There are consequences to this fi nancial fuzziness. When nonprofits and funding sources are not well matched, money doesn’t flow to the areas where it will do the greatest good. Too often, the result is that promising programs are cut, curtailed, or never launched. And when dollars become tight, a chaotic fundraising scramble is all the more likely to ensue.1

In the for-profit world, by contrast, there is a much higher degree of clarity on financial issues. This is particularly true when it comes to understanding how different businesses operate, which can be encapsulated in a set of principles known as business models. Although there is no definitive list of corporate business models,2 there is enough agreement about what they mean that investors and executives alike can engage in sophisticated conversations about any given company’s strategy. When a person says that a company is a “low-cost provider” or a “fast follower,” the main outlines of how that company operates are pretty clear. Similarly, stating that a company is using “the razor and the razor blade” model describes a type of ongoing customer relationship that applies far beyond shaving products.

The value of such shorthand is that it allows business leaders to articulate quickly and clearly how they will succeed in the marketplace, and it allows investors to quiz executives more easily about how they intend to make money. This back-and-forth increases the odds that businesses will succeed, investors will make money, and everyone will learn more from their experiences.

The nonprofit world rarely engages in equally clear and succinct conversations about an organization’s long- term funding strategy. That is because the different types of funding that fuel nonprofits have never been clearly defined.3 More than a poverty of language, this represents—and results in—a poverty of understanding and clear thinking.

Through our research, we have identified 10 nonprofit models that are commonly used by the largest nonprofits in the United States. (See “Funding Models” on page 37.) Our intent is not to prescribe a single approach for a given nonprofit to pursue. Instead, we hope to help nonprofit leaders articulate more clearly the models that they believe could support the growth of their organizations, and use that insight to examine the potential and constraints associated with those models.

BENEFICIARIES ARE NOT CUSTOMERS One reason why the nonprofit sector has not developed its own lexicon of funding models is that running a nonprofit is generally more complicated than running a comparable size for-profit business. When a for-profit business finds a way to create value for a customer, it has generally found its source of revenue; the customer pays for the value. With rare exceptions, that is not true in the nonprofit sector. When a nonprofit finds a way to create value for a beneficiary (for example, integrating a prisoner back into society or saving an endangered species), it has not identified its economic engine. That is a separate step.

Duke University business professor J. Gregory Dees, in his work on social entrepreneurship, describes the need to understand both the donor value proposition and the recipient value proposition. Clara Miller, CEO of the Nonprofit Finance Fund, who has also written wonderfully about this dilemma, talks about all nonprofits being in two “businesses”—one related to their program activities and the other related to raising charitable “subsidies.”

As a result of this distinction between beneficiary and funder, the critical aspects (and accompanying vocabulary) of nonprofit funding models need to be understood separately from those of the for-profit world. It is also why we use the term funding model rather than business model to describe the framework. A business model incorporates choices about the cost structure and value proposition to the beneficiary. A funding model, however, focuses only on the funding, not on the programs and services offered to the beneficiary.

All nonprofit executives can use our 10 funding models to improve their fundraising and management, but the usefulness of these models becomes particularly important as nonprofits get bigger. There are many ways to raise as much as $1 million a year, some of which can be improvised during the process. Once organizations try to raise $25 million to $50 million or more each year, however, there are fewer possible paths. The number of potential decision makers who can authorize spending such large amounts of money decreases (or you need to get them en masse), and the factors that motivate these decision makers to say “yes” are more established (or cannot be as thoroughly influenced by one charismatic nonprofit leader).

Our research of large nonprofi ts confi rms this. In a recent study, we identified 144 nonprofit organizations—created since 1970—that had grown to $50 million a year or more in size.4 We found that each of these organizations grew large by pursuing specific sources of funding—often concentrated in one particular source of funds—that were a good match to support their particular types of work. Each had also built up highly professional internal fundraising capabilities targeted at those sources. In other words, each of the largest nonprofits had a well-developed funding model.

The larger the amount of funding needed, the more important it is to follow preexisting funding markets where there are particular decision makers with established motivations. Large groups of individual donors, for example, are already joined by common concerns about various issues, such as breast cancer research. And major government funding pools, to cite another example, already have specific objectives, such as foster care. Although a nonprofit that needs a few million dollars annually may convince a handful of foundations or wealthy individuals to support an issue that they had not previously prioritized, a nonprofit trying to raise tens of millions of dollars per year can rarely do so.

