The first step in making nonprofits profitable is to take a more comprehensive look at what is profitable. (The second step may be to ignore the verbal contradiction!)
As a nonprofit, what are all of the ways that your work produces financial returns, directly and indirectly? And who benefits financially from what you do–your beneficiaries? Other nonprofits, businesses, taxpayers or the government?
DC Central Kitchen is a 501(c)3, a legal nonprofit, that solicits donations and foundation funding. It also generates revenue and earns money for its beneficiaries, partners and the government. Here’s how:
Every day DC Central Kitchen (DCCK) collects 3,000 pounds of surplus food from restaurants and local farms and converts it into 4,500 meals that are distributed to 100 shelters, transitional homes, and rehabilitation clinics in Washington, D.C. It runs a culinary job training program that trains and helps employ 90 people a year. These 90 students (recovering addicts, the recently homeless or previously incarcerated) graduate to earn $2 million, collectively, per year.
DCCK also runs a catering company that generates revenue and provides transitional employment for recent culinary training program graduates.
To recap, here’s the nonprofit’s financial impact:
- Decreased waste disposal costs for food service businesses
- Income for local farms, from which DCCK buys discounted produce
- Lower meal costs for shelters and rehabilitation centers, freeing up more of their budgets for critical program needs
- 90 graduates of the culinary job training program earning a starting wage of $11.05 per hour (equivalent to $2 million per year)
- $209,333 in payroll taxes to the government (2009 graduates)
- Lowered recidivism and homelessness rates for program graduates, saving tax payers hundres of thousands of dollars in social service and prison costs
- 44% of DCCK’s revenue generated through Fresh Start Catering (2009)
It would be easy to focus only on earned-income strategies–and that’s a crucial piece to helping nonprofits lessen their dependency on individual and institutional donors–but even an earned-income approach sells a nonprofit short of its total financial impact. Instead, widen the lens to think about your organization’s financial influence. What groups are benefitting, directly or indirectly?
The dazzling part comes when you begin to make connections between your work’s beneficiaries, participants and partners so that one activity benefits three others.
Robert Egger founded DC Central Kitchen in 1988. I spent this morning preparing some of the 4,500 dinners served tonight. Afterward, I had the chance to talk with Robert about the power (in impact and size) of the nonprofit sector. Our conversation pushed me to widen my view of nonprofit profitability.