No More Band Aids – Strategies and Five Tactics for helping your clients long-term by evolving into a health-outcomes based organization

Are you sure this is the cure for food insecurity?
Are you sure this is the cure for food insecurity? Because my symptoms just started again.

Big Data is Coming for YOU

One day not too long from today, funding for organizations like ours will be heavily based on the social impact returns we can bring against the financial investment made. We will have to make our cost benefit pitch over what improvements in health can we bring. Who are the specific groups we will touch and what specific disease areas will we help to mitigate or eradicate? How much money can we save the City, County, State and Nation in healthcare costs? Over what period can we do it?

If we can put forward a persuasive argument, we will receive funding with the remit to deliver on our proposals. Our food and education programs and our demonstrated ability to link to a continuum of community support and empowerment for under-resourced individuals and families will help us make a strong case.

We will then have to evaluate and measure impacts and wrangle and present the kind of data that makes our current activities in this area seem equivalent to counting on our fingers.

It could be like Feeding America’s quadriannual Hunger Study – every day!

Before you wake up screaming in sweat-soaked sheets, we are not there yet. This may be a world that you don’t want to get to. However, it is coming, whether you like it or not and we need to position ourselves by our deeds to demonstrate the hugely beneficial public health impacts of food banks.

Join the crazy food bank health kick!
Join the crazy food bank health kick!

Sure, I am a nice guy who wants to help people be healthy and feel positive about what they can achieve in life for themselves, their families and their communities. But I also care about the long-term direction and viability of organizations and a network like ours. We need financial resources to do our work, and our march into the future is going to require mastery of juggling dual funding streams (charitable donations for food insecurity and provider service fee payments for health outcomes) to be able to survive over the coming decades.

From my cheap seat in the bleachers, hunger is no longer driving the national discussion in the way it did a few years ago. It is already viewed as a sub-component of poverty, which has morphed into the ‘real issue.’ The perception is now that the country has drifted in a situation where people find it incredibly difficult to improve their circumstances no matter how hard they work, no matter how much they take personal responsibility for their own situation.

lost my job

Partnership with other organizations nationwide and locally is the only way to begin to take on both situational and generational poverty. Feeding America’s fledgling Collaborating for Clients (C4C) initiative is a great step in this direction. Here is a download for some FAQ’s about this: Collaborating for Clients FAQ_1.27.2014[2]

The vital next step after that is ‘collaborating with clients’ to achieve the kind of sustainable transformations in local communities that will work long-term. The Federal government is not going to gallop in on an ethnically balanced white/brown/black horse and save the day. Those days are done. We have to help micro-communities connect and find their own solutions, and then turn around and use their own power and ability to work together to drive the national agenda from the bottom. I mean, what is the point of all this social networking crap unless we can get it to do something worthwhile, right?

Anyway, it’s clearly time for one of my pink happy pills to calm down, because all that is still a ways off and we want to help people be more nutritionally healthy right now.

And so, there is ‘preventative health’ which can be the second flank of a ‘pincer movement’ that enables us to come at the ingrained and complex problems of poverty from two different sides, utilizing different partners. Fighting poverty through job creation and community development is actually not enough in itself. If you improve people’s financial situation, you can make them food secure, but this doesn’t necessarily improve their health. However, if you work to help people improve their health, you give them skills (food literacy) that will be invaluable to them in times of scarcity or times of plenty.

Another quiet day at the Food Bank
Another quiet day at the Food Bank

I also think it is possible to steer the issue of poverty away from being a lightning rod for people’s knee-jerk political reactions and deep seated personal fears (oops, same thing) and into a more neutral territory where we treat the ravages of poverty as a public health issue that there can be broad consensus to rally around. That is a ways off, but I think it gives us somewhere to head for that is worth reaching for.

The Tactics

So that is the ‘why.’ What about the how? How can we engage with the current preventative healthcare framework and demonstrate our worth to be part of this fabric.