This is not to say that funding markets are static; they aren’t. The first Earth Day in 1970 coincided with a major expansion in giving to environmental causes; the Ethiopian famine of 1984-85 led to a dramatic increase in support for international relief; and awareness of the U.S. educational crisis in the late 1980s laid the groundwork for charter school funding. Changes cannot be foreseen, however, and, hence, can not be depended on as a source of funding. In addition, these changes were the product or culmination of complex national and international events, not the result of a single nonprofit’s work.

Earl Martin Phalen, cofounder of BELL, an after-school and summer educational organization, captured the benefits of such intentionality well, summing up his experience for a group of nonprofit leaders in 2007. “Our fundraising strategy used to be ‘let’s raise more money this year than last’ and we always were unsure of where we’d be. Then we got serious in thinking about our model and identified an ongoing type of government funding that was a good match for our work. While it required some program changes to work, we now predictably cover 70 percent of our costs in any locality through this approach.”

TEN FUNDING MODELS Devising a framework for nonprofit funding presents challenges. To be useful, the models cannot be too general or too specific. For example, a community health clinic serving patients covered by Medicaid and a nonprofit doing development work supported by the U.S. Agency for International Development are both government funded, yet the type of funding they get, and the decision makers controlling the funding, are very different. Lumping the two together in the same model would not be useful. At the same time, designating a separate model for nonprofits that receive Title I SES funds, for example, is too narrow to be useful.

In the end, we settled on three parameters to define our funding models—the source of funds, the types of decision makers, and the motivations of the decision makers. (See “Identifying the Models” below.) This allowed us to identify 10 distinct funding models at level that is broadly relevant yet defi nes real choices.

It is interesting to note that there were several funding models we thought we might fi nd, but didn’t. One possible model was nonprofits supported by earned-income ventures distinct and separate from their core mission-related activities. Another possible model was nonprofits that operated on a strictly fee-for-service model in either a business-tobusiness or direct-to-consumer fashion, without important supplementary fundraising (from members or prior beneficiaries) or underlying government support. Although there are some nonprofits supporting themselves with such funding approaches, they were not present among the large nonprofits that we studied. It is our belief that these types of approaches do not lend themselves to large-scale, sustained nonprofit advantage over for-profit entities.

What follows are descriptions of the 10 funding models, along with profiles of representative nonprofits for each model. The models are ordered by the dominant type of funder. The first three models (Heartfelt Connector, Beneficiary Builder, and Member Motivator) are funded largely by many individual donations. The next model (Big Bettor) is funded largely by a single person or by a few individuals or foundations. The next three models (Public Provider, Policy Innovator, and Beneficiary Broker) are funded largely by the government. The next model (Resource Recycler) is supported largely by corporate funding. And the last two models (Market Maker and Local Nationalizer) have a mix of funders.
HEARTFELT CONNECTOR Some nonprofits, such as the Make-a-Wish Foundation, grow large by focusing on causes that resonate with the existing concerns of large numbers of people at all income levels, and by creating a structured way for these people to connect where none had previously existed. Nonprofits that take this approach use a funding model we call the Heartfelt Connector. Some of the more popular causes are in the environmental, international, and medical research areas. They are different from nonprofits that tap individuals with particular religious beliefs, political leanings, or sporting interests, who come together to form organizations in the course of expressing their interests. Heartfelt Connectors often try to build explicit connections between volunteers through special fundraising events. The Susan G. Komen Foundation is an example of a nonprofit that uses the Heartfelt Connector model. Established in 1982, the Komen Foundation works through a network of 125 affiliates to eradicate breast cancer as a life-threatening disease by funding research grants, by supporting education, screening, and treatment projects in communities around the world, and by educating women about the importance of early detection. The foundation’s mission has a deep resonance with many women, even though its work may never benefi t them directly. Between 1997 and 2007 the Komen Foundation’s annual fundraising grew from $47 million to $334 million. The average individual donation is small, about $33, but the foundation’s fundraising efforts have been driven by its ability to reach out to an ever-widening base of support. Its major fundraising vehicle is the Susan G. Komen Race for the Cure. The foundation and its affiliates hold about 120 running races each year that draw more than 1 million participants. These events not only allow individuals to give money; they also engage volunteers to put together teams, solicit funds, and participate in the race day experience. Nonprofit leaders considering the Heartfelt Connector funding model should ask themselves the following questions:
Have a large cross section of people already shown that they will fund causes in this domain?
Can we communicate what is compelling about our nonprofit in a simple and concise way?
Does a natural avenue exist to attract and involve large numbers of volunteers?
Do we have, or can we develop, the in-house capabilities to attempt broad outreach in even one geographic area?

