519.
Basic t-shirt price: $12.99 $14.99 $16.99 $18.99 $20.99
70% CBO profit share: $2.39 $3.79 $5.19 $6.59 $7.99
T-shirt sales needed to Breakeven: 837 528 385 303 250
Retail/On-Line Retail
FInAnCIAl BEnEFITS
• Financial benefits depend on product, volume and
distribution. For example, CBOs can sell tshirts for as much
as $20 a piece. At $20 per piece, the sale of 200 shirts can
gross the CBO as much as $2,000 (excluding design and
distribution expenses). CBOs with brand name recognition
and stylish designs can easily achieve greater sales and
revenue outcomes.
22
OVERVIEWIn-Kind Donations are donations that are given in goods, com-
modities, or services rather than cash. These non-monetary
donations can help CBOs to reduce direct expenses for travel,
supplies, equipment, the use of services and facilities, and
professional expertise. Occasionally, these types of donations
can be converted into cash through re-sale or charity auctions.
Organizations should carefully consider what type of in-kind
donations would serve them well and then identify what busi-
nesses or individuals may be able to provide these resources.
CBOs can also benefit from working with in-kind donation clear-
inghouses to gain access to a broader, more efficient network of
corporations for product donations.
In-Kind Donations
ORGAnIZATIOnAl BEnEFITS
• Reduce Expenses and Conserve Cash Flow – By offering
goods, commodities, or services that must otherwise be
purchased.
• Expansion of Mission Directed Operations – Donations
of operational supplies can support an increase in
organizational activity
• Can be utilized as Incentives – For membership, fund
raising solicitations, major gift recognition, or raffles.
• Provides an Alternative to Cash Donations – When a
direct cash contribution might not be possible.
• Thinking Green – Re-allocating resources to those who
can use them instead of throwing them away. Another
mode of re-use, recycling or free cycling.
PROjECT COMPlExITY
• Ranges from easy implementation by signing up with
existing company or clearinghouse programs to a more
complex approach of cultivating relationships with business
partners for customized support.
RESOURCES nEEDED
• Staff Time – Moderate development staff involvement is
required for tracking and acknowledging in-kind donations.
If a customized approach is utilized, more time and skills are
involved in negotiating with businesses that provide, for
example, donated earnings or allowing employees to
donate earned time off.
23
IMPlEMEnTATIOn PROCESS1. Identify Products – Identify the available commodities,
goods and or services that could be donated that would serve
the needs of the CBO.
2a. Contact Clearinghouses – Contact organizations that serve
as clearinghouses for nonprofits seeking product donations
such as: Gifts In Kind International, the National Association for
the Exchange of Industrial Resources, InKindEx.org and Share
the Technology. TechSoup Stock is an online source for donated
software and hardware that can be ordered by non-profits and
educational institutions for nominal fees.
2b. negotiate – Negotiate directly with for-profit organizations
that produce goods or services that would be beneficial to a
CBO – The Foundation Center offers resources for identify-
ing corporate sponsors of in-kind gifts. Several airlines, e.g.
American and Delta/ Continental, allow organizations to register
with them to allow travelers to donate excess airline miles to a
501c3. Southwest Airlines will donate travel vouchers.
3. Register with Giftcarddonor.com – Giftcarddonor.com is a
professional fundraising business that aggregates and re-sells
unused gift cards and store credits. People can designate re-
cipient organizations on the Gift Card Donor website and then
send in their cards or credit receipts. The organizations receive
75% or the re-sale proceeds.
5. Publicize – Advertise in-kind donation needs to existing
donor base and supporters. Don’t forget to ask for expertise,
e.g. accounting, web-site support, marketing communications.
For program success and longevity make the donation process
easy for interested parties. Newsletters or websites should be
kept fresh by continually posting and acknowledging participat-
ing partners and reminding readers how to execute an in-kind
donation.
COST-BEnEFIT AnAlYSIS
• As an example, assume an hour of fundraising develop-
ment activity costs an organization $50 fully loaded (staff
time plus overhead). If the organization averaged an hour
a day sourcing in-kind donations, they will spend approxi-
mately 240 hours on this effort over a year. The organization
would need to obtain goods and services valued around
$12,000 to breakeven on this type of program.
• In-kind donations of services can save an organization
significant expense and effectively expand the organiza-
tion’s skill sets. Supporters can donate their experience and
knowledge in specialized fields including how to do cost-
benefit analyses or developing financial resources.
