Yale Report Examines Nonprofits Operating Commercial Businesses

The Partnership on Nonprofit Ventures, a joint venture of the Yale School of Management, the Goldman Sachs Foundation, and the Pew Charitable Trusts, has released the results of a survey of the earned-income landscape in the nonprofit sector.

The study, Enterprising Nonprofits: Revenue Generation in the Nonprofit Sector (10 pages, HTML), by Cynthia W. Massarsky and Samantha L. Beinhacker, summarizes the responses from more than 500 nonprofits as well as experts in the field, with a focus on nonprofits' business experience and the factors behind successful earned-income ventures. Of the organizations that responded to the survey, 42 percent said they already operate a commercial enterprise, while 23 percent indicated they would like to start a venture. The survey also found that nonprofits that operate earned-income ventures tend to be more established and have larger staffs and budgets than organizations without such a venture. Moreover, nearly 90 percent of respondents with for-profit ventures reported that the objectives of their business relate to their nonprofit mission, while 39 percent said their for-profit enterprises provide jobs and training to their constituents and 34 percent said the ventures contributed to positive community relations.

While the report highlights sound business planning as one of the most important factors in a successful earned-income venture, the survey found that only half of those operating for-profit ventures actually wrote business plans before they launched their venture. To help remedy that situation, the Partnership has developed an online resource center to provide research and business tools to nonprofits interested in starting up a commercial venture and to serve as a forum for nonprofits interested in sharing their experience with such ventures.

The Partnership has also launched a national business plan competition for nonprofit organizations seeking to start or expand successful profit-making ventures. The competition, which will run for the next twelve months, will award $100,00 to four grand-prize winners and $25,000 to four semi-finalists in May 2003. To learn more, visit: http://www.ventures.yale.edu/aboutcompetition.asp.

To view the results of the survey, visit: http://www.ventures.yale.edu/factsfigures.asp.

"Enterprising Nonprofits: Revenue Generation in the Nonprofit Sector." Yale School of Management Press Release 05/01/2002.