BENEFICIARY BUILDER Some nonprofits, such as the Cleveland Clinic, are reimbursed for services that they provide to specific individuals, but rely on people who have benefited in the past from these services for additional donations. We call the funding model that these organizations use the Beneficiary Builder. Two of the best examples of Beneficiary Builders are hospitals and universities. Generally, the vast majority of these nonprofits’ funding comes from fees that beneficiaries pay for the services the nonprofits provide. But the total cost of delivering the benefit is not covered by the fees. As a result, the nonprofit tries to build long-term relationships with people who have benefited from the service to provide supplemental support, hence the name Beneficiary Builder. Although these donations are often small relative to fees (averaging approximately 5 percent at hospitals and 30 percent at private universities), these funds are critical sources of income for major projects such as building, research, and endowment funds. Donors are often motivated to give money because they believe that the benefit they received changed their life. Organizations using a Beneficiary Builder model tend to obtain the majority of their charitable support from major gifts. Princeton University is an example of a nonprofit that uses the Beneficiary Builder model. The university has become very adept at tapping alumni for donations, boasting the highest alumni-giving rate among national universities—59.2 percent. In 2008, more than 33,000 undergraduate alumni donated $43.6 million to their alma mater. As a result of the school’s fundraising prowess, more than 50 percent of Princeton’s operating budget is paid for by donations and earnings from its endowment. Nonprofit leaders considering the Beneficiary Builder funding model should ask themselves the following questions:
Does our mission create an individual benefit that is also perceived as an important social good?
Do individuals develop a deep loyalty to the organization in the course of receiving their individual benefit?
Do we have the infrastructure to reach out to beneficiaries in a scalable fashion?

MEMBER MOTIVATOR There are some nonprofits, such as Saddleback Church, that rely on individual donations and use a funding model we call Member Motivator. These individuals (who are members of the nonprofit) donate money because the issue is integral to their everyday life and is something from which they draw a collective benefit. Nonprofits using the Member Motivator funding model do not create the rationale for group activity, but instead connect with members (and donors) by offering or supporting the activities that they already seek. These organizations are often involved in religion, the environment, or arts, culture, and humanities. The National Wild Turkey Federation (NWTF), which protects and expands wild turkey habitats and promotes wild turkey hunting, is an example of a Member Motivator. It attracts turkey hunters, who collectively benefit from NWTF’s work and therefore become loyal members and fundraisers. Local NWTF members host more than 2,000 fundraising banquets each year, raising about 80 percent of the organization’s annual revenues. These banquets provide multiple donation opportunities: entry tickets (which cost about $50 each and include an annual membership); merchandise purchase (averaging more than $100 per attendee); and raffle tickets (generating about $16,000 per banquet). NWTF’s national headquarters supplies raffle prizes and merchandise to sell at these banquets. Each banquet clears an average of $10,000 after expenses. A significant portion of the money raised is dedicated to land and turkey conservation in the community from which it was donated. Nonprofit leaders considering the Member Motivator funding model should ask themselves the following questions:
Will our members feel that the actions of the organization are directly benefiting them, even if the benefit is shared collectively?
Do we have the ability to involve and manage our members in fundraising activities?
Can we commit to staying in tune with, and faithful to, our core membership, even if it means turning down funding opportunities and not pursuing activities that fail to resonate with our members?

BIG BETTOR There are a few nonprofits, such as the Stanley Medical Research Institute, that rely on major grants from a few individuals or foundations to fund their operations. We call their funding model the Big Bettor. Often, the primary donor is also a founder, who wants to tackle an issue that is deeply personal to him or her. Although Big Bettors often launch with significant financial backing already secured, allowing them to grow large quickly, there are other instances when an existing organization gets the support of a major donor who decides to fund a new and important approach to solving a problem. The nonprofits we identified as Big Bettors are focused either on medical research or on environmental issues. The primary reasons that Big Bettors can attract sizable donations are: the problem being addressed can potentially be solved with a huge influx of money (for example, a vast sum can launch a research institute to cure a specific illness); or the organization is using a unique and compelling approach to solve the problem. Conservation International (CI), whose mission is to conserve the Earth’s biodiversity and to demonstrate that humans can live harmoniously with nature, is an example of a nonprofit that uses the Big Bettor funding model. CI’s ability to identify locations around the world where protecting an area of land can have a significant effect on preserving global biodiversity helps it attract donors who are willing to contribute large amounts of money so that they can have an important and lasting impact on protecting the Earth. The majority of CI’s contributions come from a few large donors. Nonprofit leaders considering the Big Bettor funding model should ask themselves the following questions:
Can we create a tangible and lasting solution to a major problem in a foreseeable time frame?
Can we clearly articulate how we will use large-scale funding to achieve our goals?
Are any of the wealthiest individuals or foundations interested in our issue and approach?

