A Sea Change in the Social Sector - FULL THESIS FINAL

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A Sea Change in the Social Sector: Examining Earned-Income Ventures and Entrepreneurial Nonprofits in Rhode Island Seth J. Marbin | PPSO Senior Honors Thesis | Brown University | May 2005 | of 104

A SEA CHANGE IN THE SOCIAL SECTORExamining Earned-Income Ventures and Entrepreneurial Nonprofits in Rhode Island

By Seth J. MarbinBrown University, May 2005

Thesis submitted as partial satisfaction of the requirementsfor the degree of B.A. in Public and Private Sector Organizations

Advisor: Professor Ann Dill, Ph.D. | Reader: Dean Michael Plater, Ph.D.

Abstract

Nonprofits across the nation are increasingly launching earned-income ventures to

support their social missions. Even though this is not a new strategy for many nonprofits,

for the sector as a whole it is a fundamental shift from traditional sources of revenue.

This study identifies and evaluates significant factors associated with nonprofits

operating earned-income ventures in Rhode Island and compares these results to data

collected for a recently published national study. New data collected from a web-based

survey of over 325 Rhode Island nonprofits is analyzed along with data from over 375

nonprofits in a national sample. This study also examines the types of earned-income

ventures organizations are operating, the perceived impact, how nonprofits define

themselves as “entrepreneurial,” and the reasons why some organizations have never

operated ventures. Insights from Rhode Island nonprofit leaders, academics, and funders

are also included in this mixed-methods approach, to help understand the motivations of

nonprofits launching and operating earned-income ventures. The findings suggest that

Rhode Island organizations are operating earned-income ventures at a rate of three times

the comparable national sample. Additionally the majority of ventures are related to the

organizations’ social missions, and the impacts are overwhelmingly positive.

Key Words

Rhode Island, entrepreneurial, nonprofit, organizations, earned-income, ventures,social enterprise, social entrepreneurship.




Table of Contents

ACKNOWLEDGEMENTS ............................................................................................. 4

INTRODUCTION............................................................................................................. 5

OVERVIEW ....................................................................................................................... 5STATEMENT OF PURPOSE ................................................................................................. 6RESEARCH QUESTIONS .................................................................................................... 6DEFINITIONS .................................................................................................................... 7WHY RHODE ISLAND? ................................................................................................... 10

LITERATURE REVIEW .............................................................................................. 14

BACKGROUND................................................................................................................ 14DESCRIPTION OF THE TREND: FROM THE 1980S TO TODAY ........................................... 15BENEFITS ....................................................................................................................... 16CAUTIONS ...................................................................................................................... 16

OPPOSITIONS.................................................................................................................. 17RELATION TO MISSION................................................................................................... 18SPECTRUM ..................................................................................................................... 20PREVIOUS RESEARCH FINDINGS..................................................................................... 20WHY THE SEA CHANGE IS OCCURRING .......................................................................... 23

METHODS ...................................................................................................................... 27

THE WEB-BASED SURVEY ............................................................................................. 27OVERVIEW OF WEB-SURVEY QUESTIONS ...................................................................... 28RECRUITMENT OF PARTICIPANTS................................................................................... 29SURVEY INCENTIVES...................................................................................................... 30

COMPARISON

ANALYSIS

................................................................................................ 30INTERVIEWS................................................................................................................... 30DATA ANALYSIS PROCESS ............................................................................................. 31

RHODE ISLAND FINDINGS ....................................................................................... 33

DEMOGRAPHICS OF THE RI NONPROFIT SAMPLE ........................................................... 33CHARACTERISTICS OF THE RI EARNED-INCOME VENTURES .......................................... 34DESCRIPTION OF THE RI EARNED-INCOME VENTURES................................................... 36PROFILES OF THREE RI EARNED-INCOME VENTURES .................................................... 37

Cookie Place Cafe, Providence - An EIV from the Start .......................................... 37 Edward King House, Newport - Recently Launched an EIV .................................... 38 Crossroads Rhode Island, Providence – About to Launch an EIV........................... 39

RELATION OF VENTURE’S GOALS TO ORGANIZATION’S MISSION .................................. 40REASONS FOR LAUNCHING (AND NOT LAUNCHING) AN EIV ......................................... 41PERCEIVED IMPACT OF OPERATING AN EIV................................................................... 44HOW NONPROFITS DEFINE “ENTREPRENEURIAL” .......................................................... 45USEFUL SUPPORT AND ASSISTANCE............................................................................... 49RECENT RHODE ISLAND DEVELOPMENTS ...................................................................... 50

Amos House, Providence in National Business Plan Competition........................... 50




MBA Students Partnering with Nonprofits to plan EIVs .......................................... 51 Rhode Island Nonprofits Engaged in Learning Community..................................... 51

RHODE ISLAND COMPARED TO THE NATIONAL SAMPLE........................... 52

RHODE ISLAND DESCRIPTIVE STATISTICS...................................................................... 53NATIONAL DESCRIPTIVE STATISTICS ............................................................................. 53BIVARIATE CROSS-TABULATIONS AND CHI-SQUARE TESTS .......................................... 54

“Entrepreneurial” Organizations ............................................................................ 54 Program Area ........................................................................................................... 54 Age of Organizations ................................................................................................ 55 Budget ....................................................................................................................... 55

LOGISTIC REGRESSION................................................................................................... 56“Entrepreneurial” Organizations ............................................................................ 57 Program Area ........................................................................................................... 57 Age of Organizations ................................................................................................ 58 Budget ....................................................................................................................... 58

LIMITATIONS............................................................................................................... 59 ETHICAL CONSIDERATIONS............................................................................................ 63

CONCLUSIONS ............................................................................................................. 64

SUGGESTIONS FOR FUTURE RESEARCH .......................................................................... 66

ATTACHMENTS ........................................................................................................... 67

1. INTERVIEW PARTICIPANTS ..................................................................................... 672. INTERVIEW GUIDE FOR NONPROFITS...................................................................... 683. INTERVIEW GUIDE FOR SUPPORTING ORGANIZATION ............................................ 684. INFORMED CONSENT FORM.................................................................................... 69

5. POSTCARD.............................................................................................................. 706. E-MAIL................................................................................................................... 717. MEDIA RELEASE 1 ................................................................................................. 728. MEDIA RELEASE 2 ................................................................................................. 739. PROVIDENCE JOURNAL ARTICLE............................................................................ 7410. SOCIAL VENTURE PARTNERS OF RHODE ISLAND WEBSITE .................................... 7511. TRANSCRIPT OF WRNI RADIO ANNOUNCEMENT................................................... 7612. E-NEWSLETTER - RI FOUNDATION ........................................................................ 7613. E-NEWSLETTER - KNOWLEDGE EXCHANGE CENTER ............................................. 7714. E-NEWSLETTER - PROVIDENCE DEPT OF ART, CULTURE & TOURISM.................... 7715. SURVEY ................................................................................................................. 78

APPENDIX...................................................................................................................... 89

WORKS CITED.............................................................................................................. 99




Acknowledgements

The following is a partial list of those who have provided generous support,

advice, guidance and encouragement for this thesis.

Advisor: Professor Ann Dill, Ph.D., Brown University Reader: Dean Michael Plater, Ph.D., Brown University Deborah Schimberg, Social Venture Partners of Rhode Island Kris Hermanns, David Karoff, and Rick Schwartz, The Rhode Island Foundation Cynthia Massarsky, Samantha Beinhacker, and Betty Velazquez, The Yale School

of Management – The Goldman Sachs Foundation Partnership on NonprofitVentures

The Research at Brown (RAB) Grant Committee Ann Kim, Kristine Peterson, Morgan Grefe, and Caitlin Slodden, Brown

University Graduate Students Victoria Ball, M.Ed. Stephen Nelson, Ph.D., Brown University John Tyler, Brown University Lynn Carlson, Brown University The Writing Center at Brown Jyothi Nagraj Marbin Bruce Marbin, Jana Zvibleman, and devora marbin Alicia Young, Brown University Joshua Tripp, Community Wealth Ventures J. Gregory Dees, Ph.D., Duke University, The Fuqua School of Business Rolfe Larson, Rolfe Larson Associates William Foster, Bridgespan Consulting




Introduction

Overview

Nonprofits across the nation are increasingly launching earned-income ventures to

support their social missions (Frumkin, 2002; Massarsky & Beinhacker, 2002; W. Shore,

2003; Young & Salamon, 2002). Even though this is not a new strategy for many

nonprofits, for the sector as a whole it is a fundamental shift from traditional sources of

revenue. Instead of relying on donations, grants, and subsidies alone, nonprofits are

increasingly charging fees, contracting for services, selling products, leasing property,

and engaging in other income-generating activities.

Despite rapid growth in the availability of support services to assist nonprofits in

launching and sustaining earned-income ventures, popular opinion and previous research

are both divided on the merits of these commercial activities. Some praise the leaders of

these so-called “social enterprises” as innovative, forward-thinking, and entrepreneurial.

Others have voiced concerns about nonprofits straying from their social missions as they

attempt to generate financial capital in new ways, and in some cases, even earn profits.

This study presents a portrait of the earned-income ventures operated by

nonprofits in Rhode Island, and compares data collected from these organizations to a

recently published national study. It includes quantitative analysis of national sample

data1 gathered from over 375 organizations and of new data derived from a similar web-

based survey of over 350 organizations from across the state of Rhode Island. It also

incorporates qualitative findings from interviews with nonprofit leaders, academics, and

1 By Massarsky& Beinhacker (2002)




funders. This mixed-methods approach provides insight into the motivations, pressures,

successes, and challenges that organizations face in launching and operating earned-

income ventures. It concludes with recommendations relevant for social enterprises and

entrepreneurial nonprofits nationwide.

Statement of Purpose

The purpose of this study is to examine earned-income ventures across the state of

Rhode Island, identify and evaluate significant factors affecting their development and

compare these organizations to a national sample of nonprofits operating earned-income

ventures.

Research Questions

1. How widespread are earned-income ventures (EIVs) among Rhode Islandnonprofits?

2. How does operating an EIV impact a nonprofit organization (as perceived bynonprofit leaders)?

3. What are the perceived barriers for organizations that are not operating ventures?

4. How do nonprofits in Rhode Island define and identify with the term“entrepreneurial?”

5. What types of support and assistance would organizations interested in EIVs findmost useful?

6. How do factors (such as self-identification as “entrepreneurial,” program area,budget, and size) of nonprofits relate to an organization’s likelihood of operating

an EIV?

7. How do the EIVs of Rhode Island nonprofits compare to the rest of the nation?




Definitions

Because of the wide variety of terms and phrases that are commonly used to

describe earned-income ventures and entrepreneurial nonprofits, the following is a

discussion of key concepts and terminology. Brief definitions, for the sake of this study,

are offered for each concept, followed by explanations of important distinctions, and a

few of the many related phrases that are used in both literature and practice. Because this

study focuses on organizations in the United States, these definitions are based primarily

on American usage of these terms.

For the sake of this study, the term “nonprofits” refers to organizations defined as

“private institutions serving public purposes and not organized principally to earn a

profit” (Salamon & Anheier, 1997, p. 15). This term is often described as a misnomer,

and is widely misunderstood, because nonprofits are not actually restricted from earning

profits, as the name suggests. They are instead restricted from distributing profits to

private owners or shareholders as profit-maximizing (also known as for-profit, business,

and corporate) firms do (Hansmann, 1980). The tax status of nonprofits is another

defining characteristic that is often misunderstood. While there are currently 35 different

tax classifications for nonprofit organizations, this study focuses exclusively on those

designated as 501(c)(3). This is the most common designation, and includes

organizations that are generally exempt from federal income tax and eligible to receive

tax-deductible contributions (Internal Revenue Service, 2002). As of 1950, organizations

classified as 501(c)(3) have been required to pay Unrelated Business Income Tax on

revenue from activities that are not significantly related to their missions (Hines, 1998).




Within the U.S., nonprofits are also commonly referred to as charitable, tax-exempt ,

voluntary, not-for-profit , third-sector , and social-sector organizations.

The term “profit” is generally defined as the amount of money received (revenue)

subtracted from the money spent (costs) in a given time period. This definition is suitable

for the sake of this study. However, it is worth mentioning two other common definitions

of profit that highlight the complicated nature of this term. Accountants using the

“accrual basis of accounting” deduct explicit costs (those which can directly be

accounted for) from revenue that are “recorded in the period in which they are earned or

incurred regardless of whether cash is received or disbursed in that period” (Venture

Line, n.d.). Using this definition a firm can record a “profit” despite receiving less money

than they spent in a given time period. The economists of profit definition begins with the

general definition above, yet they deduct both explicit costs (the costs that accountants

use) and implicit (or opportunity) costs which are defined as the value of a course of

action as measured by the costs associated with alternative courses of action (Mankiw,

2004). Both the accountants’ and economists’ definitions highlight complicating factors

not taken into consideration in the general definition.

The phrase “earned-income ventures,” as it is defined for this study, refers to

activities initiated by nonprofits that generate revenue in direct exchange for products,

services, or privileges (Social Enterprise Alliance, 2005). While the phrase “social

enterprise” may be more commonly used today, Young (2001, p. 1) described it well

when he said social enterprise is an “imprecise concept in the United States.” To illustrate

this ambiguity, the term “social enterprise” can be found referring to a variety of

organizational forms in both the nonprofit and for-profit sector including: an earned-




income venture; a nonprofit organization that operates an earned-income venture; a for-

profit business which supports a nonprofit, has adopted a social mission or philanthropic

strategy; and the emerging sector made up of these various organizational forms. For

further reading, Alter (2004) offers a review of various definitions as well as a helpful

“typology” of social enterprises. The phrases: community wealth, mission-driven, and

social-purpose are also commonly combined with the words venture, enterprise, and

business, to describe income-generating activities within the nonprofit sector.

The related concept of “social entrepreneurship” is worth special consideration

because of the evolving debate about its true meaning. Some advocate for a definition of

social entrepreneurship that specifically includes earned-income as a defining

characteristic, emphasizing that innovation without income is not sustainable in either the

nonprofit or the for-profit sectors (Boschee & McClurg, 2003). Others advocate for a

more broad definition of social entrepreneurship, describing it as a “generic process not

specifically dependent on the profit seeking paradigm” (Young, 2003, p. 166) and a

method for creating social value that includes options “from pure philanthropy to the

commercial methods of the business sector” (Dees, 2001, p. 5). The working paper

“Social entrepreneurship: What are we talking about?” (Mair & Marti, 2004) highlights

many more definitions of this phrase currently in use and the evolution of this field of

study.

The label “entrepreneurial” is commonly used to describe specific innovative and

risk-taking behavior, activities related to earning money, or general approaches to

organizing a business. As one of the aims of this study is to better understand how Rhode

Island nonprofit leaders define and identify with the concept of “entrepreneurial” this is




further discussed in the Findings section. According to Drucker (1993, p. 21), since

“entrepreneur” was first used almost 200 years ago to describe leaders in the for-profit

sector, there has been “total confusion” about its definition. In the United States, it is

often used to describe “one who starts his [or her] own, new and small business,”

however Drucker (1993, p. 21) makes that case that, “not every new small business is

entrepreneurial.” Citing Drucker, Dees (2001) asserts that launching or operating an

earned-income venture does not necessarily make a nonprofit “entrepreneurial” either. He

also suggests that nonprofits can be entrepreneurial in ways that do not involve earning

income. One often-cited leader of an entrepreneurial nonprofit said, “becoming more

entrepreneurial is as much a shift in organizational culture as a broadening of economic

opportunity” (Strickland, 2003, p. 24).

This study focuses on Rhode Island nonprofits and compares these organizations

to a national sample. The following section discusses why Rhode Island is a good sample

for this comparison.

Why Rhode Island?

The nonprofit sector in Rhode Island provided a good sample for this study for

three major reasons: it has an interesting history in connection with earned-income

ventures, it is representative of the national nonprofit sector in two key revenue streams;

and despite rapid growth in recent years, the small geographic size of the state helps

foster a comparatively cohesive nonprofit community.

According to Beauchemin and Gallo (2003), organizations in Rhode Island report

key revenue streams in similar proportions to all U.S. nonprofits. For Rhode Island

nonprofits 63% of their revenue comes from programs and services and only 14% from




contributions (which include donations and foundation grants), while organizations

nationwide indicated 64% and 14% respectively. Other revenue streams including

investment income and government grants are also similar in proportions, although not

relevant for this study.

