How to Make Profits as a Non-Profit

Over the past few decades, two realities have dominated the Canadian non-profit industry:

This has forced many non-profits to re-examine their financial sustainability. One solution that many non-profits have examined is the potential to sell a product or service at a profit to support the mandate of their organization. This posting is going to explore how that works in Canada and how as a non-profit, you might leverage this revenue stream.

Before diving into the meat of this post, let me first emphasize a point that my friend David LePage from Enterprising Non Profits (based here in BC) has made about using business revenue to generate funds: “It is not a silver bullet”. This means that you cannot look to selling goods or services as the only source of revenue for your organization. That said, let’s get started.

In his wonderful book on the current state of affairs of non-profits in the 21st Century entitled Uncharitable , Dan Pallotta says:

Thankfully, there are work-arounds to this ugly truth. While the folks at Enterprising Non Profits do an excellent job of explaining these work-arounds in their full day course on the topic [LINK], here’s the short version:

Obviously, there is a lot more to the legal structures and accounting practices but that, in a nutshell, is how it is possible for non-profits to generate business revenue. Starting a business arm of your non-profit is an entirely different matter. Like any business, you cannot expect your enterprise to make profits or even break even immediately. This takes proper planning, time and hard work.

Enterprizing Non Profits has a granting program (whose next application deadline is coming up on May 20, 2010) [LINK] that would provide funds for your organization to hire consultants (ahem, like us) to help your organization plan how it is going to develop its business. We’ve worked on some interesting models in the past with other non-profits and specialize in helping organizations sell a service that builds on their existing expertise.

Other non-profits in Canada have looked at other approaches including renting halls and equipment, running courses and conferences, providing catering, selling books and othe publications, providing housing and selling tickets to artistic performances. There are over 40,000 non-profits in Canada that generate revenue in this way. I have two pieces of advice for any non-profit looking to start generating revenue:

I’ll leave you with a plug about our services: Our team has built non-profits from the ground up by developing a business plan, setting up operations and working with stakeholders to hammer out the vision, mission and mandate. We have relationships and experience with organizations that fund non-profits. This allows us to help our customers meet funder’s granting and reporting requirements successfully. We also have a lot of experience helping for-profit start-ups and helping public sector institutions like UBC and the Government of Canada create new revenue-generating programs. This expertise translates well into helping non-profits achieve similar goals.

For more information on how we can help your organization, check out our Services for Non-Profits page.