In-Kind Donations
FInAnCIAl BEnEFITS
• In-kind donations can have significant value. For example
donated airline miles can be used to reduce staff travel
costs and save an organization thousands of dollars.
• Technology hardware and software can be a high-value
donation.
• Goods offered as prizes for raffles and auctions, effectively
become cash.
24
OVERVIEWAn on-line donation strategy involves making it easier and/or
increasing opportunities for supporters and website visitors to
make donations to an organization. Two simple strategies are to
create a “donate” button on the organization’s own website and
to list the organization with websites called charity portals that
offer visitors a list of nonprofit organizations to which they can
donate. Each option has its benefits. Having a donate button
offers the CBO full control and collects 100% of the donation.
The benefits of listing with a charity portal, on the other hand,
is that they have marketing programs to attract traffic to their
websites and they eliminate the process of setting up a system
to accept on-line donations. Websites have also been set-up
to give people the opportunity to make donations to specific
charitable programs or projects, e.g. Seva.org, or as a gift for
someone else, e.g. Changing the Present. Finally, though not
exactly an on-line donation method but in the realm of mak-
ing it easy for people to give, don’t forget workplace giving
campaigns which include matching grants for donations made
by employees or the automatic payroll deduction programs like
United Way or Community Shares. Remind your supporters that
they can often “write in” or designate specific 501c3 organiza-
tions to receive their donations when they fill out the annual
Pledge Card. Almost every CBO can utilize some variation of this
strategy because participation choices range from lowcost,
easy-to-use options to complex management systems (see Cost
Benefit Analysis section).
On-line Donations
ORGAnIZATIOnAl BEnEFITS
• Generate Revenue – by making it easier for supporters to
make donations through the organization’s website and by
increasing the frequency of donation opportunities.
• Increase the Organization’s Visibility – people visiting
on-line charity portals often learn about organizations they
may not have previously known.
PROjECT COMPlExITY
• It is easy to list an organization with a charity portal to
reach new donors or to set-up a “donate” button on an
organization website.
• Alternatively an organization can build a customized
donor relationship management system that meets its exact
needs. This effort is typically more complex and costly.
RESOURCES nEEDED
• Staff Time – Computer and internet savvy staff to sort
through the online charity portals and evaluate and install
integrated member application software packages. Consul-
tants are available to help with this process.
FInAnCIAl BEnEFITS
• Incremental revenue once the CBO has modified its
website and/or listed with charity portals or programs.
• Revenue generated through charity portals is a function of
marketing and website traffic. For example, the Dance
Theater of Harlem reported raising $27,864 through the
charity portal www.networkforgood.org.
25
IMPlEMEnTATIOn PROCESS1. Research Options – Be sure to research online giving
thoroughly before deciding on your organization’s preferred
method. Differences in costs and benefits vary greatly.
2. Create a Website “Donate” Button – There are several
full-service solutions provided as part of packaged donation and
membership management software that provide a defined set
of features covering a number of common membership needs,
including the ability to receive on-line donations. Software
packages include Wild Apricot, ETapestry, GivenGain and Mem-
berClicks. Online packages include Network for Good’s Suite,
Democracy in Action, Entango.com and Acteva.com. These
packages, known as donation engine providers, do not require
in-depth technical skills or substantial set-up. Alternatively, a
CBO can contract with a backend donation collection service
connected to an existing charity portal or a standalone service
which would provide the website link (donation button) to feed
into their funds collection platform.
3. list the CBO with a Charity Portal – Examples of charity
portals include NetworkForGood.org, GreaterGood.com,
Groundspring.org (formerly eGrants.org) and justgive.org.
Individuals interested in donating to charities often use charity
portals to help them with their research. It is important that an
organization’s listing in Guidestar’s database be up-to-date.
4. list the CBO with Search Engines – List with search engines
that donate advertising revenue to charities, e.g. Goodsearch.
com. Donations occur every time a user clicks on a sponsored ad
that comes up in a search. In order to leverage this fundraising
tool, a CBO could install a link from its website to the
search engine which will pre-populate the organization’s name
as the selected cause.
COST-BEnEFIT AnAlYSIS
• The simplest solution for a CBO with limited resources is to
list the organization with a charity portal. Listing is free and
there are no monthly charges. However charity portals will
charge a fee between 2.5 and 5 percent of the total
contribution upon accepting the contribution for the CBO.