The nonprofit sector in Rhode Island has grown rapidly in recent years. From

1990-2000, the number of nonprofit organizations (with more than $25,000 in gross

annual receipts) grew by 71.4%, from 842 to 1,443 (Beauchemin & Gallo, 2003). By

comparison, the number of total business firms in Rhode Island grew by only .5%, from

25,110 to 25,243, in the same time period (U.S. Census Bureau, 2005). Yet, compared to

other states, Rhode Island’s small geographic size and resulting structural cohesion were

considered advantageous for this study. Because there is only one major newspaper, one

public radio station, and one community foundation for the entire state, news and

information are relatively easily shared among nonprofits in Rhode Island. This was

helpful in securing a higher response rate than previous national studies have achieved.

One example of Rhode Island’s history with earned-income ventures is illustrated

by the story of the nonprofit Rhode Island Hospital and its relationship to the for-profit

Rhode Island Hospital Trust Company. This relationship, as told by historian Joseph

Garland, provides an interesting example of the development of an earned-income

venture.2

The effort to build a hospital in Rhode Island started in 1851 with a traditional

nonprofit fundraising strategy. Recognizing a community need, a group of Rhode Island

doctors sent a letter to all citizens “paying more than $100 in taxes a year” asking for a

2 This illustrative anecdote of the Rhode Island Hospital is based on Garland (1963) and oral history

provided by Rick Schwartz of the Rhode Island Foundation.




contribution (Garland, 1963, p. 7). They then approached the City Council, asking them

to commit land to the hospital if the private funds could be raised. Neither the Council’s

support nor the private funds were secured, and to the frustration of many, the first

attempt to build a nonprofit hospital in Rhode Island met an untimely demise.

In 1857, upon observing “the desperate conditions under which his medical

friends attempted to treat the poor of Providence,” (Garland, 1963, p. 11) a young Brown

University graduate named Thomas Ives convinced his dying father to leave $50,000 in

his will to help establish a hospital. As wounded soldiers began to return from the Civil

War, the community need was magnified, and “sickness and suffering, wounds and death,

had become the common bonds of people in Rhode Island” (Garland, 1963, p. 11).

In 1863, the then Captain Thomas Ives returned from the war and revitalized the

effort for a hospital. Leveraging the bequest of his father, $25,000 from his uncle, and his

own donation of $10,000, Ives secured a state charter and 12 acres of land from the City

Council. Over the next year, a committee of Trustees raised $305,000 in donations, which

was “by far the largest amount that [had] ever been raised for any single object of charity

in the State,” according to Ives (Garland, 1963, p. 14). Despite the record-breaking

fundraising, and an additional $50,000 bequest from Captain Ives when he passed away

two years later, rising costs and shortages of labor and materials left the trustees wanting

for money to finish the construction so that the hospital could open.

In 1867, the trustees developed an arrangement to “the mutual benefit of the

hospital and their own financial interests” (Garland, 1963, p. 15). They leveraged the

community support of the hospital (as well as its cultural capital) to create a for-profit




bank known as the Rhode Island Hospital Trust Company.3 This bank was required to

make annual payments to the nonprofit Rhode Island Hospital (equaling one-third of its

net profits above six percent), in lieu of normal taxes. Thus, over 135 years ago, a bank

was created as an earned-income venture to help subsidize a nonprofit hospital.

The Hospital Trust Company has since been acquired (and no longer operates

under its original name) but in its time, it “proved to be a substantial source of income for

the hospital” (Garland, 1963, p. 16). The Hospital Trust Company also proceeded to

found the Rhode Island Community Foundation, the only community foundation serving

the state, and one of the collaborators on this research. The Rhode Island Hospital is now

a part of a nonprofit healthcare partnership which controls over $1.4 billion in assets,

provides over $50.4 million in uncompensated care, and employs more than 10,000

people (Lifespan, 2003).

As demonstrated, Rhode Island has an interesting history of earned-income

ventures, is comparable to the national nonprofit sector in key revenue areas, and the state

cohesion makes it a good population from which to sample. The following Literature

Review section will discuss previously published work in the field to help highlight the

national history and context of earned-income ventures.

3 The profit sharing structure of the Rhode Island Hospital Trust Company was based on a modelestablished by the Massachusetts General Hospital in 1814.




Literature Review

Background

Most of those who have written about earned-income ventures in the U.S. start

with a reminder that “earning” income is not a new strategy for all nonprofits. Hospitals

and universities, which are recognized as the two largest revenue generators in the sector

today, have both historically “earned” income by charging fees for their services. Human

service organizations such as Goodwill Industries have operated retail stores for over 100

years (Goodwill, 2005), the National Geographic Society has been underwriting their

educational mission with magazine sales since 1888 (National Geographic, 2003), and

the Girls Scouts of the U.S.A. have been selling cookies for almost 90 years (Girl Scouts,

2004). The Cistercian Abbey, a religious congregation in Wisconsin, recently received

national media attention for their earned-income venture LaserMonks.com. As they

describe it, monks used to survive by copying manuscripts by hand and today they carry

on this tradition by selling toner and ink cartridges on the internet. They date the history

of revenue-generating activity in their religious order back 900 years (McCoy, 2004).

Today, the range of nonprofits launching earned-income ventures, the types of

ventures they are operating, the resources available for guidance and support, and the

attention focused on these enterprising activities are all growing exponentially. The

following section describes how the trend has evolved over the last 25 years.




Description of the Trend: From the 1980s to Today

During the 1980s, in one of the earliest studies seeking to understand the trend of

nonprofits turning to enterprise as an alternative to traditional funding sources, Crimmins

and Keil (1983) described a “sense of explosive activity in the sector.” Five years later,

Skloot (1988, p. 3) described a small yet growing “interest in and trend toward nonprofit

enterprise.” Government cutbacks in the 1980s, that caused both funding shortages and

increased demand for nonprofit services, are cited as the primary reasons that nonprofits

began adopting earned-income ventures in such large numbers during this decade

(Crimmins & Keil, 1983; Salamon, 1996).

In the 1990s, Shore (1995) outlined a strategy for a “revolution” among nonprofit

leaders to create rather than simply re-distribute wealth. Speaking about the growth of

job-training ventures, Emerson and Twersky (1996, p. 211) reported, “increasing

numbers of non-profits are developing enterprises to employ formerly homeless and other

low-income people.” Dees (1998, p. 55) described a growing number of nonprofits,

“turning to the for-profit world to leverage or replace their traditional sources of

funding.” Weisbrod described a “commercial transformation” and declared, “massive

change is occurring in the nonprofit sector” (1998, p. 1).

In the new millennium, Massarsky and Beinhacker (2002, p. 13) observed, “the

trend to venture has increased significantly over the past twenty years,” and Shore (W.

Shore, 2003, p. 7) reported that “generating resources through profitable enterprise to

promote social change, has expanded far beyond what has previously been reported, or

could even be imagined.” Just this year, Foster and Bradach (2005, p. 92) declared,




“today it seems routine… earned-income initiatives are becoming accepted -- even

expected -- throughout the nonprofit world.”

BenefitsMuch of the previous literature focuses on benefits of operating earned-income

ventures. Advantages, often labled “halo effects” (Massarsky & Beinhacker, 2002) or

“halo benefits” (Hochberg, 2002) are described as positive influences on an

organization’s culture, current and prospective staff, reputation in the community, and

ability to achieve their mission. In addition, earned-income ventures can help

organizations “accomplish much more than they could by relying only on the limited

philanthropic and government resources…” (Dees, 2004, p. 3).

For those who describe earned-income ventures as beneficial to their parent

organizations, the level of importance varies. Some describe ventures as valuable in

moving an organization towards self-sufficiency (Burns, 2003; King, 2003), while others

describe earned-income ventures as “essential” for the survival of their organizations

(Strickland, 2003; Walls, 2003). Boschee (2001, p. 1) stated that “entrepreneurship in the

delivery of social services is not only legitimate, but necessary.”

Cautions

The majority of those who have discussed the benefits of earned-income ventures

also emphasize that these ventures are not right for all nonprofit organizations. Many

caution organizations interested in adopting earned-income ventures as a quick fix. Over

twenty years ago, Crimmins and Keil (1983, p. 32) predicted, “no matter how successful

enterprise ventures become in the sector, they will not be able to cure all of its financial




ills.” That same year, in a book generally dedicated to promoting earned-income

ventures, Haycock (1988, p. 147) published ten case studies highlighting “pitfalls of

earned income for the small nonprofit.”

Through a mostly economics-based approach, Weisbrod and his colleagues

(1998a) highlighted some benefits and numerous challenges of running earned-income

ventures including: goal displacement, competition with the for-profit sector, and

mission-drift that can accompany earned-income ventures. Bradley (2004, p. xvi)

described earned-income ventures as “risky business.” And Dees (1998, p. 56) warned of

“many dangers for nonprofits” and said, “in the best of circumstances, nonprofits face

operational and cultural challenges in the pursuit of commercial funding. In the worst,

commercial operations can undercut an organization's social mission.”

Oppositions

While many have expressed hesitation about nonprofits launching earned-income

ventures, Costello was one of the early voices of active opposition. In her review of

Shore’s call on nonprofit leaders to seize earned-income opportunities, Costello (1996,

para 16) voiced concerns about a potential increase in nonprofits’ “dedication to feeding

the bottom line rather than the bread line.”

Two articles that appeared within the last six months have raised similar concerns.

In “The Pitfalls of Profit,” Weisbrod (2004, p. 46) highlights case studies of ventures

gone bad, and encourages a “rebalancing of the tax-code” to provide more incentives for

donations and to discourage nonprofits from engaging in commercial activity. “Should

Nonprofits Seek Profits?” (Foster & Bradach, 2005) tells the stories of a few incredibly

unprofitable and mission-detracting ventures, while casting doubts about the accuracy of




financial accounting throughout the sector and questioning the “profitability” claims and

methodology of previous studies.

Relation to MissionFoster and Bradach’s (2005) conclusion to “Should Nonprofits Seek Profits?”

calls for organization to put “mission first” when considering earned-income ventures at

the risk of harming “society itself.” While few have used such strong cautionary

language, the idea that ventures are better off when they are related to an organizations’

mission seems to be the one point about which almost everyone who has studied the topic

can agree. Yet determining what exactly relates to an organization’s mission is far from

easy or clear, and the current fundraising alternatives can have similar mission-detracting

effects. Froehlich (1999) wrote, “we worry and speculate about mission dilution and

legitimacy erosion as distractions emerge from the [nonprofit’s] necessary economic

endeavors. Yet, these are and always have been the facts of life for a nonprofit

organization.”

DiMaggio (1988) raised the question of mission-drift related to enterprise in arts-

related organizations, and Frumkin (2002, p. 30) found that despite the worries of some

previous observers of nonprofits’ commercial activities, “there is no clear evidence that

the new form of financing fueling the sector’s growth has significantly undermined the

ability of nonprofit organizations to fulfill their missions." Weisbrod (2004, p. 46) added

that it is difficult to determine what distorts an organization’s mission. It is also worth

noting that it is difficult to determine if the mission has in fact been “distorted,” given

that missions often evolve and change over time.




As discussed in the Definitions section, the extent to which earned-income

ventures relate to an organization’s mission is important for tax purposes because

nonprofits are required to pay taxes on income “not substantially” related to their

missions. The “relation to mission” question is also crucial in examining the diffusion of

earned-income throughout the sector because the missions of nonprofits are one of the

key justifications for their differential tax and legal status. As Brown and Slivinsky

(2003) wrote, “it is hard to overstate the importance of mission in shaping the economic

study of nonprofits.”

Weisbrod concluded that, “increased commercialization is not ideal,” but

identified the more important question: is it preferable to alternative options? He

identified the alternative options as increased “dependence on government” or “decreased

output of collective goods” (1998a, p. 298). Further complicating matters, Weisbrod

wrote, “the precise nature of sacrifices that nonprofits make to raise money is seldom

clear-cut” (1998a, p. 298). This was reiterated recently by Shuman and Fuller (2005),

who discussed the paradox of many fundraising efforts that nonprofits now engage in that

require catering to those with abundant resources, to shift small amounts of those

resources to organizations attempting to redistribute resources. Shuman and Fuller (2005)

concluded with a call for nonprofits to embrace the power of entrepreneurship for social

change. After a thorough examination of a group of nonprofits operating earned-income

ventures, Emerson and Twersky (1996, p. 13) reported, “our experience has been that,

when managed appropriately, sound business practice can help drive the realization of the

organization’s social mission.”




Spectrum

Recognizing the vast array of program areas in which nonprofits operate, the

ambiguity of missions and the variety of activities that are considered earned-income

ventures, previous authors have tried to make sense of social enterprises along

continuums. Dees (1998) offers a “Spectrum of Social Enterprise” that relates venturing

activity to an organization’s mission, and Crimmins and Keil (1983) developed the

“Spectrum of Nonprofit Enterprise” that relates enterprises to an organization’s

programmatic area. Both highlight the wide range of activities that any individual

nonprofit organizations can undertake related to earned-income ventures.

Previous Research Findings

Massarsky and Beinhacker (2002, p. 1) set out to “survey the landscape of

enterprise in the nonprofit sector.” Through a national survey of 519 nonprofit

organizations they discovered 42% of the organizations in their sample were currently

operating earned-income ventures (EIVs); a clear majority of ventures were service-

related; organizations operating EIVs tended to be older than those not operating EIVs;

and “arts and culture” organizations were more likely to operate EIVs than organizations

focused on other program areas. The study “Enterprising nonprofits: Revenue generation

in the nonprofit sector” by Massarsky and Beinhacker was the basis and inspiration for

the quantitative portion of this thesis. Through comparison to their results, this thesis

seeks to extend their exploration of organizational characteristics related to nonprofits

operating earned-income ventures.

Massarsky and Beinhacker suggested that, “future research might answer the

question as to whether the differences [in the program area of organizations operating




EIVs] stem from inherent properties of the kinds of goods and services produced in these

varied sectors, or whether they relate more to cultural and organizational differences

among the organizations” (Massarsky & Beinhacker, 2002, p. p3). They also identified

business planning as one of the key success factors of earned-income ventures and found

only 55% of the organizations operating EIVs had written business plans. They

concluded that this could be improved though focused attention and resources, which led

to the development of the first National Business Plan Competition for Nonprofit

Organizations (now in its third year).

In 2002, Community Wealth Ventures conducted a national survey of 72

nonprofits operating business ventures, defined as “a business that generates revenue

from the sale of products and/or services to the customers beyond the organization’s

immediate constituents” (2003, p. 112). In their sample, the organizations operating

business ventures tended to be: social service organizations with employment and

training missions; at least 9 years old; and operating multiple ventures. Thrifts stores

were the most common ventures represented in their sample, 89% of respondents

indicated that their venture related directly or nearly-directly to the mission of their

organization, and 69% reported either making a profit or breaking even (Community

Wealth Ventures, 2003).

In industries such as day care, nursing homes, and hospitals, nonprofits are

already in direct competition with for-profit firms. Previous research suggests that

although the nonprofit organizations in these industries might appear to be “highly

commercial” they continue to offer a variety of benefits which characterize them as more

mission-related than profit maximizing. Weisbrod (Weisbrod, 1998a) found that when




compared to their for-profit counterparts, nonprofits continue to offer: higher-quality

services, lower prices, and continued access to services for those who can not afford to

pay.

A common concern of those in the nonprofit sector is how operating earned-

income ventures might impact their ability to continue to attract donations and other

resources. Herman and Redina (2001) sought to answer this question through a

situational analysis study of 70 volunteers. They measured how donors would respond to

nonprofit organizations engaging in commercial activities and discovered evidence to

suggest that donors would be more likely to support “mission-related commercial income

activities” than those that do not advance the organization’s mission.

Because self-identification as “entrepreneurial” was shown to be interrelated with

operating earned-income ventures by Massarsky and Beinhacker (2002), the question of

how nonprofits define entrepreneurial is an important one. A study of the personal

characteristics of women entrepreneurs in the nonprofit sector in India found agreement

with characteristics previously identified with women entrepreneurs in the for-profit

sector including, “they are risk takers, come from financially secure backgrounds, have

access to childcare and support for household duties, and place a high premium on

independence” (Handy & Ranade, 2000, p. 2). And Dart (2004a) constructed a typology

of the related concept of being “business-like” which is used as a starting place for this

study’s examination of how nonprofits in Rhode Island identify with and define

“entrepreneurial.”