Below I lay out five different steps you can take. You can’t do all of these things at once (don’t tell my staff that, though), but achieving a win in any of these areas will give you some credibility and provide the foundation to broaden and deepen your health-related activities.

diabetes-article-10-11-2013

1. Diabetes is a great place to start:

Playing a part in diabetes care is one of the best initial possibilities for demonstrating the vital role we can play in community health. Obesity is much harder for us to prove the specific benefits of our role. (Even for us our food bank with 60% of our distributed product as fresh produce). Diabetes is much easier for us to demonstrate the success of our interventions.

For the last two years, the drug company Bristol-Myers Squibb has been funding pilot programs in diabetes care with three food banks across the country, each pursuing slightly different versions of partnership with local healthcare providers. (Here is some basic information on the project. More detailed data will be released soon.)BMS Diabetes Project 2014 The interim results of these studies provide us with some real data about food banks can play a vital role in screening, helping people control their condition, and also dealing with the huge swathe of ‘borderline diabetics.’ Here is a link to an informational website on this area, which has a lot of helpful info.

new_logo1

We are actively speaking to a number of local health providers in our county about running similar programs. Virtually all of them have been enthusiastic about this. It is a big problem, they can save a lot of money, and they also have funds available for this type of activity. We are still working through how the financial model will work, but we are increasingly looking for fee payments (by healthcare provider, not individuals) for the type of direct service that we are providing in the healthcare space. We can’t be apologetic about asking these organizations to pony up. Yes, people expect charitable hunger relief for $25 bucks and a turkey too big for someone’s oven, but I can assure you that they do not expect to get bona fide health interventions so cheaply.

And now we will open up the stomach to determine that it is indeed empty.
And now we will open up the stomach to determine that it is indeed empty.

2. Consider providing training in screening for food insecurity for medical staff:

Oregon and its food bank are way ahead on this one. (what was that Ron Burgundy was saying in Anchorman II about only leaving the country once – when he went to Salem, Oregon?). They have a dedicated site with excellent online and written training materials for medical staff centered around utilizing the existing USDA two question survey to gauge food insecurity.

From childhood hunger.org
From childhoodhunger.org

Of course, medical staff will have a full-blown panic attack if you attempt to suggest adding anything more to the huge clipboard of paperwork needed to be filled in on patient intake (waivers to waive the right to waive waivers and the like). However, persuasive arguments can be made – continuing education points are available in the Oregon model, for which there are existing requirements for medical staff to obtain. Also, being aware that a patient is in a food insecure household is a pretty useful thing to know when you are looking at strategies to improve the health of that patient.

graphic-representation-of-fvrx
Prescription program

The other major potential sweetener is the possibility of providing doctors with the ability to ‘write prescriptions’ for fresh produce for some patients. They could then bring these prescriptions to a food pantry (ideally one that would be open at that time) where they could receive some fresh produce. Medical staff like to have something to give patients, and even if they have to pay something to help contribute to the cost of fresh produce, it is still a small cost compared to other interventions they could offer.

The health provider was particularly proud of their new mobile screening van
The health provider was particularly proud of their new mobile screening van

 

3. Get in on the ‘Community Health Needs Assessments’ wagon train:

This was supposed to be our admittance ticket, our way of building relationships with local hospitals and health authorities. They are now mandated to see what is happening with the health of their communities and devise strategies to deal with these issues. Food insecurity is a significant portion of this reality, as well as the health conditions that optimum nutrition can help alleviate.

We actually contributed to our local plan a few months back in terms of being invited to a stakeholder interview roundtable. We are still at the stage where we were not considered partners, more a case of ‘we better ask a bunch of nonprofits what they think.’ Consequently not much significant has resulted from our modest involvement in this process. In your area, you may be able to insert yourself at a more opportune point in the process and be more involved. From our viewpoint, I figure that we need to get on with the other things we are doing in this area, and then when next time rolls around, things will have shifted significantly.

