7 habits of increasingly profitable non-profits

But from Abuja, she and her organisation, Global Rights, face a classic dilemma that non-profits across the globe face: While the non-profit seeks sufficient resources to sustain and expand its work, the landscape of traditional donors is contracting and often doesn’t cover basic operating costs.

In a dilemma such as this, blurring lines between profit-seeking ventures and traditional non-profits are producing opportunities to solve complex development challenges that Global Rights addresses such as corruption, poverty and inequality. Under the mission of achieving social good, those of us working in the non-profit sector have adapted how we do business and developed new private sector partnerships.

Recently, Partners Global has joined forces with the Ford Foundation and the GE Foundation to expand in this area of work in West Africa, promoting new business models with local non-profit organisations. We have been working with our affiliates in the region, Partners West Africa – Senegal and Partners West Africa – Nigeria, to incorporate social entrepreneurship concepts for peer organisations in Nigeria and Senegal. Earlier this year, we convened 45 diverse organisations, including Global Rights, together with business leaders to share experiences in how to become more entrepreneurial.

Here are seven considerations that can help non-profits make the transition:

One: The legal environment matters. Non-profits need to understand what the local legal framework allows regarding activities that generate profit. Depending on an organisation’s registration or statutes, there may be legal or tax consequences to conducting new business.

Two: New definition of “market”. Non-profit leaders are often not trained to think about their work in terms of a market that has competitors and potential clients. Analysing the market prior to beginning any revenue-generating activity is essential.

Three: An organisation-wide approach. There is a misperception among many non-profits that entrepreneurship is a matter of better marketing. Rather, leaders of civic organisations must start with an assessment of their strengths and weaknesses to address shortfalls, especially financial management capabilities.

Four: Intensive staff time and resources. It is often difficult for busy grassroots leaders to dedicate time to adapt a new business model. The entire staff and board cannot underestimate the time investment. They should also plan adequately as it will sometimes necessitate shifts in staff responsibilities.

Five: Adapting non-profit “speak.” Business and non-profit representatives often travel in different circles and generally speak different professional “languages.” This can be a barrier to non-profits being seen as credible service providers for businesses as potential clients. In particular, non-profits need to be clear about the results they achieve.

Six: Defining your niche and services. Private sector representatives in our initiative recommended that local non-profits be clear about their niche and demonstrate their potential impact through business language, like return-on-investment.

Seven: Determining the right pricing. Because non-profits operate on grants and donor support, they have little experience with pricing their activities to make a profit. These leaders should seek out professional advice for pricing their products and services to be realistic about the potential for profit.

Examples of revenue-generating activities among groups in our initiative include providing training programmes and charging for their publications. Global Rights, for example, has experimented with renting out their training rooms for extra income. That service has expanded into partnerships with their clients to jointly conduct international training. Recently, these partnerships have led to consultancies with the British Council and private universities.

One of the main takeaways from our initiative is there is a clear need for local companies and non-profits to interact more in West Africa for this shift in entrepreneurial mindset to take place. Non-profits that succeed in becoming more enterprising will be more likely to flourish in the region and will gain a level of independence needed for a viable social sector.

Julia Roig is the President of PartnersGlobal and works with an international network of 19 Partners’ affiliate organisations to build effective multi-sector partnerships for sustainable development.

Kehinde Togun is the Deputy Director of Partners’ Sub-Saharan Africa team and manages the region’s portfolio of governance and security programmes.