Why the Sea Change is Occurring

As this study suggests, there is a sea change, or fundamental shift, occurring in

the nonprofit sector: nonprofits are operating earned-income ventures and social

enterprises at increasingly high rates. While there has been little empirical research about

why this change is occurring, Weisbrod (1998a, p. 305) offers one compelling reason: in

the nonprofit sector, “expanded commercial activities are the most promising revenue

sources.” Dees (1998) explained the “rising tide of commercialism” in the nonprofit

sector as a combination of five forces: a world-wide “pro-business zeitgeist,” attempts by

the organizations to model the independence they seek to instill in their clients, the search

for financial sustainability, the influence of funding agents, and competition among

nonprofits for limited funding. Dart (2004b) explored the emergence of social enterprise

through “legitimacy” and “institutional theories.” This section continues this exploration

of change through sociological theories and discusses some economic theories of

organizations and the market-based environment in which they operate to add to these

explanations of the emergence of earned-income ventures.

The sociological theory of “resource dependency” suggests that all organizations

exchange resources with their surrounding environments as a condition for survival

(Scott, 1992, p. 114). Most of the resources that nonprofits need to operate are similar to

those needed by for-profits, including staff, electricity, and meeting space; yet, some are

more unique. Legitimacy, as defined by Suchman (1995, p. 574) as “a generalized

perception or assumption that the actions of an entity are socially desirable, proper or

appropriate...”, can be seen as one resource which has a distinctive value for nonprofit

organizations. Because most nonprofits rely on donations for at least one source of




funding, and people are less likely to donate money to an organization whose legitimacy

they have reason to question, nonprofits have a unique need to be seen as “legitimate” in

order to successfully raise donations. This is particularly true for nonprofit organizations

that do no produce outputs that are easily quantified or measured.

“Resource dependency” is premised on the theory of “scarcity” (Robbins, 1932)

which suggests that all resources are in limited supply. While some resources might be

easily quantified and measured, most of what nonprofits produce (or provide as a service

to the community) are not. Because the price of these resources is the primary means of

measuring their value, the symbolic value of money itself is also important. As Smith

observed, “We say of a rich man that he is worth a great deal, and of a poor man that he

is worth very little money” (Smith, 1776, para. 1). In this sense, money is not only a

measure of assets; it is often a measure of “worth” as well. This can also be observed in

evaluations of organizations. Regardless of its ability to deliver on its social mission, a

nonprofit that was unable to pay its bills would generally be thought to have little value

and ones that have more resources are often assumed to be “worth” more.

“Institutional” theories of organizations assert that an organization’s life chances

improve when its behaviors are aligned with the norms and social expectations of the

larger society (Tucker & Baum, 1992, p. 62). These are grounded in “open-systems”

theories which suggest that the environments in which organizations operate influence

their structure (Handel, 2003). These environments have been characterized as primarily

“institutional” or “technical.” “Institutional” environments are those in which cultural

symbols and belief systems are of primary importance (Meyer & Rowan, 1977), while

“technical” environments place importance on characteristics such as an organizations




speed of production, and specific quality or financial metrics. Most nonprofits operate in

institutional environments. These “institutional” organizations are characterized by “a

more symbolic ‘bottom line,’ represented by prestige, support, and legitimacy” (Dill,

1994, p. 351). This is in contrast to organizations operating in technical environments

which “look to profit margin and market share as indicators of success” (Dill, 1994, p.

351).

The theory of “institutional isomorphism” (DiMaggio & Powell, 1983) suggests

that organizations adapt their structure as a result of forces which can be characterized as:

mimetic, coercive, or normative. “Coercive” forces are attempts by outside agencies to

influence organizations’ structure or activities. “Normative” forces are described as those

that spread through professional networks or trade associations, and “mimetic” forces

arise as a result of perceived benefits to the organization for adopting a particular

structure or set of activities.

Though there is strong evidence of isomorphism within the nonprofit community

in Rhode Island, the drivers of the institutionalization of earned-income ventures are far

from clear. There is little evidence to suggest that nonprofits are being formally

“coerced” to engage in income-generating activities, however for some, informal

“coercion” (in the sense of influence across an unequal power structure) may be a factor.

Level-funding from the state was cited by multiple organizations as a specific reason for

developing ventures or increasing the scope of their ventures.

The work of Social Venture Partners of Rhode Island and the Rhode Island

Foundation (both partners in this research) may also be having influencing effects on

local nonprofits. Both organizations have offered funding specifically for social




enterprises and they have worked together to host several workshops and forums on

topics related to social enterprises and earned-income ventures. The chance that some

organizations might be adapting their structure to include earned-income ventures to be

seen in a good light by these funding agents should not be overlooked, yet the data from

this study suggests that “mimetic” forces are the primary motivators of nonprofits

adapting earned-income ventures. Nonprofits in Rhode Island appear to be launching

earned-income ventures largely because they view it as a way to attract positive

community relations and thus legitimacy.




Methods

This study was conducted in three parts: a web-based survey, semi-structured

interviews, and a comparison analysis. The survey was available online from February

1st -15th, 2005. The interviews were conducted in March and April, 2005 and the results

were then analyzed and compared to national data that was collected through a separate

initiative in 2002. The following section provides more detail about the methods used to

collect and analyze the data.

The Web-Based SurveyThe survey [attachment 15] was hosted online by Zoomerang.com, and was

accessible through a link on the Social Venture Partners of Rhode Island website

[attachment 10]. The questions were based on those developed by Massarsky and

Beinhacker of the Yale School of Management – the Goldman Sachs Foundation

Partnership on Nonprofit Ventures.

The survey consisted of 80 possible questions and skip-logic was used to reduce

the number of questions asked of any given respondent. Based on previous answers each

respondent was asked a minimum of 18 and a maximum of 48 questions. These were a

mix of multiple-choice, yes-no, open-ended, and ranking-type questions. The eight

questions used in the skip-logic sequence were mandatory, and the other 72 were

optional.

The primary change between the survey used in this study and that of the previous

one was the result of a technical limitation of the software. The Massarsky-Beinhacker

survey asked detailed side-by-side questions about the two ventures that provided the




greatest benefit to the organization. This survey only asked details about the one most

successful venture because the side-by-side method was not possible, and asking the

questions separately would have resulted in 15-20 additional questions. Other changes

involved very limited re-wording of questions, removal of answer choices, and the

addition of a few questions such as: What is the mission of your organization? Who

manages your venture? What is the manager’s formal business training?

Overview of Web-Survey Questions

The first seven questions were identical for all respondents and addressed the

Informed Consent Statement and issues such as program area, mission, general budget,

organizational scope and size. As an example of how the skip logic worked, question #9

asked: “Do you consider your organization to be entrepreneurial?” If the respondent

chose “yes” they were asked question #10: “In what ways is your nonprofit

entrepreneurial? What entrepreneurial strategies are you using?” If they chose “no” to

question #9, they skipped question #10.

The answer to question #11 was the primary determinant in the length of the

survey and types of questions for each respondent. It provided a definition of earned-

income and then asked:

Has your organization ever operated an earned-income venture? Yes, currently operating 1 or more earned-income venture Not currently, but operated 1 or more in the past Never operated an earned-income venture

Respondents who chose answer #1 or #2 were asked up to 37 more detailed

questions about their organizations, the earned-income venture(s) they were operating




and the effects of the ventures on their organization. Those who indicated that they had

never operated an earned-income venture were asked up to 10 more questions.

The final questions, asked of all organizations, address issues including: plans to

start any ventures in the next year, types of support that might be helpful in doing so, how

participants heard about the study, and personal and organizational contact information.

Recruitment of Participants

The web-based survey was open to all 501(c)(3) organizations operating within

the state of Rhode Island. This population is estimated to be about 5000 organizations,

but because many smaller and religious nonprofits are not required to file tax returns the

exact size of this population is unknown. The mailing addresses for these organizations

were collected from one public database (Internal Revenue Service, 2005a) containing

4564 records, and two private databases. Duplicates, charitable trusts, and scholarship

funds were removed and the remaining 4652 addresses were then verified through the

National Change of Address (NCOA) and Coding Accuracy Support System (CASS)

services provided by Melissa Data Services. The final list consisted of 4342 organizations

that were each mailed a postcard [attachment 5] on 2/28/05 inviting them to participate.

Five of these postcards were returned as undeliverable. An email invitation [attachment

6] was sent directly to 1691 organizations on 3/2/05. A total of 370 of these emails were

returned as undeliverable.

On 3/7/05 media releases were distributed from the Rhode Island Foundation

[attachment 7] and the Brown University News Service [attachment 8] to all local

newspapers, television and radio stations. As a result, a brief article [attachment 9]

appeared in the Providence Journal on 3/12/05, and announcements [attachment 11]




were also made on the WRNI radio station on the last day of the study, 3/15/05. E-

newsletters from three separate organizations [attachments 12, 13 and 14] contained

descriptions of the survey and links to the website.

Survey Incentives

As incentives, recruitment materials highlighted that each participant who filled

out the web-based survey was eligible to receive:

A link via email to download an electronic copy of the final report; A chance to be profiled in the report (if selected for a follow up interview); A chance to win one of 5 certificates for $25-off the next “New Business

Ventures for Nonprofits Workshop” hosted by Social Venture Partners of Rhode

Island and run by The Grantsmanship Center; A chance to win one of 3 copies of “Generating and Sustaining Nonprofit Earned

Income: A Guide to Successful Enterprise Strategies” Edited by S. Beinhacker, C.Massarsky, and S. Oster (List Price: $45).

Comparison Analysis

The results from the Rhode Island web-based survey were compared to data

collected by Massarsky and Beinhacker for their report “Enterprising Nonprofits:

Revenue Generation in the Nonprofit Sector” (Massarsky & Beinhacker, 2002). The

Rhode Island sample includes 329 organizations collected over a two-week period in

2005, and the national sample includes 519 nonprofits from across the country, collected

over a two-and-a-half-month period in 2001.

Interviews

A series of 22 interviews were conducted in March and April, 2005 [attachment

1]. Of these, 11 interviews were conducted with nonprofit leaders, most of which were

currently operating earned-income ventures. Interviewees were selected to participate




based on attempts to balance a diverse set of organizational demographic considerations

including, size, location, budget, program area and venturing status. These interviews

were conducted over-the-phone, lasted about one half hour, and used a nine-question

guide [attachment 2].

Eleven interviews were conducted with individuals recommended by partnering

organizations as supporters of the Rhode Island nonprofit sector. These interviews used a

separate question guide [attachment 3] that asked questions about their observations and

opinions of nonprofits operating earned-income ventures. These interviews consisted of 2

funders, 3 supporting organizations, 2 academics and 3 representatives from state offices.

As incentives, all interview participants were eligible to receive a link to an electronic

download of the report, and were considered for the Profiles section and quotes in the

final report.

Data Analysis Process

The quantitative data from the Rhode Island web-survey was first examined

through Zoomerang.com’s cross tabulation function. The Rhode Island and national were

data were then analyzed with STATA 8, the general-purpose statistical software package.

The open-ended responses were analyzed using the ThoughtSCAN keyword analyzer and

then through manual content analysis. The interviews were primarily treated as brief

exploratory case-studies.

The quantitative data analysis involved five steps. First, the research questions

were established and outcome and control variables were identified. Next the variables

were examined and collapsed into categories making sure not to distort the distribution of




the raw data.4 Next the relationship of each independent variable was compared to the

dependent variable with Bivariate Cross Tabulations and Chi Squared Tests (on both the

Rhode Island and national data). The data was then pooled and compared for statistical

significance. And finally, logistic regression was run on the Rhode Island, national and

pooled sample, regressing the dependent (dichotomous) variable on the collapsed

independent variables.

4 e.g. on the survey there were originally nine sub-categories for the program variable “human services”These included “human services-employment and jobs” and “human services-youth development.” Foranalysis, these were all collapsed into the one “human service” category.




Rhode Island Findings

Demographics of the RI Nonprofit Sample

The following is a description of the 329 Rhode Island nonprofit organizations

that responded to the Web-Based Survey. The largest groups of respondents had program

areas focused on “Human Services” (21%), had been in operation for at least 20 years

(52%), and had budgets less than $250,000 (44%). The majority of organizations self-

identified as “entrepreneurial” (53%), and they were currently operating one or more

earned-income venture (62%). [Table 23]

The two program areas least represented in the sample were “International

Foreign Affairs” and “Miscellaneous and Mutual Membership Benefit Organizations”

with 1% and 2%, respectively. There were noticeably fewer organizations that had been

in operation for six to ten years, and they constituted only 13% of the sample.

Organizations with larger budgets, greater than $5 million, only constituted 12% of the

sample.

Organizations that self-identified as “entrepreneurial” (53%) were the majority of

respondents, yet there was almost an equal number that identified as “non-

entrepreneurial” (47%). [Table 1] The clear majority of organizations (61.8%) in this

sample are currently operating at least one earned-income venture. Those which have

never operated an EIV constitute 32.3% and those that are “not currently, but operated

one or more in the past” only make up 6% of the sample. [Table 2]




Table 1: Self-Identification as “Entrepreneurial” (of Full RI Nonprofit Sample)

Entrepreneurial %

1. Yes 53

2. No 47

N=298 100 0%

20%

40%

60%

Yes No

Table 2: Operation of Earned-Income Ventures (of Full RI Nonprofit Sample)

Operating EIV %

1. Yes currently 62

2. Never 33

3. Not currently but didso in the past

6

N=285 100 0%

20%

40%

60%

80%

Currently Never In Past

Characteristics of the RI Earned-Income Ventures

The following sections describe the 142 organizations surveyed that are currently

operating earned-income ventures. As shown in [Table 3], 58% of these organizations

are operating more than one venture. Forty-Six percent of all the ventures (N=220) in

operation are “service-related / fee-for-service” and fifty-six percent of the organizations

(N=140) report that service-related ventures are bringing the “greatest social and

financial benefits” to their nonprofit organization. As [Table 4] shows, the vast majority

of these ventures (80% of N=138) are structured as “in-house” operations, which means




they are operated within the parent nonprofit organization, as opposed to being operated

as separate for-profit or nonprofit entities.

Table 3: Number of EIVs in Operation (of RI Nonprofits Operating 1 or More)

Number of EIVs %

1. One 43

2. Two 23

3. More than Two 35

N=142 101 0%

20%

40%

60%

One Two > Two

Table 4: Characteristics of the EIVs

Characteristics Count %

2. Types of EIV in Operation

Service-related (fees for service) 102 46%

Product-related sales/manufacturing 49 22%

Cause-related marketing/licensing 11 5%

Renting/leasing property(e.g., building rentals)

40 18%

Other 18 8%

N=142 Total 220* 100%

3. EIVs that Provide the Greatest Social and Financial Benefits

Service-related (fees for service) 79 56%

Product-related sales/manufacturing 21 15%

Cause-related marketing/licensing 4 3%

Renting/leasing property(e.g., building rentals)

21 15%

Other earned-income ventures 15 11%

N=140 Total 140 100%

4. Legal Form of the EIV

In-house operation 111 80% Separate nonprofit entity 13 9%

Separate for-profit entity 6 4%

Other 8 6%

N=138 Total 138 100%

Note: * Total count is greater than N because respondents wereasked to “check all that apply.”




Description of the RI Earned-Income Ventures

Earned-income ventures provide products and services across a wide range of

categories. These ventures can be broadly grouped as products, services, marketing/

licensing, and property-related. Examples of products include magazine subscriptions and

houses constructed and then sold at-cost directly to home owners with an interest-free

mortgage. Examples of services include on-site medical and dental services for a

residential vocational program for underprivileged young adults and a confidential

document destruction business providing pick-up, destruction and disposal of paper.

More sample descriptions of these ventures can be found in [Table 5] and [Table 6].

Table 5: Sample Descriptions of Product and Service-Related EIVs

Products Services

Collaborative energy purchasingBanners on the website for local restaurants and

retailers

Fresh farm produce sold at farmers markets andthrough a sliding-scale community supported

agriculture (CSA) program

Confidential document destruction business providingpick-up, destruction and disposal of paper.

Houses constructed and then sold at-cost directly tohome owners, with an interest free mortgage.

Consulting fees and trademark licensing royalties fororganizing events across North America.

Magazine subscriptions

Culinary and nutrition education program designed topromote locally grown produce and improve the nutritionof low-income families through outreach and education

at RI farmers markets.

Mailing houseGraphic design studio that provides services for

companies such as logo design, annual reports, andstationery design.