• A slightly more complicated option is setting up the
on-line donation capability on the CBOs own website using a
program from an existing charity portal. Processed donations
appear on the donor’s credit card statement with the portal’s
name, however.
A sample scenario:
– 40 hours of staff time costing $50/ hour (fully loaded) to
review options, set up an online package, and perform
on-going maintenance, and
– 3% processing fee on each donation.
– The CBO would need just over one hundred $25
donations to break even. Donations beyond that level would
result in a net profit to the CBO. The table below provides
various breakeven scenarios based on different average dona-
tion amounts.
Average Donation: $25 $50 $75 $100 $150 $200
Donors Needed to Breakeven: 103 52 35 26 17 13
• Purchasing and installing a membership and donation
management software package can be accomplished for as
little as $50 (e.g. ClickandPledge’s Trio) or as much as $7,500
(e.g. Blackbaud’s Net Community software license compo-
nent of required integrated package). There is usually some
combination of a set up fee, monthly fee, transaction fee and
credit card processing fee. The ability to receive donations is
only one feature of the software which includes various useful
membership and organizational management systems.
A sample scenario:
– First year cost with consultant assisted analyses and set-up
(approximately 20 hours @ $150/hour),
– in-house maintenance of the software application
(approximately 30 hours @ $50/hour),
– $100 monthly subscription fee, and
– 3% processing fee for each donation.
In this example, it would take 226 $25 donations to break
even. The CBO would reach the breakeven point much faster
the second year since it has already installed the software
package. This solution works best for CBOs that expect high
volume website traffic and plan to initiate a donor relationship
management program.
Average Donation: $25 $50 $75 $100 $150 $200
Donors Needed to Breakeven: 236 118 79 59 39 30
On-Line Donations
26
OVERVIEWThe Charity Mall concept can take several forms. One version
is the online shopping website that returns a commission to
an organization when members or supporters make purchases
through the mall’s network of online stores. There are also pro-
grams where consumers can register their loyalty, debit or credit
cards with a charity mall. When the consumer uses that card to
make purchases at participating on-line or physical storebased
merchants, the retailers pay a sales commission to the charity
mall card program operator, and all or part of that commis-
sion is then passed on to a nonprofit. Retail store managers or
retail store chains are often willing to set-up discount-donation
programs whereby an organization’s constituents making pur-
chases at a store receive a discount and the store also donates a
percentage of the purchase to a designated non-profit. Another
version of retail store donation programs is to allow shoppers
the option of “rounding up” their bill with the additional money
going to a charitable fund or a designated nonprofit. Some
retailers will match the shopper donations. These programs work
best if they can be tied to a card that can track purchases, like a
grocery store loyalty card.
Almost every CBO can utilize this strategy because the level of
complexity and cost ranges between very easy to carry out and
costing virtually nothing to taking on a sophisticated develop-
ment effort that is moderately expensive but can generate a
good return.
Charity Malls
PROjECT COMPlExITY
• It is easy for organizations to list with existing charity
malls. Organizations must create a marketing and commu-
nication strategy to remind supporters to link through the
CBO website for on-line shopping or register their purchase
cards with a designated charity portal. Though it may take
more effort to convince supporters to register their loyalty,
debit and credit cards to support the CBO, once it’s done
supporters will be automatically contributing to the CBO
without any extra effort on their part.
• Organizations can set up their own charity mall but much
more work is involved, including: designing the mall, estab-
lishing relationships with retailers and administering account
set-up. This option works best for organizations with a large
base of supporters and/or resources to heavily market the
mall. A large volume of transactions makes in-house pro-
cessing cost-effective and eliminates 3rd-party fees.
RESOURCES nEEDED
• Staff Time – Development staff can easily register the
CBO with charity portals. Depending on the desired finan-
cial results, the CBO can minimally or aggressively publicize
this option to supporters through its ongoing communica-
tions and other marketing efforts.
• new Staff and Consultants – Creating a new Charity
Mall will require a team that includes business development
and relationship management resources, marketing strate-
gists, website designers, and operations support.
27
IMPlEMEnTATIOn PROCESS1a. Register with a Charity Mall – Register with a shopping
portal, such as escrip.com, ShopForChange.com, and eBay Giv-
ing Works. Lesser-known groups can participate at sites like,
iGive.com and MyCause.com. which let shoppers choose from
their database of organizations or add their own, including
groups that lack 501(c) 3 status.
