Nonprofits, and Businesses, Can Be Self-Sustaining. Just Think 100 Years Ahead.
Nonprofits continue to spring up that aim to raise and deploy capital with the intent to solve problems that affect many people. Commonly referred to as NGOs (non-governmental organizations), the basis for this standard setup is built around the fact that the entities rely on the generosity of both individuals and businesses to fund their ongoing projects and overall operations. What is often missing from the long-term vision is the concept of sustainability outside of perpetual generosity.
So, what typically happens if the funding faucet turns off? The lack of revenue-generating infrastructure rears its ugly head and the NGO fails with their mission remaining unresolved -- not unlike a for-profit business that can’t figure out how to generate enough revenue.
There is, however, another way to look at and tackle the sustainability issue inside the nonprofit world.
A Hundred Years from now
I recently attended an event at a forward-thinking digital agency in Los Angeles called A Hundred Years. The agency started out chasing the big brands on digital advertising campaigns with a singular focus -- to drive quarterly revenue by selling more product, any product. Then, according to its founder and CEO, Marc Mertens, it “shifted to partnering with organizations on projects that had purpose at their core and long-term thinking as a strategy.”
The A Hundred Years mantra is based on asking yourself an important question, “What is your 100-year vision?” Mertens says. “Everything seems possible in a 100 years, so it’s both useful and important to focus the big vision around actionable steps for today, next month and next year.”
From nonprofit founder to entrepreneur
Hugh Locke, the founder of the Smallholder Farmers Alliance (SFA), was speaking that night at A Hundred Years. Locke's topic was based largely around a book that he had recently written, The Haiti Experiment, which detailed how he had started SFA to help the impoverished people of Haiti begin to create sustainability in agriculture, an issue that had become something of an Achilles heal -- Haiti was importing 58 percent of its agriculture after being completely self-sufficient just a few decades earlier.
In taking on this rather expansive task, Locke went looking for funding and ended up partnering with Timberland, but then CEO Jeff Schwartz’s question, "how does the project become self-financing when we stop funding it?” forced a dramatic change in Locke’s thinking. That’s when Locke went from nonprofit founder to full-blown entrepreneur.
“I had to sit back and completely re-think everything,” he said.
After what were certainly some long days and nights of serious thought, Locke began to implement some important concepts into the organization's plan.
“We needed to create a situation where trees weren’t just a nice idea or for everyday firewood, but were actually a cash equivalent,” Locke says. He needed to find a way to create value for the locals.
With some needed education on small-scale farming, the smallholder farmers of Haiti began producing volumes of crops that hadn’t existed for decades, resulting in new saleable products and an eventual uptick in the local economies -- which naturally spurred additional local growth and the beginning of a sustainable model that just might function on its own, without outside donation or financial support.
Exit strategy aid.
This is a great story, but can only have an impact outside of Haiti if it’s replicable. So I asked Locke a simple question: If you were to give someone advice to help them create sustainability in their own NGO, what would it be?
"You must focus on what I call ‘exit strategy aid,’ meaning that you’ll need some early philanthropic financial help but it must be taken with the goal of the funding turning off,” he says. “It’s also critical that you figure out the point of intervention that allows you to introduce enough of a structure to make it work but not so much that it prevents the natural evolution of the related businesses.”
In other words, there is a fine line that must be carefully watched so you don’t exert too much control over the newly implemented processes.
To create a self-sustaining nonprofit, it really must be treated like any other for-profit business. Where is the value, how does it affect all involved parties and how can infrastructure and ongoing incentive be used to create a machine that operates without your direct involvement and the constant need for more capital?
Solve this puzzle and you’ll create a greater impact while freeing yourself from the perpetual need to hit the streets and beg for donations.
Adam Callinan is a founder at BottleKeeper, the fast-paced and sarcasm-infused solution to the warm beer and broken bottle epidemics that have plagued the world for centuries. Callinan is also a founding partner at Beachwood Ventures, a Los Angeles-based early-stage and non-traditional venture-capital firm at the intersection of technology and entertainment. As an entrepreneur, Callinan has spent over a decade building small businesses in and around technology, medical devices and consumer products, which most recently includes an exit in 2013. Callinan lives in Manhattan Beach with his wife Katie.