A co-evolutionary process is under way in the non-profit sector. On one hand, organizations are looking within to create leadership succession — often replacing an organizational founder. In other cases, leadership is sought from the for-profit world.
In most cases, sustainable nonprofits are adopting innovative, entrepreneurial practices to their missions, while yielding competitive interests in lieu of collaboration, says Gary Dembs, president and CEO of 4th Sector Consulting in Southfield.
“You have nonprofits paying much more attention to collaboration and partnerships across the different sectors than they ever have before. What that means is that you have new thinking, more entrepreneurial, social enterprise thinking. That’s a really big shift.”
Dembs, who has been following the nonprofit field in Southeast Michigan for over 30 years, says “nonprofits, especially the human services agencies, need to be much more entrepreneurial in where they’re getting their money… At a time when the perception might be that government funding is down and philanthropy’s down, there’s access to a lot more dollars for nonprofits than there ever has been, especially human service agencies.
“Sustainability is the word. You have to be sustainable. You can’t rely on your direct mail piece, individual events and individual philanthropy, you have to find new models.”
Organizations need alternate forms of “earned revenue” beyond government and philanthropic sources. Forgotten Harvest, he says, is an example of an organization that has incorporated social enterprise to augment its revenue sources and expand its services. “That’s really the trend that they’re a little ahead of the game on.”
Entrepreneurial thinking is in the “DNA” of Forgotten Harvest, says CEO Kirk Mayes. Innovative thinking that allowed the organization to grow exponentially over 25 years to becoming the largest food rescue and distribution agency in the nation, has resulted in creation of a 150 acre working farm, which supplements its donated produce, and a food processing plant, which provides revenue for the organization by serving the for-profit sector.
“If you think of what entrepreneurialism means at the granular level, it’s someone who takes a risk to manifest something that in many ways is greater than them and will have an impact past themselves.” As other organizations faltered during the past recession, Forgotten Harvest burst into productivity.
“When we address an issue, we’re very comfortable with exploding the box to addressing a challenge,” says Mayes. “We’re not just looking at best practices in food rescue or food banks. We’re looking at the business world, other non-profits; we’re looking everywhere we can to try to figure out how we can be the best we can be.”
Collaboration is essential for non-profits, says Kirk Mayes, president and CEO of Forgotten Harvest. This year, he’s begun discussions with Gleaners Food Bank, which many believe to be a competitor of Forgotten Harvest.
“We knew we needed to partner with each other in a deeper way than folks recognized that we could, so we could do everything we can to address the mission we’re both symmetrical working through every day,” Mayes explains. “What we’re going to be working on is defining our selves more clearly so that we can demonstrate how Gleaners and Forgotten Harvest are complementary forces.”
826Michigan has integrated entrepreneurship with its social mission to improve writing skills and creative thinking through mentoring. The organization, an affiliate of San Francisco’s 826Valencia, runs Liberty Street Robot Supply and Repair, which provides supplemental revenue.
All of the “826” affiliates have some sort of retail operation. Liberty Street Robot Supply and Repair was developed with the state’s manufacturing identity in mind.
“Robotics and Michigan have something in common,” says Amanda Uhle, executive director, who has overseen the growth of the Ann Arbor-based agency to serve children in Ypsilanti, Ann Arbor and Detroit, recruiting over 2,000 volunteers as mentors.
While robotics and writing may not have much in common, robots appeal to kids. “Students who might have trouble with school, instead of tutoring after school, which can be so daunting… they get to go to a pretty fun store with toys and cool stuff. Students can really key into it.”
826 Michigan currently earns about 10 percent of its revenue from the retail operation. It plans to open a second robot store in Detroit within the next year. Uhle says the store won’t become much more of a cash cow. Uhle doesn’t want it to become a distraction from the organizations core mission.
The ironic juxtaposition of technology and the eroding skill of writing gives 826 Michigan an intriguing position as a human service agency. If creativity and innovation is the hallmark of an entrepreneurial organization, every aspect of 826 Michigan’s culture is entrepreneurial. As a result, it is well positioned to serve its client population in unique ways and appeal to funding sources.
Uhle says collaboration as integral to 826 Michigan’s operation, internally and externally. “My style as a leader is very collaborative. That’s how we work with our students (and) our volunteers. They are leading this organization with me.”
Winning Futures, a middle and high school mentoring program, was founded on the entrepreneurial model. “We believe you have to run a charity like a business,” says Kristina Marshall, executive director and one of its first mentees. “That’s how you’re going to have sustainable structures in your organization…. We believe you have to have strong skills in business from finance and accounting to marketing to organizational structure and behavior.
Marshall says her board of directors encouraged her to “run this more like an entrepreneurial organization.” Her “entrepreneurial fire” is fueled as the first female president of Entrepreneurs Organization, Detroit chapter. She also hopes eventually to start a for-profit business to support Winning Futures.
Winning Futures uses Entrepreneurial Operating Systems, a strategic planning method developed Geno Wickman, one of its former board members. During the past recession, the organization acquired a struggling nonprofit, The Rare Everyday Hero, which complemented its mission. It is also marketing its curriculum to other non-profits and schools throughout the country, which is a small portion of the organization’s revenue, but offers multiple benefits, Marshall says.
“It’s a chance to impact kids across the country without needing to franchise or set up more Winning Future sites. There are too many nonprofits out there fighting for the same dollars. We didn’t want to be another competitor in the nonprofit industry. We want to be a support to nonprofits. If they have an existing mentoring program and want results around goal-setting and life skills, they can use our curriculum. They still have their identity, but they’re using our curriculum as a resource.”
Just as businesses understand that it is sometime better to find partners, collaborators and suppliers that can complement their efforts, so too has Winning Futures decided to limit the scope of its efforts.
“We believe we should have a few core activities, stay laser-focused on that and be really great at it,” says Wickman. “We used to do a lot, but we’ve focused on the core things. It has made us stronger.”
Nonprofits who have survived the recent recession are adopting business practices, becoming more innovative in how they define their services, and more collaborative in how they relate to potential competitors and funding sources.
Collaboration, says Mayes, is critical for individual interests to be successful in the non-profit sector.
“We know, as a social sector in Southeast Michigan, that the only way we’re going to do what we all get up every day to do, which is make a difference in people’s lives, is that we have to link tighter together, think together, plan together, raise money together, and make impact together in people’s lives if we’re going to really make a difference that’s going to transform our region. It’s low hanging fruit, quite honestly, for those who understand it and can see it.”
Dennis Archambault is a Detroit-based freelance writer and regular contributor to metromode and Model D.