Here is a download on this issue.Assessing and Addressing Community Health Needs_CHA_2013

 

fish

4. Stop whining that the bigger fish get all the fish food. Puff yourself up bigger to get bigger funding:

I am not talking about increasing the size of your organization, which may not be a good idea even if it is financially possible. What I mean is to link together with other food banks or similar organizations to run health based programs over a broader geographical area. While I may have my visionary moments,  most of the strategies I pursue have a very pragmatic basis. Such is the case with this. Trying to get the Feds to cough up for the dire needs of those in hunger in Santa Barbara County is an uphill struggle. Why, dear reader, even you are smirking now. What do they know about hunger? We always have to deal with the kneejerk reaction of having one rich city in a county with rampant food insecurity and low food stamp uptake. (In the 58 California counties, only 14 have more food insecurity than Santa Barbara). Also, the reality is that if you are looking for health money not USDA food security money, a county of 400,000 is a gnat bite. They want big populaces to make significant impacts on regional numbers.

This is one of the reasons for the formation of the ‘Food Bank Health Alliance of the Central Coast.’ This is an aggregation (currently) of ourselves, Santa Cruz and Ventura Counties. Between us, we have a million and a half people. If we can get San Luis Obispo and Monterey County to join us we will have an unbroken line of sister organizations covering the whole coastal region that separates LA from San Francisco.

Foodbank Health Alliance of the Central Coast logo

Our organizations are linked by MOU committing us to jointly seek for health related federal funding (though we’ll take money from USDA, Department of Defense, Smokey the Bear…). Marriages of convenience without shared values and objectives are a recipe for disaster – as I’m sure you’re all aware from your previous collaborations – however, this more open relationship is based on a shared outlook. This boils down to:

  • GOOD NUTRITION – Is the bedrock of our activities, sourcing and distributing as much nutrient dense food as possible. We also have nutrition and wellness policies so we can walk the talk (and help our member agencies do so).
  • COMMUNITY EMPOWERMENT AND DEVELOPMENT – As well as making a success of ‘feeding the line’ of people who are food insecure, we are also very focused on ‘shortening the line’ of those who will need help in the future. The only way to achieve this is through empowering the community to take control of its own nutritional challenges – on an individual and neighborhood level and upwards. This involves making those who were previously ‘clients’ into partners for healthy lifestyles and environments.
  • EVALUATION OF IMPACT – A need to move beyond measurement of outputs to demonstrating the efficacy of our actions on the public health and development of communities. We will additionally work to demonstrate wellness and self-sufficiency.
  • A HISTORY OF COOPERATION AND MUTUAL TRUST – We have a long shared history as members or partner distribution members of Feeding America, the national organization of Food Banks as well as the California Association of Food Banks.

There will doubtless be lots of challenges, different organizations used to running their own unique programs in their own idiosyncratic way. However, unless we can make this type of collaboration of very similar organizations work, then none of us have any hope at succeeding in collaborating with the wider groupings that will be necessary to have a true impact on poverty in America.

An ‘alliance’ like this needs large amounts of cash to grease the wheels and make it work, so stay tuned for results on how we’re doing. Or better yet, why wait to see whether we fall flat on our faces and put together your own regional collaborations. If the Feds don’t give you the money, they’ll only spend it on something really dumb, so you might as well go for it!

 

Gladys had waited 50 years, calculating the perfect time to make her move...
Gladys had waited 50 years, calculating the perfect time to make her move, snaring her hapless target in her macrame web of sin…

5. Lead with Seniors:

Often, funding to feed seniors is treated in a similar way to finding the money to feed homeless people. Besides a few highly motivated donors, these are the programs that it is harder to get broad funding for, so they tend to get paid for out of general operating expenses. It’s a shame, but scruffy dudes with matted beards or finicky grey hairs clipping coupons do not always excite funders. Consequently, it’s so easy to lead with kids and get funding for those kids. (I call it ‘taking candy with a baby’) Individual donors or foundations feel the heartstrings twang and they also think kids might be a better long-term investment. I have always muttered that ‘Kids are just the Seniors of tomorrow,’ but that hasn’t made much difference. I have been waiting for some perspective to shift or something to click for me in this area and I think it just did.