Manufacturing various sewn products for the federalgovernment using visually disabled labor.

HIV case management services

Paintings, t-shirts, clocks, cards and poetry chap books Low-cost sterilization surgery for community pets

Publications, curriculum and other programmaticmaterials

Marketing and box office service for arts and culturalgroups

Sales of t-shirts and baseball hatsOn site medical and dental services a residential,

vocational program for underprivileged young adults

Thrift store, and bulk clothing sales Restaurant and piano bar

Revolving loan fund

Special educational licensed facilities for IEP -behaviorally disordered middle and high school youth.

Victim training for staff and allied professionals in justicerelated fields




Table 6: Sample Descriptions of Property, Marketing/Licensing-Related, and Other EIVs

Property Marketing/Licensing

Apartment rentals Point of purchase candy sales @ banks

Commercial space for medical professional practicesProduction of items (t-shirts, magnets, mugs, etc) with

organization-related images

Leased space to a theatre Staging or 'piggybacking' on concert events

Low income housing units

Own and operate apartment housing complexes for thephysically disabled

Own the building and rent space to a deli business Other

Recovery and sober housing program Advertising Income

Rent rooms at-cost to other nonprofits Government Contracts

Rent two units of a four-story building to residentialtenants.

Membership Fees

Rental of affordable housing for families and elderly Special Events

Rental of facility for social events

Rental of part of building as office space.

Rental of residential dwelling to a family

Rental of space to community development corporation,Town Civic organization and a regional school.

Profiles of Three RI Earned-Income Ventures

Cookie Place Cafe, Providence - An EIV from the Start

“Most customers don’t know we are a nonprofit. We don’t usually market

ourselves as a nonprofit,” says Cookie Place Cafe Executive Director William Monahan.

What Cookie Place is best known for is great cookies! For the last 23 years, Cookie

Place, located in downtown Providence, has provided employment and training for

“persons with psychiatric disabilities.” Cookie Place operates a cafe, which serves

breakfast and lunch, as well as a catering business that supplies pastries, sandwiches and

beverages to local companies and private events. They have been recognized by Rhode

Island Monthly Magazine for the “Best Cookies in Rhode Island” for four years.

Cookie Place was founded as a nonprofit with government grants. Currently it

earns about half its operating budget through product-related revenue and the other half




from state grants through the department of Mental Health, Retardation and Hospitals.

For the last 6 years, as costs have risen, Cookie Place has received level funding from the

state. As a result, it has diversified its product line, with whoopee pies and birthday

cakes, to generate more revenue, and is developing a web site to raise awareness of the

organization.

Edward King House, Newport - Recently Launched an EIV

The Edward King House is an historic mansion that was given “to the people of

Newport” as a gift in 1912 by George Gordon King. It has operated as a nonprofit library

and park, as well as a senior center with the mission “to provide program activities to

seniors.” It has a diverse revenue stream which includes six different sources of income:

donations from individuals, government and foundation grants, membership dues,

service-related revenues, and endowment income. [Table 7] shows more details of the

funding mix, of which government grants constitute 40%. According to the director,

David Dean, “level funding from the state” has served as an incentive for Edward King

House to develop an earned-income venture. He recently launched a venture to rent the

historic landmark building for weddings and events on weekends when it is not in use as

a senior center.




Table 7: Funding Streams of the Edward King House

0

10

20

30

40

50

% of Funding 10 40 10 10 5 20

Foundation

grants

Government

grants

Donations

from

Endowment

income

Membership

dues

Service-

related

Crossroads Rhode Island, Providence – About to Launch an EIV

Providing crisis intervention, housing, health care, and vocational services,

Crossroads Rhode Island, formerly known as Travelers Aid of Rhode Island, is the

largest homeless services organization in the state. According to Joe Potenza, the Director

of Vocational Services, while Travelers Aid operated some fee-for-service programs

throughout their 115 year history, they have never operated any “real” earned-income

ventures (which he distinguishes as ventures that seek to make money, rather than just

cover costs). Opening this spring, the Crossroads Copy Shop will provide bulk

photocopying, electronic printing, and publishing services, and possibly an offset press.

According to Executive Director, Ann Nolan, this “micro-business,” which will operate

as a program of the parent nonprofit, will enhance the organization’s ability to achieve its

mission. "We've learned that the chances for [our clients] success are greatly enhanced

when access to affordable housing is combined with social service intervention and




vocational training for a period of six months to a year," said Nolan ("Crossroads Rhode

Island," 2005).

Relation of Venture’s Goals to Organization’s MissionPrevious literature has raised the potential for “mission drift” as one of the central

questions when examining the impact of earned-income ventures. Because missions are

often general, and evolve over time, it is difficult to examine how they may have drifted

as a result of operating an earned-income venture. In examining what Rhode Island

nonprofit leaders have to say about the topic, it appears that the ventures they are

operating are highly related to their mission. As [Table 8] shows, eighty-seven percent

said that the goals of their venture are related “a lot” or “to a great extent” (4 or 5 out of a

5 point scale) to the mission of their organization.

Table 8: How Related the Goals of the EIV are to the Mission of the Organization

Relation to Mission %

1. Not at all 32. A little bit 4

3. Somewhat 6

4. A lot 24

5. To a great extent 63

N=134

0%

20%

40%

60%

80%

1 2 3 4 5




Reasons for Launching (and Not Launching) an EIV

In order to fully understand the diffusion of earned-income ventures throughout

the nonprofit sector this study captured the perceptions of those that are currently

operating ventures as well as those that have never operated ventures. Sixty-six percent of

organizations currently operating an earned-income venture (N=119) indicated that

generating “income/surplus for programs” was a “very important” reason for launching

their earned-income venture. As [Table 9] shows, the second most important reason is

generating “positive community relations,” (58% of N=118) followed closely by moving

the organization towards “self-sufficiency” (56% on N=115) and “diversifying” the

organization’s revenue stream (48% on N=117). The least important reason among the

fixed-answer choices, was providing “employment/ training/ therapeutic opportunities to

constituents” which 50% (N=111) of the respondents indicated was “not important.”

Table 9: Reasons for Launching an EIV by Category and Level of Importance

Category NotImportant

SomewhatImportant

VeryImportant

N=

1. Generate income/surplus for programs 8% 27% 66% 119

2. Generate positive community relations 12% 30% 58% 118

3. Move organization towards self-sufficiency

13% 31% 56% 115

4. Diversify revenue stream 21% 32% 48% 117

5. Help revitalize theneighborhood/community

32% 28% 40% 116

6. Provide employment/training/therapeuticopportunities to constituents

50% 17% 33% 111




The following typify the range of responses about other reasons organizations

have for operating earned-income ventures:

Our agency is dedicated to providing information, direct client services,professional development and system change... Some of these activities fit nicelywithin the guidelines of public and/or private funding sources. Others do not, yetmust be provided to accomplish our mission. We really had no choice except todevelop fee-for-service programs.

Part of our mission is to provide space to arts non-profits at below-market rates.We are doing so through a separate for-profit entity so that we can take advantageof federal historic tax credits during our multi-year process of renovations.

People value things more if they have to pay for them.




As [Table 10] shows, there seem to be many organizations that are interested in

starting ventures, yet have not done so because of a lack of resources. Among those

organizations that have never operated an EIV, two of the most commonly identified

reason are the lack of “personnel resources to develop and manage the venture” (36% of

N=93), and the “lack financial resources” to start a venture (26%). Of particular interest

are the 22% that are concerned about “exemption status and/or tax issues.” It is also

surprising that 30% of this group “have never considered the idea.”

Table 10: Reasons for Not Launching an EIV (by Organizations That Have Never Operated)

Reasons %

1. Lack personnel resources todevelop and manage theventure

36

2. Never considered idea 30

3. Venturing not part of ourmission

29

4. Lack financial resources tolaunch

26

5. Concerned about exemptionstatus and/or tax issues

22

6. Concerned aboutoperational/financial risks 13

7. Restricted by funding 13

8. Lack board interest/support 8

9. Other (please specify): 14

N=93

Note: Does not total to 100% becauserespondents were asked to choose allthat apply.

0%

10%

20%

30%

40%

1 2 3 4 5 6 7 8 9




Perceived Impact of Operating an EIV

Overall, the leaders of nonprofits operating earned-income ventures perceive the

impact of the ventures to be very positive. This is consistent across the nine different

categories of impact addressed by the survey. Eighty-two percent of the respondents

(N=116) report that operating an EIV has had a positive or very positive impact on the

“reputation” of their nonprofit organization; 78% (N=117) indicate a positive or very

positive impact on their “organization’s mission;” and 73% (N=115) indicate that

operating an EIV has had a positive or very positive impact on their “service and program

delivery.” Only 2% of respondents indicate any negative impact across the nine

categories of questions. See [Table 11] [Table 12] and [Table 23].

Table 11: Perceived Impact of Operating an EIV on Nonprofit Organizations (CollapsedAcross Nine Categories)

Impact %

Negative 2Neutral/No Impact 25Positive 73

Average N=115 0%

20%

40%

60%

80%

Negative Neutral Positive




Table 12: Perceived Impact of Operating an EIV on Nonprofit Organizations

0%

10%

20%

30%

40%

50%

60%

70%

Reputation 0% 0% 1% 8% 9% 23% 59%

Mission 0% 0% 2% 9% 12% 30% 48%

Service Program 0% 0% 1% 10% 17% 33% 40%

Self-Sufficiency 2% 0% 4% 17% 24% 27% 26%

Attract Donors 1% 1% 0% 29% 22% 29% 19%

Entrepr. Culture 1% 0% 1% 33% 26% 19% 19%

Attract Volunt 2% 0% 2% 40% 16% 25% 16%

Attract Staff 0% 0% 0% 44% 18% 22% 16%

Board Leaders 0% 0% 2% 35% 25% 25% 13%

very

negativenegative

somew hat

negative

neutral/no

impact

somew hat

positivepositive

very

positive

How Nonprofits Define “Entrepreneurial”

There were almost equal numbers of respondents that self-identified as

“entrepreneurial” (53%) versus “non-entrepreneurial” (47%). Seventy-four percent of the

organizations that identified as entrepreneurial (N=140) are currently operating one or

more earned-income venture as show in [Table 13]. Interestingly, the majority of those

that said they were “not-entrepreneurial” (56% of N=129), also indicate they are

currently operating one or more venture.




Table 13: The Relationship between "Entrepreneurial" and Operating an EIV

0%

20%

40%

60%

80%

Yes 74% 26%

No 56% 44%

Currently operating

1 or more EIV

Never operated

an EIV

According to Dart’s typology (Dart, 2004a), nonprofits engage in “business-like”

behavior in terms of four distinct categories: goals, service delivery, management, and

organizational rhetoric. While some use “business-like” and “entrepreneurial” to mean

the same thing, there appears to be an important distinction between these two concepts

when applied to nonprofit organizational behavior.

The primary value of Dart’s framework for the sake of this study is the concept of

business-like “rhetoric.” When examining the responses to the open-ended survey

questions, there are inherent limitations to distinguishing entrepreneurial “rhetoric” from

behavior. Nonetheless, the following themes emerged from the 140 responses collected.

The clearest theme of what it means to be “entrepreneurial” relates to the act of

operating or managing an earned-income venture. This includes activity which Dart’s

topology would classify as “service delivery,” yet also includes activities outside of the

nonprofits’ typical programs and services.




When asked about entrepreneurial strategies, nonprofit leaders cited a wide range

of ventures that involve outputs of goods ors services in exchange for money, including:

selling products retail and wholesale (such as souvenirs, food, poinsettias and art),

purchasing and renting property, staging concerts and events, licensing, and charging fees

(often on a sliding scale). A small group of respondents also included planning for an

EIV as “entrepreneurial.” Examples of these entrepreneurial planning responses included:

“looking into marketing a specialty food product,” “looking into construction and

management of an office building,” and “planning to sell teacher training programs to

schools and districts.”

The second theme consistent with Dart’s framework is the use of

“entrepreneurial” as a more general approach to work and managerial decision making.

Responses were exemplified by the following: “remaining flexible so that we may

quickly and effectively address new opportunities and needs,” “always improving,”

“developing and implementing innovative programs based on market and demographic

trends and customer feedback,” and “moving swiftly and adroitly, using the materials we

have at hand, outsourcing services… using the internet to our advantage.”

The third theme is related to entrepreneurial activities described as “innovative”

or “unique” behavior. This seems to be the key distinction of business-like and

entrepreneurial and thus has no direct relation in Dart’s framework. For those that used

entrepreneurial in the “unique” sense, they described their organizations as the only one

in the state, or the country to focus on doing what they do or working with their specific

population. For others it involved a unique approach to partnering and collaborating with

other nonprofits, with businesses, or with the government.




Typifying how some consider their organizations as entrepreneurial, despite never

having operated an earned-income venture, one leader said her nonprofit was:

entrepreneurial as a grassroots organization when it originated over 30 yearsago…[and] it continues to be entrepreneurial under the current leadershipemphasizing business and financial strategies which includes honest evaluation of program effectiveness, resource usage and collaboration to deliver both efficientand innovative programs.

Another in the same “never-ventured” category described his organization as

entrepreneurial because it: “uses grant funds and specified donations as 'venture capital'

to try and test new program ideas.” Although he went on to say, “we are not

entrepreneurial in the more traditional sense of developing small business opportunities

or impacting economic conditions.”

At the other end of the spectrum, the leader of an organization that is currently

operating more than two earned-income ventures, said:

Even if we could, we would not offer our programs completely for free becausepeople would not value them. Earning money from programs is just a matter of fact…We don't think of it as being entrepreneurial at all. But we would fail if wedidn't charge for programs because we do not have enough un-earned income tosustain operations and because donors would be less supportive if they thoughteveryone was getting a free ride.

Examination of the ways in which nonprofits use “entrepreneurial” indicates that

earned-income strategies are the primary definition of what it means to be

entrepreneurial. Yet for some, as evidenced by the last quote, earning income alone is not

necessarily entrepreneurial. There are at least three other distinct ways that nonprofits

characterize their behavior as “entrepreneurial.” These include: planning to operate an




earned-income venture, a general approach to work and decision making, and “unique”

and “innovative” behavior. Thus in the nonprofit sector, as in the for-profit sector (as

discussed in the Definitions section) there still appears to be significant debate about

what it means to be truly “entrepreneurial.”

Useful Support and Assistance

As shown in [Table 14] and [Table 15] both organizations currently operating

ventures (65% of N=118) and those that have never, but are interested in operating

ventures (86% of N=64) indicate that “access to capital / financial resources” would be

the most useful types of support and assistance to help them launch and sustain their

ventures. Peer support, mentoring and workshops/seminars rate last for both groups.

Table 14: How Useful Various Types of Support and Assistance Would Be toOrganizations Currently Operating EIVs

0%

20%

40%

60%

80%

not 2% 8% 6% 5% 11% 13% 9%

somewhat 13% 22% 30% 37% 38% 41% 44%

very 86% 70% 64% 58% 52% 47% 47%

Capital/

financial

resources

Technical

assist/

consulting

Business

plan

assistance

Market

researchMentoring

Peer

support

Workshop/

seminars




from over 450 entrants in the National Business Plan Competition for Nonprofit

Organizations organized by the Yale School of Management – the Goldman Sachs

Foundation Partnership on Nonprofit Ventures.

MBA Students Partnering with Nonprofits to plan EIVs

While most of their business school peers were focused on learning how to

maximize profits, this spring, a group of University of Rhode Island MBA students spent

their final semester learning how to apply financial ratios and marketing techniques to

help nonprofit organizations. Five teams of students from Professor Deborah Rosen’s

Marketing course teamed up with local nonprofits to write business plans for their

earned-income ventures. These ventures include: a rest-stop cafe which will be opening

up along the state’s busiest bike trail operated by Corliss Institute, a service and job-

training organization focused on Rhode Island’s deaf community; and a plant design and

care service for corporations that may be launched soon by GroundWork Providence.

Rhode Island Nonprofits Engaged in Learning Community

A group of seven Rhode Island nonprofit organizations have joined together to

form a learning-community to jointly explore issue of social enterprise. “We anticipate

that through shared research, reflection, and analysis we will be able to embark on more

successful enterprises ourselves thereby strengthening our organizations and ultimately

better serving our clients and meeting our missions” writes the facilitator, MJ Kaplan, of

Kaplan Consulting (2005). Led by Carol Malysz, Director of the Center for Women and

Enterprise, and coordinated by Deborah Schimberg of Social Venture Partners of Rhode

Island, the group recently applied for a planning grant through Third Sector New

England.




