CHARITIES DOING COMMERCIAL VENTURES: SOCIETAL AND ORGANIZATIONAL IMPLICATIONS Dr. Brenda Zimmerman

IS IT A “GOOD” IDEA FOR CHARITIES TO UNDERTAKE MORE COMMERCIAL VENTURES?

THEMES OF THE RESEARCH

MEETING NEEDS AND FILLING NEEDS

Where charities see a need that should be met, commercial businesses see a niche that could be filled.

CORPORATE RHETORIC

CORPORATE RHETORIC PERMEATES THE SECTOR The language of the marketplace has put management at the centre of our organizations, corporate business at the centre of society and defined government and nonprofit organizations a nonproductive and burdensome.

AN OLD NOVELTY

Charities have been selling goods and services forever and yet it is an “invisible” option to many charities.

SELF-SUFFICIENCY AND ECONOMIC DEPENDENCE

“Unless you invent the next pet rock, you are not going to replace the government funding with your business profits. Sorry.” (Brinckerhoff, 1994c)

SEPARATION OR INTEGRATION OF COMMERCIAL AND SOCIAL VENTURES

There are practical and philosophical arguments for both integration and separation of commercial and social ventures

THE AMBIDEXTROUS ENTREPRENEUR

It takes a special person to succeed as a commercial entrepreneur. Even fewer can combine commercial entrepreneurship with a focus on meeting charitable needs

TRANSACTION POTENTIAL -FEE FOR SERVICE

Profitable fee-for-service depends on the client base served and the nature of the goods or services produced

TRANSACTION POTENTIAL BASED ON THE NATURE OF THE ACTIVITY

THE EMERGENT OUTCOMES OF COMMERCIAL VENTURES

Although there are intended or planned outcomes of commercial ventures, many emergent outcomes result from the activity

EMERGENT OUTCOMES: Resources cannibalization shifts away from intentional giving synergies/decreased financial risk increased financial risk using more energy to get fewer dollars burning charitable dollars volunteers cost of hiring “business” managers reward structures would have changed commercial activities can be undermined by the mission and values of a charity

TOP LINE THINKING VERSUS BOTTOM LINE THINKING Top Line ThinkingBottom Line Thinking Revenue = money available for charitable work Revenue  profits Costs (must not exceed revenues) Costs (required to create revenues) Revenues determine future costs Costs are incurred to create revenues Timeline  revenues precede costs Timeline  costs precede revenues

EMERGENT OUTCOMES: Relationships boards of directors recipients/beneficiaries/clients donors/funders volunteers organized labour professional staff

EMERGENT OUTCOMES: Reputation community perception market perception-unfair competition shifting definition of success

TYPOLOGY FRAMEWORK FOR CHARITIES

EMERGENT OUTCOMES: Responsiveness increased productivity change to less hierarchical more adaptable structure “low-hanging” fruit customer focus mission and values of charity are undermined by business venture

THEMES OF THE RESEARCH

KEY QUESTIONS TO ASK: Is this avoidance? Will it change the fundamental nature of the charity?

Abandon form, but preserve substance