At a recent meeting with a major healthcare provider, he said: “Kids are basically healthy unless you really mess them up, but seniors are a significant expense.” If you think about it, asking the health world to pay up now to ease the problems kids will generate thirty years from now is asking too much. If we can help them keep seniors healthy and independent as long as possible, we can save them some serious cash in the here and now, not after they’ve retired or moved on. That is something that they would be prepared to invest in – and the sums would be a drop in the ocean compared to the increased expenses they face.

In this case I am thinking about a more integrated and expansive range of senior nutrition programs that move beyond the straightforward grocery bags or congregate feeding. These programs would have a nutrition and health element and that mesh more organically with existing health screening.

We are still putting together the right mix of ideas and partners before making a significant investment, but it has to happen and soon. We are seeing an explosion of need amongst seniors and what might be termed ‘pre-seniors’ (those close enough to retirement age that they are finding it very hard to get employed as people don’t want to invest training cash in them). Really, once you are in mid to late 50’s it gets harder and harder (So that’s why those Food Bank ED’s stay so long in their jobs!) To give an example of the type of programs we are looking at in the senior arena:

• A program providing ingredients for seniors to cook a meal together a couple of times a month at a community or senior center. This would give people motivation to keep their cooking skills going and also allows social contact, additional nutritional education and health screening from other healthcare groups.

• In seeking to meet the needs of our large Latino community, we are looking at a program that caters to the large number of grandparents who look after kids while their parents work. This program would also allow for a weekly meal in a community center where both generations would work together to cook a meal. This way, nutritional health and food literacy skills can be the focus for these two age groups, who if they disagree about a lot of things, are united in their belief that mom and dad can’t cook to save their lives, or that they are convinced they don’t have the time to. Again, this situation offers great health screening opportunities for diabetes etc.

• Meal delivery to seniors. In our area (and maybe yours) senior meal delivery has become a hot potato (or a reheated lukewarm potato, more like) with responsibility for the service being passed around. Meals on Wheels may be a large presence in your area or one that is suffering from a volunteer force that is figuratively and literally dying off. The reality in many places is either some kind of vacuum or spotty service at best. We are interested in investigating partnerships in this area. At one extreme, you can be like Feedmore in Virginia and create one big entity of MOW, food bank and community kitchen. At the other is at least more collaboration and integration within the range of services in your area. I know that Greater Chicago Food Depository has been piloting a program where health visitors drop off an ergonomic box of six frozen meals with low-income seniors that they visit. These are to be picked up from various centralized locations, and the frozen element allows delivery before food safety becomes a major issue. For the health visitors it is obviously an inconvenience but also provides something tangible that they can give people and that helps them make their numbers and keep their clients happy. This is a complex strategy and I know that there have been significant challenges with it, though this is clearly a direction worth pursuing and seeking the type of local and state reimbursement funding which would make it more financially viable.

It is up to you how tightly you are able to integrate this type of programming with the health screening and health treatment needs of seniors, but the tighter you do so, the more you guarantee a stream of funding. Food is still the draw to get involved in a program whether you are seven or seventy.

Feeding America recently published a report on Senior Hunger, which may provide some help to you in pushing for funding and partnership in this increasingly vital area of our operation.

Link to executive summary of this report: Spotlight on Senior Health

Are the tactics I have suggested a distraction from your core mission of feeding people? I would argue that they enhance the mission in multiple ways. Take the suggestion around training medical staff to screen for food insecurity. Can you imagine how much your development staff will benefit from the type of new understanding that doctors and health teams will gain of both food insecurity and our work to eradicate it? People want to get involved when the discussion is good nutritional health, and now is the time to start leveraging our credibility and boots on the ground in this area.

Also think about attending the ‘Closing the Hunger Gap’ conference, which has become a key focal point for this and related issues. Closing the Hunger Gap Conference Report 2013 which held its inaugural conference last year in Tucson and will next be held out of the country in Oregon in September 2015.

Live Long and Prosper, and let us know how you’re doing!

Funny-ice-cube-live-long-and-prosper-lol-spock-Favim.com-212681

Divided We Stand? Facing the challenges of Collective Impact, Corporate Philanthropy, Earned Income and more – A dialogue with Jan Masaoka, ED of CALNonprofits.