1b. Create a Charity Mall – By administering a charity mall
in-house, the organization receives 100 percent of the commis-
sions from purchases, it can select the appropriate retailers and
match web pages to the CBO’s existing web site.
2. Set-up up a store-based donation program – Contact
local retail store managers and discuss what discounts-donation
arrangement could be set for purchases made by the organi-
zation’s constituent base. Or explore a “round-up” donation
program.
COST-BEnEFIT AnAlYSIS
• A CBO would incur minor costs to identify and sign up
with an existing charity mall. However, the organization
would have to make some effort to market the program to
encourage people to either shop at the mall or registers
their cards. If this marketing were included in existing com-
munications, even this cost can be minimized. Therefore,
financial benefits would immediately accrue to the CBO.
Additionally, supporters will often think about the CBO
when conducting purchases.
• Creating an in-house charity mall will require significantly
more work. First year cost for in-house analysis, set-up and
on-going maintenance (based on 48 hours of project staff-
ing @$2400—about an hour a week, plus $600 incremental
marketing expense) would cost about $3,000. The table be-
low provides the number of transactions necessary at given
commission rates and purchase levels to recapture the cost
of staff time investment.
Average Purchase $50 $100 $50 $100
Commission Rate 5% 5% 10% 10%
Transactions Needed to Breakeven: 1,200 600 600 300
Charity Malls
FInAnCIAl BEnEFITS
• Depending on the charity mall and the retailer, the charity
mall forwards commissions ranging from 2% to 30% of con-
sumer spending to the shoppers’ charity of choice.
• One charitable portal estimates that 50 supporters spend-
ing $400 per month at participating merchants would gen-
erate $12,000 per year, 200 supporters would generate
$48,000 per year.
ORGAnIZATIOnAl BEnEFITS
• Generate Revenue – Ask supporters to raise funds for the
CBO by shopping on-line through the organization’s charity
mall links or by registering their loyalty, debit or credit cards
and using them at designated merchants.
• Increase Supporter Opportunities to Participate – Give
supporters an easy way to regularly participate and raise
revenue for your organization through their regular shop-
ping activities.
28
OVERVIEWHarness the power of the Stars! A celebrity is a widely-recog-
nized or famous person who commands a high degree of public
and media attention. The celebrity can be an author, politician,
sports star, artist, entertainer, journalist, business leader or a key
community figure. Their connection to a cause can help raise
money in a number of ways. However, individual community
organizations may find that contacting and cultivating a fundrais-
ing relationship with a celebrity challenging. A more effective
approach might be to pool the collective networking resources
of foundations and their grantees to enlist a group of celebrities
willing to make periodic public appearances, speak out, or give
their endorsements to progressive causes and the organizations
that “do the work”--thus creating a celebrity bureau. While many
organizations can handle smaller events, producing gala events
take a material amount of time and money. Large events must
be augmented with a diverse set of related income producing
promotions to produce a good return upon investment. How-
ever, there are a number of smaller-scale special events that can
be effective fundraisers, e.g. restaurants that donate a portion of
their receipts during a set time period or theatre performances
or music events that donate proceeds to a specified nonprofit. A
bit of brainstorming can produce several good fundraising ideas
that can be built around the concept of interesting activities
that make it fun, easy and attractive for people with disposable
income to contribute to a good cause.
Celebrity Bureau and Special Events
PROjECT COMPlExITY
• Like all fundraising, establishing contacts and cultivating
a commitment can take time and requires persistence and
patience. Using network contacts is key.
• A less complicated approach to leveraging a celebrity’s
fame is to create a marketing campaign using various
advertising media and promotional collateral emphasizing
the celebrity’s endorsement.
• Organizing events usually take several months of planning
and typically require a team of people to plan and execute
the production.
RESOURCES nEEDED
• Staff and Directors Time – Existing development staff,
executive director and/or board members to establish
contacts and execute program.
• Marketing Expertise – To develop marketing campaign
and “brand” management resources.
• Marketing Budget—to support outreach.
• Consultant and Meeting Space – If program is event
oriented, the CBO will need a meeting place, production
support, and an event planning consultant.