PUBLIC PROVIDER Many nonprofits, such as the Success for All Foundation, work with government agencies to provide essential social services, such as housing, human services, and education, for which the government has previously defined and allocated funding. Nonprofits that provide these services use a funding model we call Public Provider. In some cases, the government outsources the service delivery function but establishes specific requirements for nonprofits to receive funding, such as reimbursement formulae or a request for proposal (RFP) process. As Public Providers grow, they often seek other funding sources to augment their funding base. TMC (formerly the Texas Migrant Council), which supports children and families in migrant and immigrant communities, is an example of an organization that uses the Public Provider funding model. At its inception in 1971, TMC tapped into the federal government’s Head Start program to fund its initial work, helping children prepare for school by focusing on the bilingual and bicultural needs of families. As TMC grew, its leaders sought to reduce its dependence on this one funding source and to identify other government funds. TMC now receives funding from a variety of federal, state, and local government sources. TMC has expanded from Texas into seven additional states and is offering new programs, such as literacy, prenatal care, and consumer education. Nonprofit leaders considering the Public Provider funding model should ask themselves the following questions:
Is our organization a natural match with one or more large, preexisting government programs?
Can we demonstrate that our organization will do a better job than our competitors?
Are we willing to take the time to secure contract renewals on a regular basis?

POLICY INNOVATOR Some nonprofits, such as Youth Villages, rely on government money and use a funding model we call Policy Innovator. These nonprofits have developed novel methods to address social issues that are not clearly compatible with existing government funding programs. They have convinced government funders to support these alternate methods, usually by presenting their solutions as more effective and less expensive than existing programs. (By contrast, Public Providers tap into existing government programs to provide funds for the services they offer.) An example of a Policy Innovator is HELP USA. This nonprofit provides transitional housing for the homeless and develops affordable permanent housing for low-income families. Andrew Cuomo (son of former New York governor Mario Cuomo) founded HELP USA in 1986 as an alternative to New York’s approach of paying hotels to house the homeless in so-called “welfare hotels.” HELP USA’s innovative approach to the housing crisis came about in an era when homelessness was a prominent public issue and government funders were willing to try a novel approach. Cuomo gained the initial support of government decision makers by positioning his solution as both more effective and less costly, which was critical during New York’s fiscal crisis. In 2007, HELP USA’s revenues were $60 million, almost 80 percent of which came from government sources, half federal and half state and local. The organization was operating in New York City, Philadelphia, Las Vegas, Houston, and Buffalo, N.Y. Nonprofit leaders considering the Policy Innovator funding model should ask themselves the following questions:
Do we provide an innovative approach that surpasses the status quo (in impact and cost) and is compelling enough to attract government funders, which tend to gravitate toward traditional solutions?
Can we provide government funders with evidence that our program works?
Are we willing and able to cultivate strong relationships with government decision makers who will advocate change?
At this time are there sufficient pressures on government to overturn the status quo?

BENEFICIARY BROKERSome nonprofits, such as the Iowa Student Loan Liquidity Corporation, compete with one another to provide government-funded or backed services to beneficiaries. Nonprofits that do this use what we call a Beneficiary Broker funding model. Among the areas where Beneficiary Brokers compete are housing, employment services, health care, and student loans. What distinguishes these nonprofits from other government-funded programs is that the beneficiaries are free to choose the nonprofit from which they will get the service. The Metropolitan Boston Housing Partnership (MBHP), a regional nonprofit administering state and federal rental assistance voucher programs in 30 Massachusetts communities, is an example of a nonprofit that uses the Beneficiary Broker funding model. Since launching the organization in 1991, MBHP has developed a reputation as a reliable provider of housing vouchers for families in need. MBHP is the largest provider of housing vouchers in the Boston area, connecting more than 7,500 families to housing at any one time. MBHP also provides related services, such as education and homelessness prevention programs. More than 90 percent of MBHP’s revenue comes from the small administrative fees the state provides as part of the voucher program. The remaining funds come from corporations and foundations. Nonprofit leaders considering the Beneficiary Broker funding model should ask themselves the following questions:
Can we demonstrate to the government our superior ability to connect benefit or voucher holders with benefits, such as successful placement rates and customer satisfaction feedback?
Can we develop supplemental services that maximize the value of the benefit?
Can we master the government regulations and requirements needed to be a provider of these benefits?
Can we fi nd ways to raise money to supplement the fees we receive from the benefits program?

