Exploring revenue models in the nonprofit world

Posted on July 21, 2011 by Michael Corley

Two blog posts ago, I wrote about creating a web-based utility that would answer the two questions we are using to guide this initiative:

What do I do now?

How can we put patients and caregivers in control of dementia versus dementia being in control of them?”

Working with a number of partners, we believe we are on our way to developing such a utility.  Done correctly, this will not be quick nor will it be easy, but it can get done.

A big challenge we face is the financial model around such a utility.  How can we create a model which makes this effort financially sustainable so that the “owner” of this doesn’t have to go in search of funds each year to remain operational? In other words, how do we create financial thrivibility?

Asking this last question is one of the requirements we have at The Patterson Foundation (TPF).  We want a model of financial thrivibility built into each initiative so that when The Patterson Foundation exits the initiative, it will continue on without the “annual concern for money” experienced by so many programs and entities. (TPF enters into initiatives with the understanding that it will exit at the appropriate time.)

Conceptually, this sounds relatively easy. Realistically, this isn’t true. I have identified two reasons, although, I am sure there are more, for this gap:

1)  The “spaces” in which we have chosen to involve ourselves have limited revenue generating ability.

2) Most nonprofit entities operating in nonprofit space seem to have an aversion to seek funding by generating ‘additional’ revenue, therefore, they limit fundraising efforts to seeking grants.

So what is our approach?

First and foremost, we will maintain the integrity and objectivity of any utility we create. While we recognize the need to generate revenue, we believe we can and must balance this with product and organizational integrity. (If we don’t, then the short-term financial gain will be usurped by long-term dissatisfaction with the product leading to a lack of clients. No clients=no revenue.)

Second, we must create a utility that answers the questions above AND provides value to potential customers. It is by providing value to customers that the opportunity to generate revenue becomes viable.  (Questions to answer:  Who are our customers? What do they consider “value” within our initiative? How do we generate money by merging our utility with customers with the value?)

Third, since we are working with nonprofits in nonprofit space, how do we keep mission focused?  (We must hold true to  mission(s), otherwise, we risk losing sight of the reason we are generating revenue via new approaches.)

Much more to come on this topic.  In the meantime, I welcome any thoughts on financial thrivibility.


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