Rhode Island Compared to the National Sample

In order to compare Rhode Island to the rest of the nation, bivariate cross-

tabulations, chi-square tests, and logistic regressions were run on both the Rhode Island

sample and the raw data from the national Massarsky-Beinhacker (Massarsky &

Beinhacker, 2002) study. Both data sets were coded to match the variables described in

[Table 16] and responses that had missing data for any of these variables were removed.

The resulting samples were comprised of 260 cases for Rhode Island and 389 cases for

the national sample.

Table 16: Description of Variables

Variable Name Description Answer Choices

EIV (dependent) operating an earned-incomeventure

Never = never operated an EIV5 Currently = currently operating 1 or moreEIV

Entrepreneurial does respondent considerorganization to be“entrepreneurial”

YesNo

Program organization’s primaryprogram area

arts = Arts/Culture/Humanitieseduc = Educationenviro = Environment/Animalshealth = Healthhservice = Human Servicespub = Public/Society Benefitrelig = ReligionOther

Budget total budget size for theorganization

< $250K$250–$999K$1-$5M>$5M

age total number of yearsorganization has been in

operation

<5 years6-10 years

11-20 years>20 years

5 Note: The data associated with the answer choice, “operated one or more earned-income ventures in thepast, but not currently” was excluded from this model.




Rhode Island Descriptive Statistics

Of the relevant Rhode Island sample, 66% (N=260) of the organizations report

that they are “currently operating an EIV” and only 34% report that they have “never

operated an EIV.” There are an almost even number of those organizations that identify

as “entrepreneurial” (53%) as those that indicate they are not (47%). “Human services”

organizations make up the largest program area category (22%), and “religious”

organizations only comprise 2% of the sample. Organizations that are at least 20 years

old account for 51% of the population, and organizations that are 6-10 years old make up

only 13% of the sample. Organizations with budgets less than $250,000 are the most

represented category of budget size with 44%, and organizations with the largest budgets,

over $5 million, only account for 12% of the sample.

National Descriptive Statistics

Of the comparable national sample (N=389), 48% of the organizations report that

they are “currently operating an EIV” and 52% report that they have “never operated an

EIV.” Organizations that identify as “entrepreneurial” are the clear majority (75%) as

compared to only 25% that indicated they are not “entrepreneurial.” As with the Rhode

Island sample, “Human services” organizations make up the largest program area

category (32%), and “religious” organizations comprise the smallest group at 4% of the

sample. Also similar to the Rhode Island sample, organizations that are at least 20 years

old account for the largest age category, 36% of the national sample, and organizations

that are 6-10 years old comprise the smallest group in the national sample at only 17%.

Organizations with budgets less than $250,000 are the most represented category of




budget size with 33%, and organizations with the largest budgets, over $5 million, only

account for 20% of the sample.

Bivariate Cross-Tabulations and Chi-Square Tests

Before using logistic regression to control for the effects of independent variables,

Cross-Tabulations and Chi-Square tests were used to examine the influence of the each

question variable on the outcome variable, and test for statistical significance. The

following descriptions are grouped by variable, and include explanations of the Rhode

Island and national samples.

“Entrepreneurial” Organizations

Among the Rhode Island organizations in this sample, 75% of those that identify

as “entrepreneurial” report currently operating an EIV compared to only 55% of those

that are not “entrepreneurial. Pearson chi2(1) = 10.7208 Pr = 0.001 indicates that this is a

significant difference, greater than would be observed by chance alone.

In the national sample, only 57% of those that identify as “entrepreneurial” report

currently operating an EIV and only 20% of those that are not “entrepreneurial.” This is

also a statistically significant difference as indicated by a Pearson chi2(1) = 42.4184 Pr =

0.000.

Program Area

In the Rhode Island sample, organizations with either program areas focused on

“Arts / Culture / Humanities” and “Public / Society Benefits” are the most likely to be

operating earned-income ventures with 78% of N=37, and 77% of N=26 respectively.

Organizations with “religious” program areas are the least likely to be operating EIVs,




33% of N=6, and religious organizations are the only organizations with more that have

“never” operated an EIV than those that they are “currently” operating an EIV. Pearson

chi2(7) = 10.9145 Pr = 0.142 indicates that the difference of an organizations’ likelihood

in operating an EIV across program areas is no greater than might be observed by chance

alone.

Nationally, there is also no statistically significant difference across program area

as indicated by the Pearson chi2(7) = 12.9835 Pr = 0.073. However, “arts / culture /

humanities” organizations are again the most likely to be operating EIVs with 75% of

N=40, and “religious” organizations are the least likely with 75% of N=20.

Age of Organizations

From the Rhode Island sample, the age of an organization appears to be a

significant factor in their likelihood in operating a venture. Even among the youngest

organizations, those that are less than 5 years old, 41% (N=44) report that they are

currently operating an EIV. Of the organizations which are over 20 years old, almost 75%

(N=135) report that they are currently operating an EIV. Pearson chi2(3) = 21.2400 Pr =

0.000 indicates that this difference is significant.

In the national sample, only 32% (N=146) of the organizations that are less than 5

years old, report currently operating an EIV. This is also a statistically significant

difference as indicated by a Pearson chi2(3) = 13.9045 Pr = 0.003.

Budget

Among the Rhode Island organizations, those with medium-sized budgets

($250,000-$999,000 and $1-4.9 million) are the most likely to be operating EIVs, with

76% of N=78 and 68% of N=38). Organizations with the smallest budgets, of less than




$250,000 are the least likely to be operating EIVs with 58% of N=115. Pearson chi2(3) =

7.1203 Pr = 0.068 indicates that there is not a significant difference across budget

categories.

In the national sample, there appears to be a linear relationship between budget

size and likelihood of operating an EIV. Organizations with the smallest budgets, of less

than $250,000 are the least likely to be operating EIVs with 45% of N=170.

Organizations with the largest budgets are the most likely to be operating EIVs, with

64% of N=94 currently operating EIVs. Pearson chi2(3) = 38.8190 Pr = 0.000 indicates

that there is a significant difference across budget categories at the national level.

Logistic Regression

The advantage of logistic regression is the ability to control for certain factors to

determine if other factors still have significant effects on an organization’s likelihood of

operating an earned-income venture. The following section discusses the results of the

regression tests and run on the Rhode Island [Table 31] and national [Table 32] samples

by variable categories. With only one exception, the findings at the national and Rhode

Island levels were directionally identical.6 While the magnitude varied, once controlling

for other variables, the factors associated with operating an EIV at the Rhode Island and

national level appear to be similar. Once the results were pooled, and all variables were

controlled for, Rhode Island organizations appear to be significantly more likely to be

operating earned-income ventures than the national comparison group. As shown in

6 In the case of directional variance, the organizations with the largest budgets (over $5 million) in RhodeIsland were actually the least likely of the budget categories, to be operating earned-income ventures.However, this finding was not statistically significant. [Table 32] and [Table 33]




[Table 33] national organizations were only .33 times as likely to be operating earned-

income ventures and this finding was statistically significant at the p<.01 level.

“Entrepreneurial” Organizations

In both the Rhode Island and the national samples, organizations that identified as

“entrepreneurial” were more likely to be operating earned-income ventures, once we

controlled for program area, age, and budget size. In Rhode Island, “entrepreneurial”

organizations were 2.8 times more likely to be operating an EIV than “non-

entrepreneurial” organizations. At the national level, organizations that self-identify as

“entrepreneurial” were 5.6 times more likely. Both of these findings are statistically

significant at the p<.01 level.

Program Area

As shown in [Table 17], compared to “Arts / Culture / Humanities” organizations

all seven other program areas are less likely to be operating earned-income ventures at

both the Rhode Island and National Level. This is only statistically significant for four

out of the seven categories at the national level, and two out of seven at the local level,

yet the consistency of the directional finding is noteworthy.

Table 17: Program Area - Odds of Operating an EIV at the National and Rhode Island Level(Reference Category = Arts / Culture / Humanities)

0.0

0.5

1.0

National 0.2 0.5 0.4 0.3 0.4 0.2 0.4

Rhode Island 0.4 0.4 0.3 0.4 0.8 0.1 0.2

Education Enviro Health Hum Serv Pub Ben Religion Other




Age of Organizations

In general, older organizations are more likely to be operating earned-income

ventures as shown in [Table 18]. At the national level, none of the age categories are

significantly different, but in the Rhode Island sample, there is a linear trend and the two

oldest categories are significantly more likely to be operating EIVs than the youngest

group (used as the reference category).

Table 18: Age - Odds of Operating an EIV at the National and Rhode Island Level(Reference Category = < 5 years)

0.01.02.03.04.05.0

National 1.0 1.6 1.3

Rhode Island 1.2 3.0 5.0

6-10 years 11-20 years >20 years

Budget

Similar to age, as budget size increases, organizations are more likely to be

operating ventures, as shown in [Table 19]. This is particularly true at the national level

where organizations with budgets of less than $250,000 are significantly less likely to be

operating ventures. Organizations with budgets of $250-$500,000 are 2.5 times more

likely to be operating EIVs and those with over $5 million budgets were 4.6 times more

likely to be operating ventures than the organizations with the smallest budgets. At the

Rhode Island state level, the relationship between budget and likelihood of operating an

EIV were not statistically significant.




Table 19: Budget - Odds of Operating an EIV at the National and Rhode Island Level(Reference Category = < $250k)

0.01.02.0

3.04.05.0

National 2.6 2.5 4.6

Rhode Island 1.5 1.1 0.9

$250-$999K $1-$5M > $5M

Limitations

This study has several limitations that should be considered when interpreting the

results. The primary limitations are threats to internal validity concerning sample bias,

and the reliability of the instrument. Caution should therefore be used when attempting to

generalize these findings to the larger population of nonprofit organizations.

Sample biases may have resulted from the use of the open-invitation method,

rather than stratified or random sampling techniques. While a random sampling technique

may have had some advantages, as discussed in the Methods section, the entire

population of nonprofits in Rhode Island could only be estimated. Therefore, even a

random sample of this population would have resulted in a biased population, specifically

excluding those organizations that are not in any of three databases used for outreach.

Stratification sampling of this population along relevant demographics, such as budget

size and program area might have also been preferable, however, there is no known

database that has accurate records of this information.

The relatively short amount of time the survey was active may have also biased

the sample. A previous national study on nonprofits suggested that “older, larger, and




organizations more reliant on contributions take longer to return a survey” (Hager, 2002,

p. 9). Additionally, as [Table 20] shows, there was a small surge in responses during the

last two days the survey was available online. This suggests that with more time there

might have been more responses.

Table 20: When Respondents Completed the Web-Based Survey

0%

10%

20%

30%

% 26% 9% 9% 3% 1% 7% 18% 6% 3% 4% 1% 1% 6% 5%

3/2 3/3 3/4 3/5 3/6 3/7 3/8 3/9 3/10 3/11 3/12 3/13 3/14 3/15

As shown in [Table 21], 54% of respondents found out about the survey through

email. This suggests that all participant recruitment efforts were not equally effective.

Because email invitations were available for less than half of the total population, this

could have significantly biased the results towards those organizations which received the

email invitation. The web-based nature of the survey may have also biased the results

towards organizations with greater access to technology.




Table 21: How Respondents Found Out About the Survey

0%

20%

40%

60%

56% 33% 3% 1% 3% 4%

Email Postcard Website NewspaperFriend/

ColleagueOther

Additionally, the reliability of the survey instrument has not been empirically

tested. As discussed in the Methods section, the survey instrument for this study was

based on an instrument used in the Massarsky & Beinhacker (2002) national study which

to the knowledge of the researcher has not been tested.

As [Table 22] shows, there was a high rate or respondents that started, yet did not

fully complete the Web-Based Survey (43% of N=370). In this case “complete” meant

that the respondent reached the end of the survey, as opposed to actually providing an

answer to every question. Some the “completes” therefore included questions that were

left blank at the respondents’ discretion. The “incompletes” are assumed to be unfinished

as a result of the length of the survey rather than any meaningful difference between the

organizations that completed the survey and those that did not complete the survey. For

the descriptive statistics, the “incompletes” were included with the “complete” responses,

which explain the varying sample size. For the statewide and national regression models,

any cases with blank answers for the question variables were systematically excluded.




Table 22: Complete vs. Incomplete Responses to the RI Web-Based Survey

“Complete” %

1. Yes 57

2. No 43

N=3690%

20%

40%

60%

1 2

The relatively low number of respondents that indicated they were “not currently

but had operated 1 more ventures in the past,” (6% of total N=285) lends credibility to

the assertion that “failing organizations are less likely to volunteer [for this type of study]

than successful ones -- and ventures that have already closed their doors never do

[respond to surveys]” (Foster & Bradach, 2005, p. 95). While information was collected

on these organizations, it was not analyzed for this study.

While some inferential statistics were used, the value of this study is largely in the

descriptive power of the findings as a benchmark for future research. Recommendations

for future studies concerning this topic include: systematically testing the reliability of the

survey instrument, considering random or stratification sampling techniques, and

identifying a way to empirically test “complete” vs. “incomplete” responses.

Some of the results reported here appear to support and extend previous research

findings. At the very least, the consistency of these findings suggests that earned-income

ventures and entrepreneurial nonprofits merit further systematic exploration. However,

because of the limitations outlined here, the findings in this report should be interpreted

and generalized with due caution.




Ethical Considerations

The protocol for this study received approval through the Institutional Review

Board (IRB) at Brown University on February 2, 2005. It was determined to be exempt

(category two) from the regulations at 45CFR46 regarding the use of human subjects in

research. According to the IRB, the other methods of data collection, including the

Interviews with Supporting Organizations and the Web-Based Survey did not warrant

review. However, in accordance with common ethical research guidelines, informed

consent forms [attachment 4] were used to explain issues of confidentiality to all

interviewees and survey participants. Detailed measures were taken to ensure the privacy

and confidentiality of all subjects for the wed-based survey, including password

encrypted files and secure storage. According to IRB ethical guidelines for internet

research, “online survey instruments must explain at the outset what options are

available, if any, for retrieving and discarding responses, and must allow “no response”

as an option for every question” (Hicks, 2004). While the technology of skip-logic

required a few specific questions to be mandatory, all other questions were optional.

For the interviews, each participant was made aware that the purpose of the

interviews was to collect profile information which could be specifically attributed to

individuals and organizations, and therefore the interviews were not considered

confidential. At the time of this publication, there are no known or anticipated risks to

any of the research subjects or their organizations as a result of their association with this

study.




Conclusions

A fundamental shift is occurring in the nonprofit sector. This examination of 329

Rhode Island nonprofits demonstrates that a wide variety of them are operating earned-

income ventures to support their programs, generate positive community relations, and

help move their organizations towards self-sufficiency. It is also noteworthy that Rhode

Island organizations are operating ventures at three times the rate of a comparable

national sample. These organizations generally self-identify as “entrepreneurial” and are

engaged in a variety of ventures as diverse as selling farm produce, operating a graphic

design studio, running a restaurant and piano bar, managing a revolving loan fund, and

leasing commercial and residential property.

This study extends the work of previous research by focusing on one state, using

statistical analysis to determine how organizational factors are related to an

organization’s likelihood of operating an earned-income venture, and then compares the

statewide results to a national sample. Across 17 out of 18 categories, the Rhode Island

and national samples indicate similar trends in characteristics such as the age, program

area, and budget size of organizations operating ventures.

For some nonprofits earned-income is nothing new, and like the rest of the nation,

Rhode Island has a long history of nonprofits operating earned-income ventures. This

study demonstrates the remarkable extent to which nonprofits are currently adopting this

form of revenue creation, characterizes the breadth of the organizations now operating

these ventures, and highlights support needed to continue to grow the social enterprise

sector.




Many organizations that are not currently operating ventures are interested in

doing so, yet are limited by access to resources. One survey respondent contacted the

researcher to add:

We all could use money, but in this day and age… grants are hard to come by. Isthere any way that non-profits could apply for low-interest loans tocover initial start-up expenses…? If the income generating proposals are strongenough to be worthy of a reasonable loan, repayment of the loan is a given.

This suggests that targeted funding in the form of loans and grants could help nonprofits

interested in developing ventures.

Survey respondents also indicated that they generally lack information regarding

the potential implications of venturing on their legal and tax status. This suggests that

educational literature, programs and workshops could be beneficial to organizations

interested in venturing.