RESOURCE RECYCLER Some nonprofits, such as AmeriCares Foundation, have grown large by collecting in-kind donations from corporations and individuals, and then distributing these donated goods to needy recipients who could not have purchased them on the market. Nonprofits that operate these types of programs use a funding model we call Resource Recycler. Businesses are willing to donate goods because they would otherwise go to waste (for example, foods with an expiration date), or because the marginal cost of making the goods is low and they will not be distributed in markets that would compete with the producer (for example, medications in developing countries). In kind donations typically account for the majority of revenues, but Resource Recyclers must raise additional funds to support their operating costs. The vast majority of Resource Recyclers are involved in food, agriculture, medical, and nutrition programs and often are internationally focused. The Greater Boston Food Bank (TGBFB), the largest hunger relief organization in New England, is an example of a nonprofit that uses the Resource Recycler funding model. This organization distributes nearly 30 million pounds of food annually to more than 600 local organizations, including food pantries, soup kitchens, day care centers, senior centers, and homeless shelters. TGBFB acquires goods in many ways. The dominant sources of goods are retailers and manufacturers. It also receives surplus food from restaurants and hotels. In 2006, corporate in-kind support accounted for 52 percent of TGBFB’s revenues. Federal and state government programs provide TGBFB with in-kind goods and money, accounting for 23 percent of its annual budget, which TGBFB uses to purchase food for distribution. Cash donations from individuals make up the remaining 25 percent of revenues, covering overhead and capital improvements. Nonprofit leaders considering the Resource Recycler funding model should ask themselves the following questions:
Are the products that we distribute likely to be donated on an ongoing basis?
Can we develop the expertise to stay abreast of trends in the industries that donate products to us so that we can prepare for fluctuations in donations?
Do we have a strategy for attracting the cash we’ll need to fund operations and overhead?

MARKET MAKER Some nonprofits, such as the Trust for Public Land, provide a service that straddles an altruistic donor and a pay or motivated by market forces. Even though there is money available to pay for the service, it would be unseemly or unlawful for a for-profit to do so. Nonprofits that provide these services use a funding model we call Market Maker. Organ donation is one example where Market Makers operate. There is a demand for human organs, but it is illegal to sell them. These nonprofits generate the majority of their revenues from fees or donations that are directly linked to their activities. Most Market Makers operate in the area of health and disease, but some also operate in the environmental protection area (for example, land conservation). The American Kidney Fund (AKF) is an example of a nonprofit that uses the Market Maker funding model. AKF was founded in 1971 to help low-income people with kidney failure pay for dialysis. It is now the country’s leading source of financial aid to kidney dialysis patients, providing (in 2006) $82 million in annual grants to 63,500 kidney patients (about 19 percent of all dialysis patients). Before 1996, health care providers were allowed to pay Medicare Part B and Medigap premiums (approximately 20 percent of total costs) for needy dialysis patients. In 1996, the federal government made it illegal for providers to do this because it might trap the patient into receiving dialysis from a particular provider. The new law left thousands of kidney patients unable to afford kidney treatment. AKF noticed this gap and established a program to fill it. AKF now pays these premiums, allowing patients to continue their treatment. AKF is funded primarily by health care providers and other corporations. AKF is now applying the same principles used in its kidney dialysis program for pharmaceuticals used to treat bone loss. Nonprofit leaders considering the Market Maker funding model should ask themselves the following questions:
Is there a group of funders with a financial interest in supporting our work?
Are there legal or ethical reasons why it would be more appropriate for a nonprofit to deliver the services?
Do we already have a trusted program and brand name?

LOCAL NATIONALIZER There are a number of nonprofits, such as Big Brothers Big Sisters of America, that have grown large by creating a national network of locally based operations. These nonprofits use a funding model we call Local Nationalizers. These organizations focus on issues, such as poor schools or children in need of adult role models, that are important to local communities across the country, where government alone can’t solve the problem. Most of the money for programs is raised locally, often from individual or corporate donations and special events. Very little of the money comes from government agencies or fees. Very few local operations exceed $5 million in size, but, in totality they can be quite large. Teach for America (TFA) is an example of a nonprofit that uses a Local Nationalizer funding model. TFA recruits, trains, and places recent college graduates into teaching positions in schools across the country. TFA was founded in 1989, and by 2007 had more than $90 million in annual revenues. The organization relies on its 26 regional TFA offices to raise more than 75 percent of its funding. The reason this works is that TFA’s mission—improving the quality of K-12 education—resonates with local funders. TFA developed a culture in which fundraising is considered a critical aspect of the organization at every level, and it recruited local executive directors who would take ownership of attracting regional funding growth. Nonprofit leaders considering the Local Nationalizer funding model should ask themselves the following questions:
Does our cause address an issue that local leaders consider a high priority, and is this issue compelling in communities across the country?
Does expanding our organization into other communities fulfill our mission?
Can we replicate our model in other communities?
Are we committed to identifying and empowering high-performing leaders to run local branches of our organization in other communities?