• Volunteer Coordinator – The CBO will need a person to
manage volunteer resources needed to facilitate program
and events
ORGAnIZATIOnAl BEnEFITS
• Generate Revenue – Increase public profile of cause or
organization. Engage the celebrity’s fan base and capture
the attention of the media and the general public.
• Energize the Organization – the celebrity halo or a
special event can create excitement among the organiza-
tion’s members, donors, and constituents, particularly
around a major event.
29
IMPlEMEnTATIOn PROCESS1a. Identify Potential Celebrity Supporters:
• Survey members and Board members of the coalition of CBOs
and Funders to determine existing connections to mission
aligned VIPs.
• Identify regional or geographic ties that may be important to
particular celebrities, e.g. Bruce Springsteen and New Jersey.
• Research public statements made by VIPs that indicate
mission alignment.
• Research celebrity interests and personal background to
determine connection to causes
• Review Speaker Bureau lists.
2. Establish Contacts with Celebrities:
• Network through member and Board member social and
business contacts
• Talk to business managers, agents, editors
• Use tools: Celebrity Black Book 2008, www.contactanyceleb-
rity.com ($20/mo. database usage fee)
3. Cultivate Celebrity Relationships:
• Suggest modes of participation—public endorsement, public
appearances, performances, talks, book signings, donating
mementos for charitable auctions or raffles, private engage-
ments with major donors, using their image or related graphics
on T-shirts, posters, etc.
• Solicit celebrities’ suggestions as to how they may contribute
to the cause.
• Agree upon scope of commitment. Document the offer, e.g.
a certain number of public appearances in a year.
4. Develop Marketing Campaign Templates – how-to guides
for organizations wanting to use the celebrity bureau.
• Producing events
• Selling memorabilia
• Leveraging endorsements in donation appeals
COST-BEnEFIT AnAlYSIS
Given the many variables that go into a celebrity based
marketing campaign or event, it is important to carefully
assess the revenue potential of the plan and then carefully
control production expenses. It may be possible to cover
some production costs through pro bono support.
A sample analysis:
Planned Proceeds
Ticket Sales: 300 @$50 …………………………… $15,000
Silent Auction: 5 items avg. at $250 ………………. 1,250
Commemorative Posters/T-shirts: 100@ $15 ……...1,500
Total Proceeds: ……………………………….........$17,750
Example costs:
Staff time – 60 hrs @$50 per ………………..……. $3,000
Consultant—40 hrs@ $150 per ………....….……… 6,000
Marketing Expense …………………………………. 2,500
Location Expense ………………………….…….….. 3,000
Total Costs: ………………………………..….…… $14,500
Net Revenue ………………………….…….......….. $3,250
Ancillary revenue:
Projected expansion of membership base = $x
Projected expansion of donor base = $y
Celebrity Bureau and Special Events
FInAnCIAl BEnEFITS
•Generate revenue form event ticket sales and themati-
cally tied complementary fundraising activity. Donation
campaigns based on celebrity endorsements and sale of
celebrity related memorabilia also can produce funds.
30
OVERVIEWPolitical giving can go beyond the traditional contributions to
candidates and electoral campaigns. To advance a political
agenda or effect social change, political donors may also want to
fund the on-the-ground organizations that are doing the work for
the cause. Advocacy organizations do the research and build
consensus to formulate policy. Community organizers educate
and mobilize voters, train candidates, and get officials elected
to office. A host of community-based organizations execute mis-
sions to strengthen the civil society and promote social,
economic and environmental justice.
There are at least three ways for CBOs to harness the financial
resources of politics. One is to become part of the investment
portfolio of newly developing “political mutual funds”--struc-
tured contribution programs that bring new financial resources
to community-based organizations while satisfying the donors’
desire for a “political return upon investment”. Secondly, CBOs
need to cultivate their relationships with political candidates,
elected officials and key government operatives and demon-
strate their organization’s value and influence by developing and
mobilizing their constituent base as they address social issues.
Thirdly, CBOs can research who is donating to political cam-
paigns that align with their organizational missions and approach
these parties with additional options to make their money work
for social change. Potential local donors in your area can be eas-
ily identified through some of the online databases listed below.
Political Donors and Philanthropy
PROjECT COMPlExITY
• Connecting to regional political entities is classic
community organizing coupled with donor development.
•Connecting to large-scale or national political funds is
comparable to developing national foundation relationships.