An example of one local resource addressing both the education and funding

issues is the Rhode Island Economic Development Corporation (EDC). Michael

McMahon, the Executive Director, indicates that the EDC has recently provided two

ventures with seed capital, and he also notes that the EDC has a largely untapped “talent

pool to help write business plans, and a staff with a wealth of managements expertise

who can help advise [nonprofits interested in venturing]” (McMahon, 2005). This type of

support and partnership has the potential to dramatically affect the way nonprofits

operate.

While it may be too soon to tell if the sea change towards earned-income is

ultimately a good thing for the nonprofit sector - or society as a whole - this study

demonstrates promising signs that this shift is being embraced by nonprofits. Staff

members from the organizations operating these ventures indicate that they are having




overwhelmingly positive effects on their organizations. According to former nonprofit

director and current Rhode Island Secretary of State, Matt Brown, “it is a good thing that

people are exploring [earned-income ventures]. The work that the nonprofit sector does is

so important…. as a society we have to figure out a sustainable way to fund it” (M.

Brown, 2005).

While this research is exploratory, it provides the first comprehensive glimpse

into the trend of social enterprise within a state’s nonprofit sector. What is occurring in

Rhode Island appears to be sea change in the way nonprofits operate. Hopefully this data

can help enhance our understanding of the development of this vital sector and serve as a

guidepost for future research about nonprofits and earned income ventures.

Suggestions for Future Research

The value of this data will only grow as it can be compared to similar activities of

nonprofits in other states. Thus, the primary suggestion for future researchers is to

conduct similar surveys in other states and then compare across states. Other suggestions

include: empirically test the reliability of the survey instrument used in this study;

analyze mission drift vs. natural evolution of an organization’s mission as a result of

earned-income ventures; and continue to survey stakeholders other than nonprofit staff

members about the perceived benefits of earned-income ventures.




Attachments

1. Interview Participants

Category Name Title Organization

Academic Sandra Enos, Ph.D.Associate Professor of

SociologyRhode Island College

Academic Deborah Rosen, Ph.D. Kingston MBA DirectorUniversity of Rhode Island

Business School

Funder Peter WalshDirector of Retail

Lending and CommunityRelations

Bank Rhode Island

Funder Tony Maione President / CEO United Way of Rhode Island

Nonprofit Joe NewsomePresident/

Executive DirectorSouth Providence Development

Corporation

Nonprofit Brenda J. Clement Executive Director Housing Network of Rhode Island

Nonprofit Peter Bramante Executive DirectorArts & Business Council of

Rhode Island

Nonprofit David Dean Executive Director Edward King House

Nonprofit Lori Urso Executive DirectorWood Pawcatuck Watershed

Association

Nonprofit Michele R. Berard, CFREDirector, FundsDevelopment

Butler Hospital

Nonprofit Joseph PotenzaDirector of Vocational

ServicesCrossroads RI

Nonprofit Dennis K. EvansPresident/CEO/

WebmasterCreative Television of Rhode

Island, Inc.

Nonprofit David PiccerelliActing President & CEO;

CFOWSBE-TV

Nonprofit William Monahan Executive Director Cookie Place Inc.

Nonprofit Daniel Vellucci Project Leader Scene Teens

Nonprofit Loriana De Crescenzo Executive Director Opera Providence

Support / Nonprofit

Robert LeaverBoard Member / CEO,

Sr. Consultant

Jewelry District Association/ NewCommons / Entrepreneurship

Forum of New England

Support / Nonprofit

Milinda Butterworth Executive DirectorKnowledge Exchange Center of

Rhode Island

Support / Nonprofit Eileen M. Moser Advisory Board Member The Nonprofit Institute

State Matt Brown Secretary of State State of Rhode Island

State Ray NeirinckxHousing Resources

CoordinatorState of Rhode Island Housing

Resources Commission

State Michael McMahon Executive DirectorRhode Island Economic

Development Corporation




2. Interview Guide for Nonprofits

For nonprofit organizations currently operating (or planning to operate) 1 or more earned income venture(s).

Note to all interviewees : The primary objective of this interview is to gather information on the story behind yourorganization’s experiences operating (and/or planning) an earned-income venture in Rhode Island.

The interview will last about 30 minutes and will focus on the following:

1. Primary motivations for starting an earned-income venture2. Alignment of venture with the mission of organization3. Impact (real or anticipated ) on the organization as a whole4. Unexpected outcomes (positive or negative)5. Measurement and Reporting of success of the venture6. Most challenging and rewarding experiences in planning/operating venture7. Resources (books, websites, workshops, conferences, supporting organizations, colleagues, etc.) that

helped launch/sustain the venture8. Resources not currently available that would be helpful9. Advice for other nonprofits considering launching an earned- income venture

3. Interview Guide for Supporting Organization

For supporting organizations (local funders, consultants, and academics in the field).

Note to all interviewees : The primary objective of this interview is to gather information on the entrepreneurialstrategies and earned-income ventures undertaken by nonprofit organizations within Rhode Island.

The interview will last about 30 minutes and will focus on the following:

1. Your experiences with nonprofits in Rhode Island, and specifically:a. any operating earned-income venturesb. any you consider to be entrepreneurial

2. The impact earned-income ventures or social enterprises have on the organizations operating them3. Characteristics of the organizations which you feel are succeeding4. Characteristics of the organizations which you feel are struggling5. Any unexpected outcomes you might have observed for the organizations, their stakeholders or the

community as a whole as a result of operating an earned-income venture6. Resources you know of (books, websites, workshops, conferences or supporting organizations) that have

helped organizations launch or sustain earned-income ventures7. Resources not currently available which you think might be helpful8. Any advice you have for nonprofits that are considering launching an earned-income venture




4. Informed Consent Form

Rhode Island Nonprofit SurveyInformed Consent Statement for InterviewsLast updated: 3/10/2005

This is a Brown University research study in collaboration with Social Venture Partners of Rhode Island and the Rhode Island Foundation .

The purpose of this interview is to learn more about your organization’s efforts operating and/or supporting socialenterprises. Information you provide in this interview may be attributed to you and your organization in our finalreport which will be publicly distributed. If you do not wish to have your statements attributed to you or yourorganizations, please let the interviewer know.

Participation in this research study is entirely voluntary, and you are under no obligation to participate.There are no known or anticipated risks to you from participating in this research. Refusing to participate ordiscontinuing the interview, will involve no penalty or loss of benefits to you which you are otherwise entitled andwill not affect your relationship with any of the organizations conducting this research. You may discontinue theinterview at any time, and you may choose not to answer any questions.

Each interview participant will receive:1. A link via email to download electronic copy of the report;2. A chance to be profiled in the report.

The full transcript, notes, and/or any recording of this interview will be kept confidential. All personally andorganizationally identifiable information will be removed, coded, and stored separately from your responses. Thesedata and codes will be stored in separate locked files accessible only to the principal investigator.

If at any time you have questions about your rights related to this research, please contact: Susan Toppin orDorinda Williams at the Office of Research Administration, Brown University, Box 1929, Providence RI, 02912.Phone: 401-863-2777.

For any other questions about this research project, please contact the Principal Investigator, Seth Marbin of BrownUniversity by email at [email protected].

Do we have your permission to create an audio recording of this interview to assist in accurate note-taking?( ) Yes ( ) No

By signing below you indicate you are over 18 years old, and that you have read and understood this information.

Print Name ___________________ Signature __________________ Date _______




6. E-mail

From: Seth MarbinSent: Tuesday, March 01, 2005 11:00 PMTo: RI Nonprofit Leaders

Subject: An invitation for RI Nonprofit Leaders

RI Nonprofit Leaders:

You are invited to participate in a statewide survey for all 501(c)(3) organizations.

To join in, visit our website before March 15, 2005: http://www.rifoundation.org/svpri/survey.asp

This research study is being conducted by Brown University in collaboration with Social Venture Partners ofRhode Island and The Rhode Island Foundation, and with assistance from The Yale School of Management – The Goldman Sachs Foundation Partnership on Nonprofit Ventures.

This survey is for you, if you have ever:> Thought about diversifying your funding base> Tried to generate revenue to support your social mission> Operated an earned-income venture or social enterprise

The purpose of this research is to learn about the entrepreneurial and revenue-generating activities of nonprofitsin our state. This study will be the fi rst of its kind comparing one state's efforts to a national research study.

If you want your organization to be represented and possibly highlighted in our final report, complete thebrief online survey by March 15th at 5 pm.

All respondents have a chance to win valuable prizes!

For more information, visit our website: http://www.rifoundation.org/svpri/survey.asp

If you know of a RI nonprofit leader who did not receive this invitation, please help spread the word by forwardingthis email to your colleagues.

For any questions about this research study, please contact the Principal Investigator, Seth Marbin via email at:[email protected] reply to this message.

This email is intended for leaders of nonprofit organizations operating within the state of Rhode Island who havean established relationship with one or more organizations named above. If you are no longer affiliated with a RInonprofit or if you do not want to receive any more information about this study, please reply with "no thanks" inthe subject line and your address will be cleared from our list.




7. Media Release 1

The Rhode Island Foundation

One Union Station - Providence, RI 02903401.274.4564 - www.rifoundation.org

MEDIA RELEASE: Monday, March 7, 2005

For more information: Rick Schwartz, 401-274-4564; 401-331-8085 (fax); [email protected]

Wanted: a few good nonprofits that have started – or are thinking of starting – business enterprises

Survey underway through March 15 seeks to compare statewide efforts to a national study

A Rhode Island survey hopes to uncover a growing entrepreneurial spirit among the state’s nonprofit

organizations.

“We’re looking for nonprofits at all stages of entrepreneurial thinking and development: some are just

exploring the idea of launching a social enterprise, and others already have successful business models. But we

also want to know why some nonprofits are not participating in this growing national trend!” says Brown University

Senior Seth Marbin, who is leading the research.

The Rhode Island Foundation and Social Venture Partners of Rhode Island (SVPRI) are also

collaborating on this study. SVPRI is a group of philanthropists committed to investing time, expertise, and money

in innovative nonprofits to strengthen their organizations and promote social enterprises.

“This study will be the first to focus on the revenue-generating activities of an entire state,” explains

Deborah Schimberg, Executive Director of SVPRI. “And we will be comparing the data from Rhode Island to

results from a national study,” adds Kris Hermanns, Program Officer of The Rhode Island Foundation.

The national data is being provided by The Yale School of Management – The Goldman Sachs

Foundation Partnership on Nonprofit Ventures, which runs the National Business Plan Competition for Nonprofits

Organizations and is also providing assistance for this research.

All tax-exempt organizations with 501(c)(3) status are eligible to take the survey currently available on

the web at www.rifoundation.org/svpri/survey.aspand “participants can even win prizes,” promises Marbin. “We

sent out invitations to 4,000 nonprofit organizations across the state, but there are more out there we haven’t

reached yet,” explains Marbin.

As an example of a local entrepreneurial nonprofit, Marbin points to Amos House, a Providence social

services agency which recently launched a catering business that provides job training programs for clients and

healthy meals for area schools and other customers. “What distinguishes Amos House is their detailed strategy to

use profits from the new catering business to support their established social programs,” says Marbin. Amos

House was recently selected as a finalist from over 450 entrants in the National Business Plan Competition for

Nonprofit Organizations.

“The findings of this study could help support entrepreneurial nonprofits like Amos House throughout

Rhode Island and nationwide,” says Marbin.

Marbin says he first learned about “social entrepreneurship” as an AmeriCorps member with City Year,

a national nonprofit recently cited by Fast Company Magazine as one of the top “25 organizations using creativity,

business smarts, and hard work to invent a brighter future.”




“I was surrounded by proactive leaders applying entrepreneurial skills and strategies to create positive

social change,” he remembers. After four years with City Year, Marbin came to Brown to study “social change

from an academic perspective,” he says. The vision for this research study was developed through conversations

between Marbin and his academic advisor Ann Dill, Director of the Public and Private Sector Organizations

program and Associate Professor at Brown University.

“Our report will be valuable if it increases understanding and awareness of entrepreneurial nonprofits,”

says Marbin. “They represent an alternative to what we have in America right now: businesses which are expected

to focus almost completely on financial profits, and nonprofits asked to solve our toughest social issues relying on

donations alone. ‘Social enterprises’ could be the best of both worlds, creating both social and financial value.”

Nonprofit leaders are invited to fill out the survey before it closes at 5 pm on March 15 and the final report

will be available in May on the SVPRI website at www.rifoundation.org/svpri/survey.asp.

###

The Rhode Island Foundation was founded in 1916 and is one of the nation’s largest and oldest charitable

organizations serving a specific geographic area.

8. Media Release 2

The News Service 38 Brown Street / Box R

Providence RI 02912401 863-2476Fax 863-9595

A second Media Release was sent out through the Brown University News Service on March 7th. This releasewas identical to Media Release 1, with three exceptions: The main headline was replaced with “Nonprofit LeadersRevealing Secretes of Business Enterprises;” the references to the Rhode Island Foundation were replaced withreferences to Brown University; and the Foundation’s contact information was replaced with that of the principalinvestigator: Seth Marbin, (phone) 401-465-0411 (email) [email protected]




9. Providence Journal Article

Sunday, March 13, 2005

Entrepreneurial nonprofits invited to take part in study

The Rhode Island Foundation and Social Venture Partners of Rhode Island are collaborating on a study ofnonprofit agencies in the state that have started or are thinking of starting business enterprises.

All tax-exempt organizations with 501(c)(3) status are eligible to take the survey, available on the Web atwww.rifoundation.org/svpri/survey.asp. However, nonprofit leaders have only until 5 p.m Tuesday to complete thesurvey.

An example of an entrepreneurial nonprofit is Amos House, a Providence social services agency which recentlylaunched a catering business that provides job training for clients and healthy meals for area schools and othercustomers.

Brown University senior Seth Marbin is leading the research effort. He said that after four years as an AmeriCorps

member with City Year, he came to Brown to study social change. He believes social enterprises, such as AmosHouse, can have social and financial value.

Available in print version and published online at:http://www.projo.com/news/content/projo_20050313_nonprofit.2342ff7.html




10. Social Venture Partners of Rhode Island Website

Hosted online at: http://www.rifoundation.org/svpri/survey.asp




11. Transcript of WRNI Radio Announcement

Read by Mark Degon - March 15, 2005

Researchers are completing a survey of nonprofit organizations in Rhode Island today as part of an effort tofind out how they raise funds. Brown University researcher Seth Marbin says there are a growing number oforganizations that are supported by more than donations. "There is an assumption that nonprofits are onlylooking for donations but many are now expanding and looking for ways to sell products and generate therevenue they need." Researchers next plan to compare the results from Rhode Island to a national study.

12. E-Newsletter - RI Foundation

From: The Rhode Island Foundation [[email protected]]Sent: Tuesday, March 08, 2005 11:33 AMSubject: E-News from The Rhode Island Foundation

Wanted: business-minded nonprofits, to take an online survey by March 15

A Rhode Island survey underway through March 15 hopes to uncover a growing entrepreneurial spirit amongthe state's nonprofit organizations.

"We're looking for nonprofits at all stages of entrepreneurial thinking and development. But we also want toknow why some nonprofits are not participating in this growing national trend," says Brown University SeniorSeth Marbin, who is leading the research. The Rhode Island Foundation and Social Venture Partners ofRhode Island (SVPRI) are collaborating on the study.

All tax-exempt organizations with 501(c)(3) status are eligible to take the survey by clickingwww.rifoundation.org/svpri/survey.asp and "participants can even win prizes," promises Marbin. "We sentout invitations to 4,000 nonprofit organizations across the state, but there are more out there we haven'treached yet," explains Marbin.

As an example of a local entrepreneurial nonprofit, Marbin points to Amos House, a Providence socialservices agency which recently launched a catering business that provides job training programs for clients

and healthy meals for area schools and other customers.

Take the survey before it closes at 5 PM on March 15.

Looking for additional resources? Check out the Foundation's Nonprofit Consultant Directory and our newestresource, the Directory of Rhode Island's Nonprofits .

Want to learn more about the Foundation? Go to www.rifoundation.org.

To unsubscribe to this newsletter, click the link below: http://enewsletter.embolden.com/users/unsub.php?Mem=48094&ConfirmCode=8123d3154a3a147e7070ac3cac56a30e




13. E-Newsletter - Knowledge Exchange Center

From: Knowledge Exchange Center of Rhode Island [[email protected]]Sent: Wednesday, March 09, 2005 2:49 PMSubject: E-Newsletter for RI Non Profit Agencies

RI Nonprofit Leaders:You are invited to participate in a statewide survey for all 501(c)(3) organizations.

