1. O for Opportunity: Exploring New Revenue Opportunities for Nonprofits Produced by the Society for Nonprofit Organizations September 11, 2008

2. Copyright © 2007 — Community Wealth Ventures, Inc. — 2 Workshop Objectives 1.Introduce participants to the concept of community wealth/social enterprise 2.Share examples, risks, best-practices 3.Identify community wealth opportunities for participant organizations 4.Understand how to assess and prioritize opportunities 5.Learn about the components of a successful feasibility assessment

3. Copyright © 2007 — Community Wealth Ventures, Inc. — 3 What do you hope to learn from this workshop?

4. Introduction to Community Wealth

5. Copyright © 2007 — Community Wealth Ventures, Inc. — 5 Looking for Something Different?

6. Copyright © 2007 — Community Wealth Ventures, Inc. — 6 What Is Community Wealth? Revenues generated through profitable or self-sustaining enterprises to promote social change

7. Copyright © 2007 — Community Wealth Ventures, Inc. — 7 What Is Different About Community Wealth? Community Wealth is Not… Community Wealth is… ■ Traditional fundraising ■ Grant money ■ Gifts/donations ■ A “quick fix” out of a crisis ■ For everyone ■ Generating sustainable new resources to support mission ■ Engaging market forces to work for the nonprofit sector ■ Devising new ways to leverage existing assets ■ Allowing for greater flexibility by bringing in unrestricted revenue ■ Decreasing dependence on the external funding community

8. Copyright © 2007 — Community Wealth Ventures, Inc. — 8 Community Wealth Examples

9. Copyright © 2007 — Community Wealth Ventures, Inc. — 9 Which is Not a Community Wealth Enterprise? 1.Zoo Doo – compost 2.Caroline Center Upholstery – furniture upholstery 3.Greyston Bakery – manufactures brownies for Ben & Jerry’s and other ice cream manufacturers 4.Rubicon Landscape Services – landscaping 5.Freedom Wheels – used car business 6.Laser Monks – discount printer cartridges

10. Copyright © 2007 — Community Wealth Ventures, Inc. — 10 What Factors are Necessary to Launch a Successful Community Wealth Enterprise?

11. Copyright © 2007 — Community Wealth Ventures, Inc. — 11 Characteristics of Successful Community Wealth Enterprises 1.Planning and upfront investment 2.Clearly defined goals 3.Mission alignment 4.Leadership and skilled staff For more information download : Powering Social Change: Lessons on Community Wealth Generation for Nonprofit Sustainability at www.communitywealth.com/resources_tools.htm

12. Copyright © 2007 — Community Wealth Ventures, Inc. — 12 Is Community Wealth Legal? 1.Nonprofits can launch community wealth enterprises and maintain 501c3 tax status 2.Income Related to Exempt Purposes  No limit on amount of revenue 3.Income from Unrelated Activities  Taxable as “unrelated business taxable income”(UBTI) 4.There is no standard legal structure 5.Consult an attorney to understand the most appropriate legal structure

13. Copyright © 2007 — Community Wealth Ventures, Inc. — 13 Community Wealth Potential Risks FinancialReputationOrganizational Venture may cost more than expected Opportunity cost – resources could have been spent elsewhere Traditional funders may decrease funding Venture may lose money Reputation could be compromised Venture could fail and negatively impact reputation Venture may divert management and staff attention Increased organizational complexity and new skills required may be difficult to handle Culture clashes between core organization and venture Staff and board resentment Major Types of Risks

14. Copyright © 2007 — Community Wealth Ventures, Inc. — 14 The Social Venture Development Process 1. Asset Identification 2. Assets into Opportunities 3. Opportunity Screening 4. Feasibility Assessment 5. Select One Opportunity 6. Business Planning Implementation Idea Generation High Level Assessment Detailed Market Analysis and Operations Plan Today

15. Task 1 – Asset Identification

16. Copyright © 2007 — Community Wealth Ventures, Inc. — 16 ASSETS Things You HAVE :  Physical assets  Location/space  Distribution/sales network  Brand/Reputation  Patent  Access to desired resource  Relationships (membership, suppliers, etc.) Things You DO:  Continuously innovate  Manage information  Produce low cost goods Things You KNOW:  Understanding of specific issue  Process expertise  Market expertise  People/key decision makers Task 1 Assets Can Be Things You Have, Do, or Know

17. Copyright © 2007 — Community Wealth Ventures, Inc. — 17 Assets Are a Matter of Perspective Consider this example...

18. Copyright © 2007 — Community Wealth Ventures, Inc. — 18 Nonprofit Organizations Have Lots of Assets Attractive Facilities, Desirable Locations Excellent Service Provision Financial Accounting, Human Resources Management HAVE DO KNOW

19. Copyright © 2007 — Community Wealth Ventures, Inc. — 19 Time: 5 minutes How: Individually and as a group 1.Take 1 minute to identify your organization’s key assets that could be leveraged into potential opportunities. Assets can be things you have, do, or know, and are often a matter of perspective…so get creative Greyston Bakery A venture of Greyston Foundation Exercise # 1: Asset Identification

20. Task 2 – Opportunity Identification

21. Copyright © 2007 — Community Wealth Ventures, Inc. — 21 Task 2 Evaluating Your Assets 1.Is the asset unique? 2.Who would value the asset? 3.How valuable is the asset? 4.What is the customer’s willingness to pay? 5.Is the asset sustainable over time?