IMPLICATIONS FOR NONPROFITS In the current economic climate it is tempting for nonprofit leaders to seek money wherever they can find it, causing some nonprofits to veer off course. That would be a mistake. During tough times it is more important than ever for nonprofit leaders to examine their funding strategy closely and to be disciplined about the way that they raise money. We hope that this article provides a framework for nonprofit leaders to do just that.

The funding paths that nonprofits take will vary, and not all will find models that support large-scale programs. The good news is that all nonprofits can benefit from greater clarity about their most effective funding model, and it is possible for some nonprofits to develop models that raise large amounts of money. As mentioned earlier, almost 150 new nonprofits (not counting universities and hospitals), surpassed $50 million in annual revenues between 1970 and 2003.

On the other side of the equation, philanthropists are becoming more disciplined about their nonprofit investing. A growing number of foundations, such as the Edna McConnell Clark Foundation and New Profit Inc., are investing in their grantees to improve both program and funding models. We hope that this article helps philanthropists become clearer about their funding strategy so that they can support their programs more effectively.

As society looks to the nonprofit sector and philanthropy to solve important problems, a realistic understanding of funding models is increasingly important to realizing those aspirations.

Notes 1 In a November 2008 Bridgespan survey of more than 1001 nonprofits, leaders were asked which of eight different and often conflicting fundraising tactics would play some role or a major role in their approach to addressing the downturn. Nearly half (48 percent) of respondents said that six or more would. 2 For example, see Thomas Malone, Peter Weill, Richard Lai, et al., “Do Some Business Models Perform Better Than Others?” MIT Sloan Research Paper No. 4615-06, May 2006. 3 For an early framework looking at “donative” vs. “commercial” nonprofits, see Henry Hansmann, “The Role of Nonprofit Enterprise,” Yale Law Journal, 89, 5, April 1980. 4 William Foster and Gail Fine, “How Nonprofits Get Really Big,” Stanford Social Innovation Review

William Landes Foster is a partner at the Bridgespan Group, where he advises direct service nonprofits and foundations and leads research on social sector funding. He is a coauthor of “Should Nonprofits Seek Profits?” (Harvard Business Review, February 2005), “How Nonprofits Get Really Big” (Stanford Social Innovation Review, spring 2007), and “Money to Grow On” (Stanford Social Innovation Review, fall 2008).

Peter Kim is a consultant in Bridgespan’s Boston office, where he focuses on growth strategies for nonprofits in the education and youth development sectors. Before joining Bridgespan, Kim worked for Goldman Sachs.

Barbara Christiansen is a consultant in Bridgespan’s Boston office, where she focuses on helping organizations plan for expansion. Before joining Bridgespan, Christiansen was a strategy consultant at the Monitor Group, working with pharmaceutical, biotech, and energy companies.

Soon thereafter, I founded the Youth Action Program and enlisted 20 young people and five adult volunteers. Our first project was a five-story abandoned tenement on 107th Street in East Harlem that was “in rem”—taken from its private owner by the city. It was a mess, full of garbage and rotting dead animals. We learned as we went, taking five hours to lay the first 14 bricks.

The Youth Action Program evolved into YouthBuild USA, which now consists of 226 local programs in 42 states engaging 8,000 students each year. In these programs, low-income 16- to 24-year-olds earn their GEDs or high school diplomas and learn job skills by building affordable housing for homeless and low-income people. They also participate in leadership development activities and build a supportive mini-community of peers and adults passionate about rebuilding their communities and their lives. Since 1994, 76,000 young people have produced 17,000 units of affordable housing in 226 of America’s poorest communities. Most of them have also qualitatively improved their own lives through education and employment and internalized the ethic of service.

Nonetheless, we’re still not meeting the nation’s need. Many local YouthBuild programs are turning away three to six times as many young people as they can take in; last year we turned away 14,000 applicants. Young people are knocking on our doors and we are forced to say, “Sorry, no room at the inn.” When I sat in the waiting room at YouthBuild Philadelphia Charter School in the summer of 2004, on the final day of admissions, many of the 800 young people not accepted were crying, and I vowed to try harder. It’s my job to open those doors wider.

To get from partial to full scale—and for us full scale means 50,000 students a year in 850 communities— YouthBuild’s federal funding must increase from $60 million annually to $1 billion over an eight-year period (or an average of $125 million annually). Local programs will also need to raise $250 million annually from state and local education and criminal justice funds for diploma-granting and reentry services, and from private funds.