This research study is being conducted by Brown University in collaboration with Social Venture Partners ofRhode Island and The Rhode Island Foundation, and with assistance from The Yale School of Management

– The Goldman Sachs Foundation Partnership on Nonprofit Ventures. This survey is for you, if you haveever: > Thought about diversifying your funding base > Tried to generate revenue to support your socialmission > Operated an earned-income venture or social enterprise. The purpose of this research is to learnabout the entrepreneurial and revenue generating activities of nonprofits in our state. This study will be thefirst of its kind comparing one state's efforts to a national research study. If you want your organization to berepresented and possibly highlighted in our final report, please complete the brief online survey by March15th at 5 pm. For any questions about this research study, please contact the Principal Investigator, SethMarbin via email at: [email protected] respondents have a chance to win valuable prizes! To

join in, visit our website before March 15, 2005: http://www.rifoundation.org/svpri/survey.asp

14. E-Newsletter - Providence Dept of Art, Culture & Tourism

From: Lynne McCormack [[email protected]]Sent: Thursday, March 10, 2005 9:33 AMSubject: This Week from the Dept. of Art, Culture & Tourism - March 10, 2005

Attention RI Nonprofits:You are invited to participate in a statewide survey for all 501(c)(3) organizations.

This survey is for you, if you have ever: thought about diversifying your funding base; tried to generaterevenue to support your social mission; or operated an earned-income venture or social enterprise. Toparticipate in the survey, visit the website here before March 15. The purpose of this research is to learnabout the entrepreneurial and revenue-generating activities of nonprofits in our state, and comparing them toa national study. For more information contact Seth Marbin at [email protected]




15. Survey

Informed Consent StatementParticipation in this research study is entirely voluntary. There are no known or anticipated risks to you fromparticipating. Refusal to participate or discontinuing participation will involve no penalty or loss of benefits to which

you are otherwise entitled, and you may discontinue participation at any time.Each participant who fills out this web-based survey completely by March 15th, 2005 will be eligible to receive:> A link via email to download an electronic copy of the report;> A chance to be profiled in the report (if selected for a follow up interview);> A chance to win one of 5 certificates for $25-off the next "New Business Ventures for Nonprofits Workshop";hosted by SVPRI and run by The Grantsmanship Center;> A chance to win one of 3 copies of "Generating and Sustaining Nonprofit Earned Income: A Guide to SuccessfulEnterprise Strategies" Edited by S. Beinhacker, C. Massarsky, and S. Oster. (List Price: $45)Winners will be chosen at random from all eligible respondents and will receive their prizes by May 1, 2005.Any information you provide on this survey will be kept confidential. Responses will be password protected,separated from personally and organizationally identifiable information, and coded. These codes and passwords willbe accessible only to the Principal Investigator. Your answers will only be reported collectively with other responsesor quoted anonymously.This survey is hosted by Zoomerang.com which will not collect or record your IP address. A standard cookie may beplaced on your computer for faster page loading. For a description of Zoomerang's privacy policy, please see:Privacy PolicyIf at any time you have questions about your rights related to this research, please contact: Susan Toppin or Dorinda

Williams at the Office of Research Administration, Brown University, Box 1929, Providence RI, 02912. Phone: 401-863-2777 or Toll-Free: 1-866-309-2095.For any other questions about this research project, please contact the Principal Investigator, Seth Marbin, of BrownUniversity by email at [email protected]

# Question Answer Choices

1Have you read and understood thisInformed Consent Statement?

Yes No

Sorry!In order to participate in this survey you must indicate that you have read and understood the InformedConsent Statement.

Please use your browser's "back" button, or right click and choose "back" to return to question # 1.For any questions about this research project, please contact the Principal Investigator, Seth Marbin, of BrownUniversity by email at [email protected]

2

Which of the following best describesyour nonprofit organization's programarea? (please check the one category

that best applies.)

Arts/Culture/Humanities Education Environment/Animals - Environmental Quality, Protection &

Beautification Environment/Animals - Animal Related Health – General & Rehabilitative Services Health – Mental Health, Crisis Intervention Health – Multipurpose Associations/Services Associated with

Specific Diseases/Disorders/ Medical Disciplines Health – Medical Research Human Services - Public Protection: Crime & Delinquency

Prevention, Legal Administration, Legal Services Human Services - Employment/Jobs Human Services - Food, Nutrition, Agriculture Human Services - Housing/Shelter Human Services - Public Safety, Disaster Preparedness &

Relief Human Services - Recreation, Leisure, Sports, Athletics Human Services - Youth Development Human Services - Multipurpose & Other International Foreign Affairs Public/Society Benefit - Civil Rights, Social Action, Advocacy




Public/Society Benefit - Community Improvement/EconomicDevelopment/ Capacity Building

Public/Society Benefit - Philanthropy/GrantmakingFoundations

Public/Society Benefit - Volunteerism Public/Society Benefit - Science and Technology Research

Institutes/Services Public/Society Benefit - Social Sciences, Research

Institutes/Services Public/Society Benefit - Multipurpose & Other Religion Miscellaneous Mutual/Membership Benefit Organizations Other (please specify):

3How many years has your organizationbeen operating?

Less than 1 year 1-5 years 6-10 years 11-20 years More than 20 years

4Please indicate the number of full timeequivalent (FTE) staff in yourorganization.

0-10 11-20 21-30 31-40 41-50 51-99 More than 100

5What is your organization's mission?(please describe below)

6What is the size of your organization'sannual budget (from this fiscal year)?

Less Than $50,000 $50,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 - $2,499,999 $2,500,000 - $4,999,999

$5,000,000 - $11,999,999 $12,000,000 - $24,999,000 More than $25,000,000

7 Which best describes your organization?

An independent organization (with no chapters/affiliates) A chapter/affiliate of a statewide organization A chapter/affiliate of a regional organization A chapter/affiliate of a national organization A chapter/affiliate of an international organization The headquarters for an organization with chapters/affiliates Other (please specify):

8What is the geographic scope of your

organization?

Local Statewide Regional National International

9Do you consider your organization to beentrepreneurial?

Yes No




10

In what ways is your nonprofitentrepreneurial? What entrepreneurialstrategies are you using? (pleasedescribe using the space below)

11

Has your organization ever operated an

earned-income venture?

Earned-income includes service-relatedfees or tuition, product-related sales ormanufacturing, government contracts,membership dues, cause-relatedmarketing or licensing, renting or leasingproperty, and other income generatingactivities.

Earned-income does not includesources such as corporate, foundation orgovernment grants or subsidies,contributions from individuals, or in-kinddonations of products or services.

Yes, currently operating 1 or more earned-income venture Not currently, but operated 1 or more in the past Never operated an earned-income venture

12What was your organization's totalrevenue (from all sources) in the lastfiscal year?

Less Than $50,000 $50,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 - $2,499,999 $2,500,000 - $4,999,999 $5,000,000 - $11,999,999 $ 12,000,000 - $24,999,000 More than $25,000,000

13

What percentage of that total revenuecame from the following sources:(Please enter a number in each boxbelow to add up to 100%)(For any source which does not apply,please enter a "0").

Foundation grants Government grants Corporate grants Donations from individuals

Endowment income Investments Government contracts Membership dues Service-related revenue Product-related revenue Cause-related marketing or licensing Renting or leasing property Other

14If you entered "Other" revenue pleasespecify the source

15How many earned-income ventures is

your organization currently operating?

1 2 more than 2

16Please indicate the type(s) of earned-income venture(s) your organization iscurrently operating. (check all that apply)

Service-related (fees for service) Product-related sales/manufacturing Cause-related marketing/licensing Renting/leasing property (e.g., building rentals) Other, Please Specify




17

Please indicate the type of earned-income venture which you are currentlyoperating which provides the greatestsocial and financial benefits to yourorganization (check one only)


18 Please briefly describe this earned-income venture.

19 What is the legal form of this venture?

In-house operation Separate nonprofit entity Separate for-profit entity Other (please specify)

20

How important are the following reasonsfor operating this earned-incomeventure? Please rate each reason on thescale from 1 to 3 below.1= not important2 = somewhat important3 = very important

Generate income/surplus for programs Move organization towards self-sufficiency Provide employment/training/therapeutic opportunities to

constituents Generate positive community relations Diversify revenue stream Help revitalize the neighborhood/community

21If there are other reasons for operatingyour venture, please specify.

22

To what extent do the goals of yourearned-income venture relate to themission of your nonprofit organization?Please rate using the following scalewhere 1="not at all" and 5="to a greatextent."

not at all a little bit somewhat a lot to a great extent

23Who is responsible for managing your

earned-income venture?

Executive Director Business Manager

Other (Please specify):

24Which of the following best describesthis person's formal business training?

Masters in Business Administration (MBA) Bachelor’s degree in business (B.A. or B.S.) Associate’s degree in business (A.A. or A.S.) No formal business training Other (please specify):

25For how long has your earned-incomeventure been operational?

less than 1 year 1-2 years 3-5 years 6-10 years more than 10 years

26How was your venture initially funded?(Please check all that apply)

Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets Private venture capital




Other (Please Specify):

27Are you currently seeking additionalfunding for your venture?

Yes No

28What sources of additional funding areyou considering for your venture?(please check all that apply)

Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets Private venture capital Other (Please Specify):

29For the last fiscal year, what was yourventure's financial net gain or loss?

Loss of $1 - $5,000 Loss of $5,001 - $10,000 Loss of $10,001 - $15,000 Loss of $15,001 - $20,000 Loss of $20,001 - $25,001 Loss of $25,001 or greater $0 (Broke Even) Gain of $1 - $5,000 Gain of $5,001 - $10,000 Gain of $10,001 - $15,000 Gain of $15,001 - $20,000 Gain of $20,001 - $25,001 Gain of $25,001 or greater Don't know

30

If it ever operated at a net loss, which of

following sources were used to subsidizeyour earned-income venture (check allthat apply)

Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s))

Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets Private venture capital N/A - venture never operated at a net loss Other (Please Specify):

31Please briefly describe how youmeasure the financial impact of yourearned-income venture

32How do you measure the social impactof your venture?

33How often do you calculate the financialReturn on Investment (ROI)?

Monthly Quarterly Yearly Never Other (please specify):

34Do you formally calculate the SocialReturn on Investment (SROI)?

Yes No




35If YES, please briefly describe how youcalculate SROI:

36

To what extent has your earned-incomeventure had an impact on the followingaspects of your nonprofit organization?Please rate each aspect using the scalefrom 1 to 7 below.1= very negative2 = negative3 = somewhat negative4 = neutral/no impact5 = somewhat positive6 = positive7 = very positive

Ability to attract and retain donors Ability to attract and retain staff Ability to attract and retain volunteers Board leadership Entrepreneurial culture Mission of organization Reputation of organization Service/program delivery Self-sufficiency of organization

37

How valuable would you find thefollowing types of support andassistance to help implement and

sustain your earned-income venture?Please rate each option from 1 to 3 onthe scale below.1= not valuable2 = somewhat valuable3 = very valuable

Business planning assistance Access to capital/financial resources Market research Mentoring Peer support Technical assistance (hands-on consulting) Workshops/seminars on earned-income venturing

38

Please describe any other type ofsupport or assistance that you would findvaluable to help implement and sustainyour earned-income venture

39In your last complete fiscal year, whatwas your organization's total revenue(from all sources)?

Less Than $50,000 $50,000 - $149,999

$150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 - $2,499,999 $2,500,000 - $4,999,999 $5,000,000 - $11,999,999 $ 12,000,000 - $24,999,000 More than $25,000,000

40

What percentage of your total revenuecame from the following sources:(Please enter a number in each box

below to add up to 100%)

Foundation grants Government grants Corporate grants Donations from individuals Endowment income Investments Government contracts Membership dues Service-related revenue Product-related revenue Cause-related marketing or licensing Renting or leasing property Other

41 If you entered "Other" revenue pleasespecify the source




42How many earned-income ventures hasyour organization operated?

1 2 more than 2

43Please indicate the type of earned-income venture(s) your organization hasoperated. (check all that apply)


The following questions will ask you to comment on the 1 earned-income venture your organization operatedwhich provided the greatest social and financial benefits to your organization.

44

Please indicate the type of earned-income venture which you operatedwhich provided the greatest social andfinancial benefits to your organization(choose one only)


45Please briefly describe this earned-income venture

46 What is the legal form of this venture?

In-house operation Separate nonprofit entity Separate for-profit entity Other (please specify):

47

How important were the followingreasons for starting this earned-incomeventure?Please rate each reason on the scalefrom 1 to 3 below.

1 = not important2 = somewhat important3 = very important

Generate income/surplus for programs Move organization towards self-sufficiency Provide employment/training/therapeutic opportunities to

constituents Generate positive community relations Diversify revenue stream Help revitalize the neighborhood/community

48If you had any other reasons foroperating your earned-income venture,please briefly describe them

49

To what extent did the goals of yourearned-income venture relate to themission of your nonprofit organization?Please rate using the following scalewhere 1="not at all" and 5="to a greatextent."

not at all a little bit somewhat a lot to a great extent

50Who was responsible for managing yourearned-income venture?

Executive Director Business Manager Other (Please specify):

51Which of the following best describesthis person's formal business training?

Masters in Business Administration (MBA) Bachelor’s degree in business (B.A. or B.S.) Associate’s degree in business (A.A. or A.S.) No formal business training




Other (please specify):

52How long ago did you stop operatingyour earned-income venture?

less than 1 year ago 1-2 years ago 3-5 years ago 6-10 years ago

more than 10 years ago

53For how long was the ventureoperational?

less than 1 year 1-2 years 3-5 years 6-10 years more than 10 years

54

Please indicate the reasons yourorganization is no longer operating anyearned-income ventures. (Check all thatapply.)

Lacked personnel resources to develop and manage theventure

Lacked financial resources to operate Lacked board interest/support Decided venturing not part of our mission Concerned about exemption status and/or tax issues Concerned about operational/financial risks Restricted by funding Never considered idea Other reasons (please specify):

55How was the venture initially funded?(Please check all that apply)

Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets Private venture capital Other (Please Specify):

56For the last fiscal year it operated, whatwas the venture's net gain or loss?

Loss of $1 - $5,000 Loss of $5,001 - $10,000 Loss of $10,001 - $15,000 Loss of $15,001 - $20,000 Loss of $20,001 - $25,001 Loss of $25,001 or greater $0 (Broke Even) Gain of $1 - $5,000 Gain of $5,001 - $10,000 Gain of $10,001 - $15,000 Gain of $15,001 - $20,000 Gain of $20,001 - $25,001 Gain of $25,001 or greater Don't know

57If it ever needed subsidy, which of thefollowing sources were used to subsidizethe venture (check all that apply)

Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets




Private venture capital N/A - venture never operated at a net loss Other (Please Specify):

58Please briefly describe how youmeasured the financial impact of yourearned-income venture

59How did you measure the social impactof your venture?

60How often did you calculate the financialReturn on Investment (ROI)?

Monthly Quarterly Yearly Never Other (please specify):

61Did you formally calculate the SocialReturn on Investment (SROI)?

Yes No

62If YES, please briefly describe how youcalculated SROI

63

To what extent has your earned-incomeventure had an impact on the followingaspects of your nonprofit organization?Please rate each aspect using the scalefrom 1 to 7 below.1= very negative2 = negative3 = somewhat negative4 = neutral/no impact5 = somewhat positive6 = positive7 = very positive

Ability to attract and retain donors Ability to attract and retain staff Ability to attract and retain volunteers Board leadership Entrepreneurial culture Mission of organization Reputation of organization Service/program delivery Self-sufficiency of organization

64

How valuable would you have found thefollowing types of support andassistance to help implement andsustain your earned-income venture?Please rate each option from 1 to 3 onthe scale below.1 = not valuable2 = somewhat valuable3 = very valuable


65What types of support or assistance notlisted above would have also beenvaluable?

66Did you write a Business Plan beforeyou launched your earned-incomeventure?

Yes No

67How long did it take your organization todevelop the Business Plan?

