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Social Enterprise: Improving Non-Profit Funding

February 4, 2008
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Leaders in the non-profit field often seek funding from foundations and government entities to start and sustain community programs. But there is another option that many leaders don't think of - social enterprise - meaning to generate revenue through earned income to fund programs and services.

To help organizations understand the power and feasibility of using earned income as a funding source, First 5 LA and the Social Enterprise Institute (SEI) convened a day-long training last Tuesday to teach organization representatives about this innovative model. More than 45 leaders representing 24 community organizations attended the training to explore their organizations' potential to generate revenue for program sustainability.

"This is exactly the type of training non-profit leders should attend if they plan on venturing into the realm of social enterprise," said Arthur Rieman, managing director for The Law Firm for Non-Profits, a leading law firm that exclusively serves non-profit and other tax-exempt organizations. At the training, Rieman spoke about the sometimes tricky legalities that may accompany social enterprise programs.

The training allowed participants to identify assets of their organization that could be used to generate revenue and explore the potential ventures that are compatible with their mission. Each participant was encouraged to ask questions during one-on-one time with trainers. Dave McDonough, President of SEI, urged participants to ask themselves, "What are we good at?" and, "What do we offer potential investors?" It was emphasized that leaders should not deviate from their organizations' mission or core competencies when planning their potential social venture, and that good social enterprise programs should "bring their mission to the marketplace."

"What is especially important for First 5 LA grantees to recognize is that their services are often wanted by members of the community who may make too much money to qualify," said Janet Cohen, workshop facilitator and consultant for non-profit organizations. "Let families that can pay for these services do so, and let the agency use the revenue to sustain the program for those who can't."

Attendees left the training with a new way of looking at their organizations. Some said the training reminded them that non-profits are still a business, and to think about their assets and core competencies as resources to generate income.

The training also encouraged non-profit leaders to approach funders and donors from a position of strength. "They taught us how earned income can help us approach investors and funders with a different attitude and language," said Jamico Elder, Contract Compliance Officer from People Coordinated Services. "Rather than saying, ‘This is what we need', say, 'This is what we are doing, and here is how you can support us.' "

Click here to learn more about the Social Enterprise Institute. To learn more about the training and other First 5 LA sustainability workshops call Sara Maranowicz at 213-482-7557.

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