How will we achieve this breakthrough? By going back to our past supporters, and by decisively stepping up our communications and advocacy to bring in powerful new allies.

PRIVATE FUNDS
YouthBuild would never have gotten to partial scale without private support. To get to full scale, we’ll approach all the private funders who have ever supported us and ask them to contribute to an $85 million growth fund. This fund will strengthen federal and state advocacy, provide resources for quality assurance and innovation in an expanding field, support the next generation of research on program impact, strengthen the management capacity of YouthBuild USA to handle growth, and provide strategic grants to local programs.

We’ll also approach the new generation of billionaires and persuade them that the challenge of expanding an established but still inspiring program to full scale to help solve a critical social problem is as interesting, important, and feasible as replicating promising new initiatives in a few dozen locations. Many funders have been attracted to the initial replication process because they consider it scaling, but few have committed to the more ambitious goal of expanding programs such as YouthBuild (which have already been successfully replicated and proven to work over time) to full scale.

We’ll even revisit funders who in the past decade refused to invest in YouthBuild because it was “too big” and “already a government program,” or because they believed it could lose federal funding at any time through a political decision and was therefore too insecure. This time we’ll tell them that yes, we did succeed in creating a government program that is dependent on political decisions, but that this is a reason to expand support, not to avoid it. (In 1992 Sen. John Kerry and Rep. Major Owens helped us build bipartisan support in both houses of Congress to get the YouthBuild Act passed and $40 million appropriated to the U.S. Department of Housing and Urban Development (HUD) for this new federal program. Every year since then, between $20 million and $65 million has been appropriated, thanks to the support of these champions, a mobilized constituency, and steadily expanding bipartisan congressional support.)

Having created a federal program at the $60 million level does not solve the problem, meet the demand, or exhaust the capacity, we’ll argue. We’ll also point out that such expansion takes private investment in advocacy, communications, research, leadership development, and quality assurance. To maintain the quality and impact of a federal program, a national nonprofit must constantly negotiate with the federal government at every level and keep the entire grassroots network engaged at a high level of inspiration and connection with the mission. The nonprofit must also fill the government’s gaps and correct its errors, and that takes private, flexible resources. In the unique public-private partnership that we have created, the federal government acts as the ocean liner that manages the taxpayers’ funds, and we are the flexible tugboat that can move quickly to correct mistakes, support innovation, and maintain inspiration at the grass roots.

GOVERNMENT FUNDS
A little background: After the first $40 million of federal YouthBuild funds reached local communities in 1994 under HUD’s jurisdiction, YouthBuild grew from 15 sites to 106 in two years. But after 1996, Congress changed leadership and the YouthBuild appropriation was cut in half. Still, the YouthBuild Coalition fought every year to increase the appropriation, and we managed to generate a steady rise to $65 million in 2002. In 2006, the program was moved with our cooperation from its incubation in HUD to institutionalization in the U.S. Department of Labor (DOL). The Bush administration felt it was better aligned there, and DOL wanted it as a cornerstone of their approach to disadvantaged youth. Some of the glitches in this transfer process resulted in a 23 percent cut in funding, down to $50 million. Over the same period, since 1994, six additional federal agencies have gradually invested in key aspects of the YouthBuild program, using Youth- Build USA as an intermediary for targeted grants.

Still, this success is incremental, and it comes nowhere near meeting the nation’s demand or need. To go to full scale, YouthBuild USA and our local affiliates must convince politicians to make a national commitment to reconnecting all unemployed, out-of-school young adults to education, employment, and service. Such an achievement would play an essential part in building our economy and eliminating poverty in America.

YouthBuild, combined with all other comprehensive programs reconnecting low-income out-of-school youth, could end the drain on society represented by 2 million idle young adults in an economy with worker shortages in industries such as construction and health care, 250,000 young adults in prison, and thousands of unemployed young adults who can’t afford to care for their own children. Seventy-two percent of YouthBuild students are young men, attracted to the manliness of building houses for homeless and low-income people, and to the opportunity, as they tell it, to become better fathers than they had growing up.

Of course, having the President of the United States as an advocate would be the optimal situation, and I felt deeply hopeful when during his presidential campaign, Barack Obama included expanding YouthBuild to serve 50,000 youths in his national service platform.

To build political will and private support, YouthBuild USA will create a private sector advisory board. Bank of America, Home Depot, and the Wal-Mart Foundation have been our primary corporate allies so far. We’ll also enlist the help of forces and organizations with overlapping goals—the Alternative High School Initiative, America’s Promise Alliance, Campaign for Youth, the Forum for Youth Investment, the National Collaborative for Youth, the National Youth Employment Coalition, ServiceNation, Voices for National Service, the Youth Policy Action Council, and many others. The YouthBuild Coalition itself has 1,000 organizational members committed to the expansion of YouthBuild.