Less than 3 months 3-6 months 7-12 months More than 1 year




68

In developing your Business Plan, who

did you receive advice or feedbackfrom? (check all that apply)

Organizational consultant(s) Funder(s) Lawyer(s) Accountant(s)

Volunteer(s) from the corporate sector Other nonprofit organization(s) College/university faculty or student(s) Current or potential clients/customers Other (please specify):

69Are you planning to launch anyadditional earned-income ventureswithin the next year?

Yes No

70Please indicate the type of earned-income venture(s) you plan to launch(Check all that apply.)

Service-related (fees for service) Product-related sales/manufacturing Cause-related marketing/licensing Renting/leasing property (e.g., building rentals) Other (please specify):

71

Please indicate the reasons yourorganization has never operated anearned-income venture (Check all thatapply.)

Lack personnel resources to develop and manage theventure

Lack financial resources to launch Lack board interest/support Venturing not part of our mission Concerned about exemption status and/or tax issues Concerned about operational/financial risks Restricted by funding Never considered idea Other (please specify):

72Are you planning to launch any earned-income ventures within the next year?

Yes No

73Please indicate the type of earned-income venture(s) you plan to launch(Check all that apply.)

Service-related (fees for service) Product-related sales/manufacturing Cause-related marketing/licensing Renting/leasing property (e.g., building rentals) Other (please specify):

74Are you interested in starting an earned-income venture?

Yes No Not Sure

75

How valuable would you find thefollowing types of support andassistance to help implement andsustain your earned-income venture?

Please rate each option from 1 to 3 onthe scale below.

1= not valuable2 = somewhat valuable3 = very valuable


76




Please briefly describe any other ideasfor support or assistance that would bevaluable?

77How did you learn about this survey?

(Please check all that apply)

Email Postcard Website

Newspaper From a friend/colleague Other (please specify):

78

So that we may verify we have receivedonly one response per organization andtabulate results by geographic location,please provide the following:

Organization Name Address City State Zip

79

We plan to follow up with a limitednumber of organizations for briefinterviews. Organizations selected for aninterview may be highlighted in our finalreport. If you are NOT interested inbeing considered for an interview,please check below:

Do NOT consider my organization for an interview!

80

Social Venture Partners of Rhode Islandis compiling a directory of nonprofitsoperating earned-income ventures. Ifyour organization would NOT like to beconsidered, please check below:

Do NOT consider my organization for the directory!

81

In order to be eligible for a free copy ofthe report, a chance to be interviewedand possibly highlighted in the report, achance to win the gift certificates andbooks, we need to know how to reach

you.

This contact information will NOT bereported anywhere and will be removedfrom your survey responses.

Please provide the following contactinformation:

Your Name Title Email Address Phone




Appendix

Table 23: Demographics of the Full Sample of RI Nonprofit Organizations

Demographic Factor Count %

1. Program AreaArts/Culture/Humanities 46 14

Education 48 15

Environment/Animals 16 5

Health 40 12

Human Services 70 21

International Foreign Affairs 2 1

Misc. Mutual/Membership Benefit Orgs 5 2

Public/Society Benefit 32 10

Religion 9 3

Other (please specify): 61 19

N=329 Total 329 102*

2. Years in Operation

Less than 5 years 49 17

6-10 years 39 13

11-20 years 55 19

More than 20 years 152 52

N=295 Total 295 101*

3. Total Budget

Less than $250,000 126 44$250,000 - $999,999 84 29

$1,000,000 - $4,999,999 42 15

More than $5,000,000 35 12

N=287 Total 287 100

4. Self-Identification as “Entrepreneurial”

Yes 158 53

No 140 47

N=298 Total 298 100

5. Operating an Earned-Income Venture

Yes, currently operating 1 or more EIV 176 62

Never operated an earned-income venture 92 32

Not currently, but operated 1 or more in the past 17 6

N=285 Total 285 100




Note: * Does not equal 100% due to rounding

Table 24: Perceived Impact of Operating an EIV by Organizations Currently Operating 1 orMore

AttractDonors

AttractStaff

AttractVolunteers

BoardLeadership

EntrepreneurialCulture

Very negative 1 0 2 0 1

Negative 1 0 0 0 0

Somewhat negative 0 0 2 2 1

Neutral/no impact 33 50 46 40 38

Somewhat positive 25 21 19 29 30

Positive 33 25 29 29 22

Very positive 22 18 18 15 22

N= 115 114 116 115 114

Perceived Impact (Continued)

Missionof organization

Reputationof organization

Service andProgram

Self-Sufficiency

Very Negative 0 0 0 2

Negative 0 0 0 0

SomewhatNegative

2 1 1 5

Neutral/No Impact 10 9 11 20

Somewhat Positive 14 11 19 28

Positive 35 27 38 31

Very Positive 56 68 46 30

N= 117 116 115 116




Table 25: Rhode Island Sample Descriptive Statistics

Variable Obs Mean Std. Dev. Min Max

Entrep 260 .5269231 .5002375 0 1

Program 260 4.553846 2.384187 1 8

Years 260 3.053846 1.134312 1 4

Budget 260 1.938462 1.022933 1 4Eiv 260 .6576923 .4753971 0 1


1. Program Area


Education 36 14

Arts/Culture/Humanities 36 14

Health 32 12



Religion 5 2

Other** 54 21

N=260 Total 260 101*



6-10 years 34 13

11-20 years 52 20


N=260 Total 260 100

3. Total Budget

Less than $250,000 114 44

$250,000 - $999,999 78 30

$1,000,000 - $4,999,999 38 15

More than $5,000,000 30 12

N=260 Total 260 101*


Yes 137 53No 123 47

N=260 Total 260 100

5. Operating an Earned-Income Venture***

Yes, currently operating 1 or more EIV 171 66Never operated an earned-income venture 89 34

N=260 Total 260 100

Notes: * Does not equal 100% due to rounding error** "Other" includes the categories: "Misc. Mutual/Membership Benefit Orgs" and "International Foreign Affairs"*** The category "Not currently, but operated 1 or more in the past" was not included for the logistic regression




Table 26: Rhode Island Sample Bivariate Cross-Tabulations and Chi-Square Tests

| entrep

eiv | no yes | Total

-----------+----------------------+----------

no | 57 35 | 92

| 44.19 25.18 | 34.33

-----------+----------------------+----------

yes | 72 104 | 176| 55.81 74.82 | 65.67

-----------+----------------------+----------

Total | 129 139 | 268

| 100.00 100.00 | 100.00

Pearson chi2(1) = 10.7208 Pr = 0.001

| program

eiv | arts educ enviro health hservice | Total

-----------+-------------------------------------------------------+----------

no | 8 12 4 12 20 | 91

| 21.62 32.43 26.67 37.50 35.71 | 34.60

-----------+-------------------------------------------------------+----------

yes | 29 25 11 20 36 | 172

| 78.38 67.57 73.33 62.50 64.29 | 65.40

-----------+-------------------------------------------------------+----------

Total | 37 37 15 32 56 | 263

| 100.00 100.00 100.00 100.00 100.00 | 100.00

| program

eiv | public relig other | Total

-----------+---------------------------------+----------

no | 6 4 25 | 91

| 23.08 66.67 46.30 | 34.60

-----------+---------------------------------+----------

yes | 20 2 29 | 172

| 76.92 33.33 53.70 | 65.40

-----------+---------------------------------+----------

Total | 26 6 54 | 263

| 100.00 100.00 100.00 | 100.00

Pearson chi2(7) = 10.9145 Pr = 0.142

| years

eiv | <5yrs 6-10 11-20 >20 | Total

-----------+--------------------------------------------+----------no | 26 17 15 34 | 92

| 59.09 50.00 28.85 25.19 | 34.72

-----------+--------------------------------------------+----------

yes | 18 17 37 101 | 173

| 40.91 50.00 71.15 74.81 | 65.28

-----------+--------------------------------------------+----------

Total | 44 34 52 135 | 265

| 100.00 100.00 100.00 100.00 | 100.00

Pearson chi2(3) = 21.2400 Pr = 0.000

| budget

eiv | <$250K 250-999 1-4.9 <5mil | Total

-----------+--------------------------------------------+----------

no | 49 19 12 10 | 90

| 42.61 24.36 31.58 32.26 | 34.35

-----------+--------------------------------------------+----------

yes | 66 59 26 21 | 172

| 57.39 75.64 68.42 67.74 | 65.65-----------+--------------------------------------------+----------

Total | 115 78 38 31 | 262

| 100.00 100.00 100.00 100.00 | 100.00

Pearson chi2(3) = 7.1203 Pr = 0.068




Table 27: National Descriptive Statistics


Entrep 389 0.745501 0.43614 0 1Program 389 4.722365 2.063437 1 8Years 389 2.619537 1.239067 1 4

Budget 389 2.298201 1.127684 1 4Eiv 389 0.48072 0.500272 0 1


1. Program Area


Education 54 14


Health 34 9



Religion 17 4

Other** 52 13

N=389 Total 389 100



6-10 years 67 17

11-20 years 70 18


N=389 Total 389 100

3. Total Budget

Less than $250,000 127 33

$250,000 - $999,999 98 25

$1,000,000 - $4,999,999 85 22

More than $5,000,000 79 20

N=389 Total 389 100


Yes 290 75No 99 25

N=389 Total 389 100



N=389 Total 389 100

Notes:* "Other" includes the categories: "Misc. Mutual/Membership Benefit Orgs" and "International Foreign Affairs"*** The category "Not currently, but operated 1 or more in the past" was not included for the logistic regression




Table 28: National Bivariate Cross-Tabulations and Chi-Square Tests

| entrep

eiv | no yes | Total

-----------+----------------------+----------

no | 81 125 | 206

| 80.20 42.66 | 52.28

-----------+----------------------+----------

yes | 20 168 | 188

| 19.80 57.34 | 47.72

-----------+----------------------+----------

Total | 101 293 | 394

| 100.00 100.00 | 100.00

Pearson chi2(1) = 42.4184 Pr = 0.000

| program

eiv | arts educ enviro health hservice | Total

-----------+-------------------------------------------------------+----------

no | 14 43 13 24 79 | 269

| 35.00 64.18 54.17 51.06 54.11 | 55.35

-----------+-------------------------------------------------------+----------

yes | 26 24 11 23 67 | 217

| 65.00 35.82 45.83 48.94 45.89 | 44.65

-----------+-------------------------------------------------------+----------

Total | 40 67 24 47 146 | 486| 100.00 100.00 100.00 100.00 100.00 | 100.00

| program

eiv | public relig other | Total

-----------+---------------------------------+----------

no | 42 15 39 | 269

| 54.55 75.00 60.00 | 55.35

-----------+---------------------------------+----------

yes | 35 5 26 | 217

| 45.45 25.00 40.00 | 44.65

-----------+---------------------------------+----------

Total | 77 20 65 | 486

| 100.00 100.00 100.00 | 100.00

Pearson chi2(7) = 12.9835 Pr = 0.073

| years

eiv | <5yrs 6-10 11-20 >20 | Total

-----------+--------------------------------------------+----------

no | 99 45 41 89 | 274

| 67.81 57.69 47.67 49.44 | 55.92

-----------+--------------------------------------------+----------

yes | 47 33 45 91 | 216

| 32.19 42.31 52.33 50.56 | 44.08

-----------+--------------------------------------------+----------

Total | 146 78 86 180 | 490

| 100.00 100.00 100.00 100.00 | 100.00

Pearson chi2(3) = 13.9045 Pr = 0.003

| budget

eiv | <$250K 250-999 1-4.9 <5mil | Total

-----------+--------------------------------------------+----------

no | 125 62 53 34 | 274

| 73.53 51.24 50.00 36.17 | 55.80

-----------+--------------------------------------------+----------

yes | 45 59 53 60 | 217

| 26.47 48.76 50.00 63.83 | 44.20

-----------+--------------------------------------------+----------

Total | 170 121 106 94 | 491

| 100.00 100.00 100.00 100.00 | 100.00

Pearson chi2(3) = 38.8190 Pr = 0.000




Table 29: Pooled Descriptive Statistics


Program (art = ref category) 649 4.654854 2.197321 1 8

Educ 649 0.138675 0.345874 0 1

Enviro 649 0.050848 0.219856 0 1

Health 649 0.101695 0.30248 0 1Hservice 649 0.278891 0.4488 0 1

Public 649 0.12943 0.335934 0 1

Relig 649 0.033898 0.181107 0 1

Other 649 0.163328 0.36995 0 1

Years (< 5 = ref category) 649 2.793529 1.216104 1 4

6 – 10 649 0.155624 0.362778 0 1

11 – 20 649 0.187982 0.390999 0 1

> 20 649 0.420647 0.494044 0 1

Budget (< $250k = ref category) 649 2.154083 1.100359 1 4

$250 k – 999 k 649 0.271186 0.444915 0 1

$1 mil – 4.9 mil 649 0.189522 0.392225 0 1

> $5 mil 649 0.167951 0.374111 0 1Entrep 649 0.657935 0.474767 0 1

EIV 649 0.551618 0.497712 0 1

Sample 649 0.599384 0.490401 0 1


1. Program Area


Education 90 14


Health 66 10



Religion 22 3

Other ** 106 16

N=649 Total 649 99*



6-10 years 101 16

11-20 years 122 19


N=649 Total 649 101*

3. Total Budget

Less than $250,000 241 37

$250,000 - $999,999 176 27

$1,000,000 - $4,999,999 123 19

More than $5,000,000 109 17




N=649 Total 649 100


Yes 427 66No 222 34

N=649 Total 649 100



N=649 Total 649 100

Notes: * Does not equal 100% due to rounding error* "Other" includes the categories: "Misc. Mutual/Membership Benefit Orgs" and "International Foreign Affairs"** The category "Not currently, but operated 1 or more in the past" was not included for the logistic regression

Table 30: Pooled Bivariate Cross-Tabulation and Chi-Square Test

| sample

eiv | 0 1 | Total

-----------+----------------------+----------

no | 89 202 | 291

| 34.23 51.93 | 44.84

-----------+----------------------+----------

yes | 171 187 | 358

| 65.77 48.07 | 55.16

-----------+----------------------+----------

Total | 260 389 | 649

| 100.00 100.00 | 100.00

Pearson chi2(1) = 19.7335 Pr = 0.000




Table 31: RI Logistic Regression Predicting Organizations Currently Operating 1 or MoreEIVs (Reference Category = Never)

Predictor Odds Ratio Std. Err.

Budget (Reference category = < $250K)

$250-$999K 1.48 0.56

$1-$5M 1.14 0.54> $5M 0.88 0.48

Age (Reference category = < 5 years)

6-10 years 1.23 0.65

11-20 years 3.02* 1.52

>20 years 4.96** 2.29

"Entrepreneurial" (Reference category = No)

Yes 2.85** 0.86

Program Area (Reference category = Arts/Culture/Humanities)

Education 0.41 0.24

Environment 0.39 0.29

Health 0.28 0.18

Hum Service 0.38 0.21Public Benefit 0.82 0.55

Religion 0.09* 0.10

Other 0.21** 0.11

*p < .05 **p < .01

N = 260

Table 32: National Logistic Regression Predicting Organizations Currently Operating 1 orMore EIVs (Reference Category = Never)



$250-$999K 2.58** 0.81$1-$5M 2.48** 0.87

> $5M 4.61*** 1.77


6-10 years 1.04 0.37

11-20 years 1.62 0.60

>20 years 1.33 0.45


Yes 5.59*** 1.70

Program Area (Reference category = Arts/Culture/Humanities)

Education 0.22** 0.12

Environment 0.46 0.30

Health 0.37 0.21Hum Service 0.30* 0.14

Public Benefit 0.43* 0.22

Religion 0.17* 0.13

Other 0.35 0.18

*p < .05 **p < .01 ***p < .001

N = 389




Table 33: Pooled Logistic Regression Predicting Organizations Currently Operating 1 or

More EIVs (Reference Category = Never) controlling for Budget, Age, Entrepreneurial, andProgram Area



$250-$999K 2.05** 0.47$1-$5M 1.69 0.46> $5M 2.47** 0.74


6-10 years 1.17 0.3311-20 years 1.94* 0.56>20 years 2.15** 0.56


Yes 3.91*** 0.80Program Area (Reference category = Arts/Culture/Humanities)

Education 0.29** 0.11Environment 0.44 0.21Health 0.31** 0.13Hum Service 0.33** 0.12Public Benefit 0.50 0.19Religion 0.15** 0.09Other 0.26*** 0.10

Sample (Reference category = Rhode Island)

National 0.33*** 0.07

*p < .05 **p < .01 ***p < .001

N = 649




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