DATE GOES HERE ARIAL 16 BOLD

Non-Profit Revenue Stream AlternativesThinking Outside the Box

Tom Wilson, Campbell & CompanyDaniel Ducoff, Case Western Reserve University

September 24, 2012

A Lorman Webconference

Daniel DucoffCase Western Reserve University

Associate Dean, Case School of Engineering

Rock and Roll Hall of Fame and Museum

Playhouse Square Center in Cleveland

Jewish Community Federation of Cleveland

Board member– Beachwood Schools Foundation (Ohio)

Commissioned an Honorable Kentucky Colonel– The highest award by the Commonwealth of

Kentucky

Shtickmeister

3

1) 30 years of encouraging donors & nonprofits

2) Classical musician, conductor, teacher, jazz

3) Weblog –

4) Certified trainer Peter F. Drucker The 5 Most Important Questions

5) University vice president, executive director, facilitator for dozens of nonprofit boards for strategic planning and visioning

Tom WilsonTrusted Advisor & Coach

Diversifying Revenue Is More Important than Ever

1) Governmental operating funds are being reduced

2) Fundraising is tough

3) Proceeds from smaller endowments are lower than we planned

4) Traditional sources of earned revenue are static or reduced

Yet personnel costs are up

5) Board members are seeking better opportunities for engagement in areas of expertise

Business

First, Boost Current Revenue Streams

Re-engineer all earned income streams

– Create a task force of all staff involved with creative board members who can think out of the box

• Don’t allow incremental growth – how do you double revenue in the next 3 years

• How can you use the Internet to boost your current activities

First, Boost Current Revenue Streams

Conduct fundraising audit to determine best ROI for contributed income

– You may have cut back too far

– What investments can you make to boost contributed income by 100% ? 200% ?

– Have you benchmarked top-notch, great fundraising programs in your community, in your nonprofit niche regionally and nationally?• Why can’t you be the best?

First, Boost Current Revenue Streams

Review every fundraising special event to maximize net-net results

– Net-net: net after expenses and net after all staff time is allocated to the project

Take your events to $100,000 net-net: as fast as you can

– Focus on one, spectacular, great event rather than a lot of small, nonimpact activities

First, Boost Current Revenue Streams

Get endowment revenue to 20% of budget

– Your long-term objective is 20% to 30% of operating revenue from endowment

– Create a 5-year plan and a quarter-century vision for endowment growth• Planned estate giving must play a role

– Get going

Scour Your Operating Budget for In-kind Donation Opportunities

Don’t pay cash for anything except salaries

Corporations may have tight budgets for cash contributions, but in tough times they love to give “stuff”

• You need to make it a win for them too

• University research equipment opportunities

Some Traditional Alternative Revenue Streams

Thrift Shop

Gift Shop

Educational materials– If you’ve got something unique, market it on the

Internet

Now, Think Outside the Box

Find a way to reinforce your mission as you diversity your funding

Institutionalize Extracurricular Activities

What are people doing in their spare time?

Where are their passions?

What do your people do “on the side?”

Get the old suggestion box out of the closet

– The Google 10% Factor– University faculty 4 days

A University

ThinkBox Project

Joint patents

Business & governmental partnerships

International students

Real estate options

An Arts Organization

Taking performances to movie theaters around the world

Revenue Strategies for the Future

Ask your board members to help

• A great way to engage them in an area where they have strong expertise

• Making money

Go After Federal Funding

Find a governmental-funding consultant to match your operations and federal grants

• Don’t try this by yourself

Find a government-lobbying organization who can guide you

• Who else could join you

State, County, & City Funding

State cultural tax credit

State endowment tax credit

County property tax

Art & historical cultural district tax

17

Outsource Your Talent to Other Nonprofits

1) Who are the stars on your admin team?• CFO• Fundraising database expert• Events coordinator

2) How could other nonprofits pay for part of their time?

It won’t be a total win, you’re busy already– So how do you leverage their time with assistants to

enable them to generate revenue outside of your offices?

Playhouse Square Center

Staff going out as a consultants to other arts organizations

Subsidiary real estate company

Artistic touring productions

Developed a ticketing company

Hotels, restaurant, parking co-development

Partnering with other nonprofits on physical space and programming

Use Your Land

A private school

A medical Center

The church parking lot

Lease to a farmers market

Leveraging Partnerships

Delve deeper into the development toolkit– Tax increment– Tax credits

• New markets• Historic

– Foreign investment funds

Telling your story– Public & private lenders– The larger community

21

Obtain Leasing Revenue

Lease Street Level Access to Retail Shops

Move your operations to the second floor and work with a developer to lease out ground level spaces

Partnered with local economic development corporation for tax credits

Gordon Square Arts District – the art of economic development

Lease Your Space in Off Hours

Some churches and synagogues in urban settings are leasing their Saturday and Sunday school classrooms to pre-schools during the week

Can a company or other nonprofit lease your offices for an evening calling center

What Alternative Revenues Could Apply to a New Building?

Explore tax credits and community development financing

• Harder than it used to be• Work with private developers for mutual benefit

Air rights and retail leasing should be fully considered before new construction

Find a strategic partner to run the other uses

UBITUnrelated Business Income Tax

There’s a cost of doing business• Get legal counsel to advise your organization

Be aware of our nonprofit role• Don’t cross the gray line

There Are Opportunities to Cover Overhead by Scaling Up

Set up a national federation

Join a regional & national organization

Statewide political coalitions

In Conclusion

1) Of course look for alternative revenue sourcesa) But first, have you really maximized and re-

engineered all of your current sources?

2) Seek mission-focused alternative revenue

3) Of course, do anything but understand it will take time, be complicated, and make take you off mission

Resources

Conscious Governance – http://conscious-governance.com/alternative-sources-of-revenue-streams.html

Mandel Center – Nonprofit Revenue Streams: Finding the Right Mix, Dennis R. Young, Professor, Mandel Center for Nonprofit Organizations, May 2004

St. Thomas University – http://www.massnonprofit.org/expert.php?artid=1872&catid=18

MassNonprofit.org – http://exed.stthomas.edu/ENonprofitArticle3MoneyWatch.com –

http://findarticles.com/p/articles/mi_hb3356/is_1_56/ai_n29000232/Andrew Young School of Policy Studies, Georgia State University –

http://aysps.gsu.edu/publications/2007/downloads/07-32%20FischerWilskerYoung-ExploringtheRevenueMix.pdf