An increasing number of nonprofit agencies and so-called "venture philanthropists" in Boulder are trying to bridge the social service and business worlds with enterprises that raise money and support social change.
Driven by decreases in giving and government grants during the recession and changing philosophy of nonprofit executives and donors, many nonprofits are launching social enterprises or looking for ways to expand their existing revenue-generating activities.
"We have started to realize that the funding is never going back to the way it was before the recession," said Jennie Arbogash, executive director of Social Venture Partners Boulder County. "One of the greatest opportunities that nonprofits have is social enterprise."
Social Venture Partners, a donor-advised fund of The Community Foundation, gives out grants geared toward social enterprise, provides pro bono consulting for nonprofits and helps philanthropists get involved in social enterprise.
Arbogash describes the work as "venture philanthropy."
Social enterprise -- using revenue-generating opportunities that are related to the nonprofit's mission, according to Arbogash's definition -- has been gaining in popularity among both nonprofit agencies and donors.
Examples of social enterprise in Boulder include a gourmet cupcake business run by the homeless shelter, a work corps run by the day shelter that contracts with local governments to pick up trash and clean off graffiti, and a successful plant starts sale run by a local community gardens group.
"Donors are really excited about the model because it gives more impact to their donation," Arbogash said. "It's sustainable much longer than a single donation."
their social impact, considers social enterprise to be "anything that uses market-based mechanisms to positively impact or solve social issues."
All hands on deck
Caryn Capriccioso, founder and principal partner at interSector Partners, an education and consulting firm that works with nonprofits on social enterprise and with for-profit companies on enhancing
]Patrick Young, 17, uses a shuffle hoe to remove weeds while working at Growing Gardens Cultiva! program in Boulder on July 5, 2012.
She sees an increasing blurring of the lines between the world of philanthropy and the world of investment. Some nonprofits are starting to set ambitious revenue goals for their enterprises, and some entrepreneurs are looking to make money doing good in the world.
"I think we're figuring out that we need an all-hands-on-deck approach to solving the world's problems," Capriccioso said.
Capriccioso attributes the shift to a number of factors. Young people who grew up doing service projects are oriented toward trying to make a difference. Former business executives have come into the nonprofit world. Nonprofit agencies want more control over their revenue sources and more security from the whims of donors who may give to an animal shelter one year and a children's charity the next.
Capriccioso points to the decision by Inc. magazine to feature the founders of Boulder's Unreasonable Institute, an incubator program for social enterprise entrepreneurs, in the business publication's "30 under 30" entrepreneurs to watch as "raising the profile" of social enterprise.
This fall, the newly created HUB Boulder will open a year-round incubator and co-working space for social entrepreneurs of the nonprofit and for-profit variety. HUB is a global network and will tie social entrepreneurs -- or impact entrepreneurs, as HUB Boulder Managing Director Greg Berry prefers -- to expertise from around the world.
Berry expects a majority of the people using the space will be launching for-profit ventures that are trying to have a positive impact in the world. He also expects that nonprofits will try to cover a lot more of their costs through their business ventures.
It's a development that investors and donors are watching closely, Berry said.
"People have realized, particularly high-net-worth individuals, there was a lot of space there between venture capitalism and philanthropy," he said. "There is no question that in Boulder there is a growing interest in this middle ground."
Copyright 2012 Boulder Daily Camera. All rights reserved.
subheadhere
At the same time, generating significant revenue for a nonprofit enterprise while maintaining a focus on the core mission (and staying within IRS guidelines) is no easy task.
Last year, the Boulder Shelter for the Homeless launched Street Fare Bakery, a program that produces gourmet cupcakes for sale at the farmers' markets in Boulder and Longmont and through special orders under the direction of shelter kitchen supervisor Sarah Haas.
The program provides employment experience for 11 clients of the homeless shelter, but the revenues mostly cover the costs.
Ideally, the business would generate more money for the shelter, but Haas said profit is not the primary goal. The first goal is providing as much employment as possible for shelter clients and people who are referred by other agencies.
"Making money conflicts with our first goal of providing as much employment as possible," Haas said. "Every time we hire another person, that cuts into our profit."
Eventually, selling retail cupcakes, cake mixes and frosting might generate a higher return, even at the employment levels the bakery hope to maintain, Haas said. For now, she's focused on growing the business in a sustainable way.
"We've been growing very steadily," she said. "It's a pace that's slow enough to support our complicated mission."
Greg Harms, executive director of the shelter, said the agency would like to develop other social enterprises, including revenue-generating ventures, but coming up with viable ideas has proved challenging.
"We have to find a viable business, and that's a real challenge," Harms said. "Finding a way to employ people in what would otherwise be a viable business, with employment opportunities that are appropriate for our clients, is difficult. We've kicked around a lot of ideas."
The businesses have to work on their own merits.
"It has to be a competitive business," Harms said. "People aren't going to buy lousy cupcakes just because they are made at the shelter."
Becoming self-sustaining
Bridge House, a day shelter and social service agency for the homeless, launched Ready to Work last year with five employees. The program provides market wages and employment experience for Bridge House's homeless clients. They clean up trash and graffiti, help with snow removal and do other odd jobs.
The organization now has two annual contracts, one with the city's Parks and Recreation Department for $40,000 and another with Boulder Housing Partners for $15,000. Ready to Work has also done jobs for several property management companies.
Bridge House Executive Director Isabel McDevitt said Ready to Work covers its own costs at this time, but doesn't support other Bridge House services. The program now employs 10 people, and four of the original five trainees have found private employment.
McDevitt, who had extensive experience with social enterprise in New York City, said Bridge House is looking into other opportunities, including a possible restaurant or cafe in the future. She remains a big believer in the potential of social enterprise.
Berry, of HUB Boulder, said developing viable businesses will help nonprofits meet growing needs.
"It's super clear to nonprofit executives and to boards that the pool of needs in the world is growing and the pool of available capital is not growing at the same rate," Berry said. "The only way for organizations to survive is to generate revenue somehow."
Yet the experience of Growing Gardens highlights the tension that continues to exist between nonprofit goals and a for-profit mentality.
A Boulder-based nonprofit organization that runs community gardens, a horticultural therapy program, the Cultiva youth program and a children's peace garden, Growing Gardens earns $160,000 of its $500,000 annual budget from its revenue-generating activities. Those include summer camps for children and people with disabilities, the annual plant sale and a CSA.
In 2000, the first year of the plant sale, it brought in $2,000. Now, the annual sale of organic plant starts grown in Growing Gardens' greenhouses brings in $70,000.
Ramona Clark, Growing Gardens executive director, said the organization wanted to be less dependent on grants and donations.
"We're very dependent on the kindness of people, and we started to realize that if we wanted to become more self-sustaining, we needed to develop different income streams," Clark said. "It also helps strengthen our programs."
By working on the revenue-generating projects, participants learn marketing and business skills, as well as develop their leadership abilities. At the same time, there's a limit to how much Growing Gardens could expand those operations, which don't fully cover the cost of the programs with which they are associated.
"We always look for ways to increase our ability to earn more income, but at the same time, we have to balance that with our mission and our programs," Clark said. "We're not there to make a profit. We don't want to just be about money, because then we wouldn't be a nonprofit."
Ami Kaogbo, right, 15, works on seeding and fertilizing plants in the greenhouse while working at Growing Gardens Cultiva! Program in Boulder on July 5, 2012.
