Social enterprises make poor fundraising strategies. Nevertheless, many nonprofits enter into this unique market space with the idea that they can improve their budgets. If it were only that simple! Certainly some enterprising nonprofits do make money by starting related businesses. But the operative word is “related.” And, despite all the talk about double-bottom lines, the goal of making money needs to be secondary to their mission. To justify the risk of failure and the real possibility of wasting philanthropic resources, nonprofit businesses need to be “related” to their mission. What’s more, if there is a less expensive way to achieve the same social gain, the responsible steward should follow the less expensive way.
A good social enterprise for a nonprofit organization will assist with its mission in a way that charitably-funded operations cannot. If it is also able to also cover its costs, that’s a bonus. And if it can financially contribute to the organization’s charitable operations, that’s a windfall. All three are possible with carefully designed, implemented, and managed social enterprises.
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