The Rise of For-profit Non-profits
Have you heard of a “for-profit non-profit?” The term seems quite contradictory, but many social service organizations have adopted this structure with success. There was once a time in which many believed that non-profits must solely thrive off of government grants, private donations, and community support. However, as income sources have dried up, some non-profits have learned how to earn their own way.
There are many benefits to utilizing both a for-profit, as well as non-profit structure. Alfred Wise, director of the Community Wealth Ventures for-profit consulting unit within the non-profit Share Our Strength, has been quoted stating: “Can we teach the people we serve the importance of being self-sufficient while not being self-sufficient ourselves?”
At Shea Yeleen International, we couldn’t agree more! We are centered on empowering women shea butter producers in West Africa, and giving them the tools to support their cooperatives and sustain their families. This cannot be done effectively if the organization does not have the funds to carry out its mission. We’ve decided to create a new for-profit entity, Shea Yeleen Health and Beauty, LLC that sells shea butter products and ensures that financial revenue is generated not only to help the women that we serve, but also to keep the non-profit organization thriving.
The bakery at Boston’s Haley House is a prime example of how another group hopes to benefit from establishing for-profit activities within a social service organization. The small, multiservice non-profit Haley House is a spiritually-based community organization that serves the homeless, alcoholics, the elderly, and others. Haley House launched the bakery to ignite economic independence among its clients, most of whom had limited work skills and education levels.
Two other NYC-based organizations that are for-profit non-profits are: Hot Bread Kitchen – which trains and empowers immigrant women, while also selling baked goods, and Housing Works – which addresses homelessness and HIV/AIDS, while also raising revenue and providing job-training through thrift stores and a catering service.
Even well-known brands such as Google have recognized the benefits of adopting for-profit non-profit structures. The Google Foundation, established in 2004, supports and promotes ventures for economic development and poverty eradication in developing countries, attaching particular importance to market-based, entrepreneurial, microfinance and technological solutions. Recently, Google took the next step and established a philanthropic organization named Google.org to combat poverty, disease and global warming. Google founders believe that the organization’s for-profit status will allow Google.org to do something that traditional non-profits cannot: make profits, fund start-up companies, partner with venture capitalists, and lobby Congress.
Flexibility and competitiveness are two advantages that will help for-profit non-profits to thrive and be successful. Having multiple approaches allows an organization to reach people that it may not normally have access to. It also allows for a particular freedom that may have not been otherwise experienced, creating the potential for a larger social impact.
What are your views on for-profit non-profits? Do you know of other organizations that are utilizing this model? We’d love to hear your thoughts!