CHARITIES DOING COMMERCIAL VENTURES:

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CHARITIES DOING COMMERCIAL VENTURES

• SOCIETAL AND ORGANIZATIONAL IMPLICATIONS
• Dr. Brenda Zimmerman

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IS IT A GOOD IDEA FOR CHARITIES TO UNDERTAKE
MORE COMMERCIAL VENTURES?
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THEMES OF THE RESEARCH
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MEETING NEEDS AND FILLING NEEDS
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MEETING NEEDS AND FILLING NEEDS

• Where charities see a need that should be met,
  commercial businesses see a niche that could be
  filled.

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CORPORATE RHETORIC
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CORPORATE RHETORIC PERMEATES THE SECTOR

• The language of the marketplace has put
  management at the centre of our organizations,
  corporate business at the centre of society and
  defined government and nonprofit organizations a
  nonproductive and burdensome.

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AN OLD NOVELTY
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AN OLD NOVELTY

• Charities have been selling goods and services
  forever and yet it is an invisible option to
  many charities.

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SELF-SUFFICIENCY AND ECONOMIC DEPENDENCE
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SELF-SUFFICIENCY AND ECONOMIC DEPENDENCE

• Unless you invent the next pet rock, you are not
  going to replace the government funding with your
  business profits. Sorry. (Brinckerhoff, 1994c)

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SEPARATION OR INTEGRATION OF COMMERCIAL AND
SOCIAL VENTURES
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SEPARATION OR INTEGRATION OF COMMERCIAL AND
SOCIAL VENTURES

• There are practical and philosophical arguments
  for both integration and separation of commercial
  and social ventures

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THE AMBIDEXTROUS ENTREPRENEUR
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THE AMBIDEXTROUS ENTREPRENEUR

• It takes a special person to succeed as a
  commercial entrepreneur. Even fewer can combine
  commercial entrepreneurship with a focus on
  meeting charitable needs

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TRANSACTION POTENTIAL-FEE FOR SERVICE
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TRANSACTION POTENTIAL-FEE FOR SERVICE

• Profitable fee-for-service depends on the client
  base served and the nature of the goods or
  services produced

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TRANSACTION POTENTIAL BASED ON THE NATURE OF THE
ACTIVITY
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THE EMERGENT OUTCOMES OF COMMERCIAL VENTURES
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THE EMERGENT OUTCOMES OF COMMERCIAL VENTURES

• Although there are intended or planned outcomes
  of commercial ventures, many emergent outcomes
  result from the activity

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EMERGENT OUTCOMESResources

• cannibalization
• shifts away from intentional giving
• synergies/decreased financial risk
• increased financial risk
• using more energy to get fewer dollars
• burning charitable dollars
• volunteers
• cost of hiring business managers
• reward structures would have changed
• commercial activities can be undermined by the
  mission and values of a charity

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TOP LINE THINKING VERSUS BOTTOM LINE THINKING

• Top Line Thinking Bottom Line Thinking
• Revenue money available for charitable
  work Revenue ? profits
• Costs (must not exceed revenues) Costs
  (required to create revenues)
• Revenues determine future costs Costs are
  incurred to create revenues
• Timeline ? revenues precede costs Timeline
  ? costs precede revenues

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EMERGENT OUTCOMESRelationships

• boards of directors
• recipients/beneficiaries/clients
• donors/funders
• volunteers
• organized labour
• professional staff

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EMERGENT OUTCOMESReputation

• community perception
• market perception-unfair competition
• shifting definition of success

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TYPOLOGY FRAMEWORK FOR CHARITIES
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EMERGENT OUTCOMESResponsiveness

• increased productivity
• change to less hierarchical more adaptable
  structure
• low-hanging fruit
• customer focus
• mission and values of charity are undermined by
  business venture

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THEMES OF THE RESEARCH
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KEY QUESTIONS TO ASK

• Is this avoidance?
• Will it change the fundamental nature of the
  charity?

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Abandon form, but preserve substance