22. Copyright © 2007 — Community Wealth Ventures, Inc. — 22 Example – Leveraging Assets for Opportunities Assets 1.Historic downtown building Opportunities 1.Cafe 2.Market-rate housing 3.Space rental for special events 4.Day-care center 5.Thrift-store location

23. Copyright © 2007 — Community Wealth Ventures, Inc. — 23 Time: 5 minutes How: Individually and as a group 1.Review lists of assets and brainstorm potential opportunities. List each opportunity and its corresponding asset (1 minute) 2.Share ideas and brainstorm new ones Exercise # 2: Turning Assets into Opportunities

24. Task 3 – Opportunity Screening & Prioritization

25. Copyright © 2007 — Community Wealth Ventures, Inc. — 25 Task 3 Opportunity Screening 1) Which opportunities will enable us to achieve our goals? Financial goals Mission goals 2) How easy or difficult will it be to implement?

26. Copyright © 2007 — Community Wealth Ventures, Inc. — 26 Task 3: Opportunity Screening Financial Analysis Financial Potential 1.Market demand and estimated size of the market 2.Level of competition 3.Quality of product 4.Expected growth rate 5.Cost structure

27. Copyright © 2007 — Community Wealth Ventures, Inc. — 27 Task 3: Opportunity Screening Assess Ease of Implementation Ease of Implementation 1.Expected complexity of the project 2.Availability and skills of current staff to manage the new opportunity 3.Ability to recruit other staff quickly 4.Access to necessary capital

28. Copyright © 2007 — Community Wealth Ventures, Inc. — 28 Ease of Implementation Financial Potential Easy High Low Hard Task 3: Opportunity Screening Which Opportunities Are Most Attractive?

29. Copyright © 2007 — Community Wealth Ventures, Inc. — 29 ■Feasibility analysis is a high-level assessment of the market opportunity, profitability, and fit with the organization for a potential business venture The goal of a feasibility analysis is to inform a Go/No Go decision on a business opportunity using impartial market research and internal assessments Task 4 What is a Feasibility Assessment?

30. Copyright © 2007 — Community Wealth Ventures, Inc. — 30 Task 4: Feasibility Assessment External & Internal Factors Internal Factors External Factors

31. Copyright © 2007 — Community Wealth Ventures, Inc. — 31 ■How big is the current market? Is it growing or contracting? How is it segmented? ■Who are the key customers? What customers are willing to pay? ■Who are the key competitors? How do they differentiate themselves? ■What are the margins for current vendors in the market? ■What are the barriers to market entry? Task 4: Feasibility Assessment External Factors

32. Copyright © 2007 — Community Wealth Ventures, Inc. — 32 ■Can you secure organizational and board buy-in for this opportunity? ■How well does the market opportunity fit with your organization’s skills and expertise? Will you need to purchase outside expertise? ■Do you have a potential competitive advantage? ■What investment is needed to launch and grow the opportunity? ■How long will it take to make the opportunity a reality? ■What are the risk factors? What are ways to mitigate risk? Task 4: Feasibility Assessment Internal Factors

33. Copyright © 2007 — Community Wealth Ventures, Inc. — 33 Task 4: Feasibility Assessment Evaluate & Compare Opportunities Based on your findings, take your “top/best” three and evaluate them Opportunity – (Low, Medium, High) ABC Market Size Market Outlook Favorable Competitive Factors Ease of Entry Likely Competitive Advantage Market Profitability Fit with Mission Fit with Skills/Expertise Fit with Material Resources Ability to Manage Risk OVERALL ATTRACTIVENESS Internal Factors Internal/ External External Factors

34. Copyright © 2007 — Community Wealth Ventures, Inc. — 34 Ultimately, the Opportunity Needs to be Something the Organization Really Wants to Do 1.What are the potential strengths of the idea? 2.What are the potential drawbacks of the idea? 3.Is it better than the other things the organization could be doing with its time and money? 4.Is the organization willing to dedicate the management staff and financial resources necessary to make it succeed? 5.Is there someone in the organization who will wake up every morning excited to make the venture a success?

35. Copyright © 2007 — Community Wealth Ventures, Inc. — 35 The Social Venture Development Process 1. Asset Identification 2. Assets into Opportunities 3. Opportunity Screening 4. Feasibility Assessment 5. Select One Opportunity 6. Business Planning Implementation Idea Generation High Level Assessment Detailed Market Analysis and Operations Plan Today

36. Copyright © 2007 — Community Wealth Ventures, Inc. — 36 Questions? Heather Peeler Managing Director hpeeler@communitywealth.com