It does seem that for a solution to be taken to full scale, the problem needs to become high in the public’s mind. Sometimes this happens spontaneously through an event or crisis, sometimes through a strategic and well-funded campaign involving many advocates and various communications professionals. At the moment, the dropout crisis is rising steadily in the public’s awareness, and this can lead to awareness that reenrolling students is one part of the solution.

Hundreds of young people have personally thanked me for YouthBuild and asserted that without it, they would probably be dead or in jail. Instead, they say, they are doing well and giving back to their communities. Last year I asked 75 YouthBuild graduates at a conference how many of them had acquaintances or relatives who had applied to YouthBuild, were not accepted for lack of room, and were now dead. Some 80 percent raised their hands.

We have no choice now but to go full scale ahead.

Dorothy Stoneman is founder and president of YouthBuild USA. She has received a MacArthur Fellowship, the John W. Gardner Leadership Award, and the Skoll Award for Social Entrepreneurship.

Benetech is a strong example of social entrepreneurship.We are part of a growing movement of people taking new approaches to solving social problems. A hallmark of this movement is approaching these problems in partnership with the communities we want to help. This approach melds features from business and the social sector, creating hybrid solutions.

In some cases, the people we want to serve are our customers, providing the market-based feedback that keeps us focused on the needs of our users.

In other cases, there is no revenue model, but the value exchanged is still real and shapes our accountability to our partners.

In general, social entrepreneurs are tackling market failures, meeting needs where business entrepreneurs are unlikely or unwilling to fulfill. Yet, treating the communities we serve more like customers than the recipients of charitable beneficence reflects the new realities of global society. More to the point, it works.

Sources:

To read more about benetech:  http://www.benetech.org/index.shtml

The case download:  http://www.benetech.org/about/downloads/INNOVATIONS-3-3_Fruchterman.pdf

Reminder: Read the case…interesting Insights!!

We knew we couldn’t do what we wanted in terms of funding without the business to support it. We were also committed to harnessing our community, as like us, travellers who have seen the positive impact community projects can have in developing countries.

Our challenge after that was to redesign the technology so any e-commerce engine could build Footprints into their business model. Now we’ve done that, imagine the impact you could make from the potential millions of micro-donations made each day online.

Providing transparency, accountability and reporting, even on a $2 donation, quickly erodes that ever growing charity cynicism and proves that CSR can be both effective and inspiring.

—Chris Noble

SazzadurI model businesses and NGOs. NGOs have a slightly different orientation than revenue driven businesses. The structure of NGOs is oriented around funding rather than revenues. In this respect their “customers” are donors. From a modeling point of view “consumers” of the NGOs’ product are classified as beneficiaries. Sales and marketing constructs indeed exist and their message is targeted towards donors. A donor is any entity who has an interest in supporting the beneficiaries as a class type.

If an NGO breaks free of donors than they are modeled as any regular business with the extra spin of non-profit branding. Think of Paul Newman’s food products, Newman’s Own, where their profits, over $125 million, have been donated to charities. The difference between them and for-profits is that they don’t have to deal with tax consequences and shareholders otherwise all other business considerations are the same.

My focus with clients always begins with identifying what their strategies are for sustainability. This means they must develop value propositions that resonate with their customers with consistency and persistency. For NGOs this is a major challenge as their customers are donors. Donors are segmented no differently than revenue markets. Some fall into charity de jour, others have a binding relationship with the targeted beneficiaries and some others participate to get a brand lift for their own company or agenda.

All businesses, this includes charities, must have serve others in order to survive.

Sweden
Contact: sr_tusar@hotmail.com

-Alex Osterwalder

Contact: alex@businessmodeldesign.com

Source: http://business-model-design.blogspot.com/2005/05/ngo-business-models.html

Contact:
Ashwin
Cell No: 09886165220
Email: ashwin.arya@gmail.com

http://divyadeepatrust.org

I had thought about this long ago, but could not come up with any potential answer. I recently came across a for profit company who has developed their business model around the needs of the rural Indian population called Drishtee. It was founded in 2000, and they operate this way: They set up Internet kiosks in rural areas operated by some villagers themselves. The kiosks cater to the rest of the village population which pays a small fee to use the services of the kiosks. Drishtee takes a small percentage of that fee.

While Drishtee is not involved in development the way NGOs are, they have a sustainable business model, and their activities will affect the rural areas they are working with in a positive manner.

Thus ends this post with me sitting here thinking about, and hoping for innovation in the NGO sector.

Source: http://crashpodel.wordpress.com