RESOURCES nEEDED
• Community organizing program staff—may involve no
incremental cost or time if the community organizing
agenda already addresses cultivating political officials.
• Development Staff –for networking, presentations, and
proposals.
• Marketing strategy support
ORGAnIZATIOnAl BEnEFITS
• Raises public awareness of organizational mission –
either as a selected investment target or by partnering with
political officials.
• Facilitates fundraising – A new way to connect with
donors who are already contributing to political campaigns.
• Create opportunities – to leverage governmental
resources.
• Advances policy agenda – that supports the
organization’s mission.
31
IMPlEMEnTATIOn PROCESS1. Identify local or regional political entities that would
recognize the mutual benefit of directing financial support
to mission aligned CBOs.
2. Ask for endorsements or referrals to their contributor base.
3. Actively work to elect progressives and make these efforts
visible.
4. Contact a political fund such as the New Progressive
Coalition or the Democracy Alliance to discuss inclusion in
their social agenda prospectus.
5. Use on-line political contribution tracking databases, e.g.
FundRace, to identify potential funding sources.
6. Use the Voter Action Network www.voteractivationnetwork.
com to data mine voter lists.
COST-BEnEFIT AnAlYSIS
• Assuming 5 hours a week or 240 hours per annum of
staff time @$50/hr =$12K per year plus $3000 marketing
expense
• Need to gross $16.5K for a 10% return upon investment.
Political Donors and Philanthropy
FInAnCIAl BEnEFITS
•Potentially, a new source of donor relationships which can
provide incremental funding.
•May open access to government resources or contracts.
32
There are several ways for CBOs to obtain assistance
in implementing the ideas outlined in this guide.
The first step is to contact the program officers of
the funders supporting your organization to discuss
what technical assistance resources may be available.
These discussions should consider the following
types of support.
Technical Assistance
Most CBOs are resource constrained and don’t necessarily have
the skill sets to identify, develop, or put financial resource devel-
opment programs in place. There are consultants that specialize
in developing business opportunities, e.g. Internet marketing,
or are specifically oriented towards supporting non-profits in the
development of revenue sources. The References and Resources
section of this catalogue cites a few consulting organizations that
can support these types of projects.
Some foundations fund organizational capacity building
programs and are starting to develop formal and informal
technical assistance programs that pull together a network of
consultants and staff that can provide:
• Market research and feasibility analyses
• Program design
• Business plan development
• Implementation strategies
• Implementation support
• Post-implementation follow-up, and even some
• Centralized program management for projects, programs, and
initiatives that will actualize a foundation’s strategic mission.
Some examples of these initiatives include the New World
Foundation’s Resource Lab and the French American Charitable
Trust’s (FACT) Capacity Building Program for its grantees. To
identify these resources at other foundations, CBOs should
discuss what resources may be available with their own networks
of foundation funders.
loans for Revenue Generating Programs
Most existing loan programs for nonprofits focus on financing
capital assets, particularly real estate, or providing emergency
funds during a cashflow crisis. Larger Program Related Invest-
ment (PRI) loans are beginning to support social enterprise
initiatives. The revenue stream generated from these types of
projects, either through cost savings or new income can make
this an economically viable approach.
The projects outlined in this catalogue have short breakeven
time horizons (1-3 years) if the program can reach appropriate
scale. Micro-loan terms should reflect this reality offering
12-24 months initial deferred payments, low interest rates, and
up to 5-year payback. A $20,000 loan at 0% interest, 12-month
payment deferral and 5 year payback would commit a CBO to
a manageable $417 a month payment in years 2 through 5.
Venture philanthropy investments, which can be structured as
equity participation as well as loans, may be the next step once
a CBO or a CBO coalition determines they have a scalable social
enterprise requiring growth capital.
loans for Revenue Generating Programs
Another discussion that CBOs can have with foundation program
officers is the value of funders providing organizational capacity
building grants as seed money for CBOs to expand their fund-
raising capabilities. Whether the project is as basic as setting up
a membership and donor tracking database or developing one
of the expanded fundraising opportunities outlined in this
catalogue, these types of grants economically empower CBOs.
In addition to traditionally structured grants, a funder may want
to consider “pay for performance” grants that are usually larger
in size, with funds released as fundraising benchmarks
are achieved.
Implementation Support
33
FOOTnOTESi New World Foundation President Colin Greer, February 2008.
References and Resources
34