MMI Lab 4 2018

Free to Fee: Help Your Nonprofit Partners Generate Earned Income

Posted on July 25, 2018 by Michael Corley, consultant with The Patterson Foundation

Editor’s Note: Free to Fee: Help Your Nonprofit Partners Generate Earned Income was initially published by Exponent Philanthropy. Michael Corley, the author of the post, is an independent management consultant working with individuals and organizations to facilitate systemic change and improve leadership/management effectiveness. Michael began doing work with The Patterson Foundation in 2009 and continues to lead various initiatives and provide operational oversight.

ngoImagine the benefit to society—and to funders—if nonprofits generated income, operating with the efficient, effective practices that are necessary to do so?

Stronger operating models.

More money to drive mission.

More people served.

More philanthropic dollars available in the community.

This has been our experience after working with nonprofit organizations on plans to generate mission-related earned-income products and/or services.

Learn more about the Margin & Mission Ignition initiative.

The Patterson Foundation is deeply interested in strengthening nonprofit organizations in our geographic area (Sarasota, FL) and sensitive to the limits of available philanthropic dollars in our community. We frequently hear that nonprofits need flexible funds to run their organizations effectively, but they can sometimes struggle to raise those unrestricted funds. We also know from working with our nonprofit partners that each has assets (physical and intellectual) that can be monetized if approached in that manner.

So we asked ourselves, “What if we could help our nonprofit partners turn their assets into income?”

Margin & Mission Ignition

Five years ago, The Patterson Foundation began a journey to help nonprofit organizations generate earned income. The initial premise was this: If nonprofit organizations could generate a portion of income from their current assets, then these same organizations would be better prepared to weather the types of funding shortfalls that occurred in 2009 and 2010. The actual outcome has been much broader and deeper.

In addition to $1,965,660 in earned income in 2017, we heard from nonprofits:
  • “Staff and board are now more business savvy…operating like a business.”
  • “Improved our overall operations.”
  • “Culture shift.”
  • “Organizational discipline.”
  • “Change was not easy. We were changing the culture from ‘free’ to ‘fee.’”
  • “It spreads over to all other parts of the organization and change takes place.”

Virtually all nonprofit organizations have assets that can be converted into a product or service customers are willing to purchase. Yet few nonprofits know how to approach the task of monetizing assets. If properly and patiently supported, however, nonprofit organizations can implement practices that position them to earn income. These practices—strong financial systems, marketing, branding, and management—not only support the earned income product/service but strengthen the organization’s operations.

Leadership and management skills improve. Systems and processes evolve. Financial and reporting systems are enhanced. The organizations implement for-profit techniques while remaining focused on mission.

As a foundation, we believe we are positioned and even obligated to strengthen the nonprofit sector and the agencies with which we work. We define strengthening as providing expertise, coaching, funding, encouragement, or support needed to make an agency more sustainable. After all, it is through the agencies that the work gets done and change happens.

Learn more about The Patterson Foundation’s Margin & Mission Ignition initiative at Exponent Philanthropy’s 2018 National Conference, where foundation representatives will showcase the project in our Hall of Outsized Impact.

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