Jan Masaoka

Jan Masaoka is a leading writer and thinker on nonprofit organizations with particular emphasis on boards of directors, business planning, and the role of nonprofits in society. She has recently assumed the mantle of Executive Director of the California Association of Nonprofits. (CalNonprofits).

She is Editor-in-Chief of Blue Avocadothe essential online nonprofit magazine with an amazing 63,000 subscribers. For 14 years she was executive director of CompassPoint Non-profit Services (www.compasspoint.org), a consulting and training firm for nonprofits based in San Francisco and Silicon Valley.

She is an eight time designee as one of the “Fifty Most Influential People” in the nonprofit sector nationwide. Her recent book with Jeanne Bell and Steve Zimmerman, Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, (Jossey-Bass, 2010) has quickly become a vital tool for nonprofits to truly assess the financial impact of their range of activities. (I will explore the teachings of the book in another post.) My conversation with her was an opportunity to revel in her rich experience and take-no-prisoners plain talking. This makes everything she says not so much a condemnation of how things are, but an invitation to question, question, question. And we can’t have enough of that.

Jan, you are new in your position at CalNonprofits, yet already you are involving the organization in a major initiative to get nonprofit staff, volunteers and clients signed up to vote (for the recent California elections). I have noticed that some nonprofits shy away from such activities in their direct service programs because they are fearful that some donors might say they are ‘becoming political.’ How can you deal with that?

First of all, this is non-partisan voter registration to get out the vote. We’re not telling people how to vote. We are saying that whatever the ideals and values that brought you into contact with the non-profit sector, vote with those values.

Nonprofits are not outside of communities, they are the ways that a community organizes to take care of itself. But I also think that we don’t just serve people, we represent them. Anybody that’s serving children with disabilities, for instance, is also representing them. There is a lot of heavily lawyer-scrutinized information in the Legal FAQ’s section of CalNonprofit’s website which indicates what nonprofits can and can’t do in this area.

LOOKING UP AND DOWNSTREAM

In my discussion with Jan Poppendieck, she touched on the need for food banks and similar organizations to put more emphasis on looking up and downstream from what their own particular level of involvement was with clients.

This is vital. I can think of an example of a shelter program for runaway kids that used to be funded by the government. They received a fee for service based on a performance outcome basis. The designated outcome was reuniting kids with their families, and they would receive a certain amount of money for every kid they reunified with his or her family. But if you look downstream and think about it for 10 seconds you realize that with some kids, reunification is a good outcome but for many others, it is no. There were a lot of kids being returned to abusive homes or to a home where drugs were being used all the time. The nonprofit realized they needed another goal, of more long-term shelter for those kids who didn’t have good homes to go back to. They received no government money for this, so they had to raise it. And then looking upstream, they realized they had to advocate to get the policy changed that specified unification as the only goal. If they had only thought of themselves as a little factory of unduplicated units of service they might have remained focused on the unification numbers. But because they are representing this part of our community, they had to find the best outcome for them even if it didn’t mean they got any money for it. Standing on the sidelines is easy, but is no longer an option if we want to achieve big things.

 GOVERNMENT, BUSINESS AND NONPROFITS

We hear a lot about the supposed realignment of the roles between government, business and nonprofit organizations. What is your take on this?

I think it’s about smoke and not fire. I just read in today’s paper that some country music star is going on a tour, and in each of 25 cities, he’s going to buy a house mortgage free for a veteran there. That’s wonderful, and great publicity for him. Unfortunately this is not really an example of private dollars helping veterans in a significant way, it is more about winning a lottery, and that is no way to help those around us. We have over a million veterans in the United States and he’s buying houses for 21 of them. So I think that the idea that private money is going to supplant the need for government money will never be true.

I‘m jes’ tryin’ to help best I can. Don’t be dragging me into your whiney little blog.

 So, kind of like with Tom’s shoes concept, which sounds great (and full disclosure, my ten month old, Mia Regina has a ‘metallic tweed’ pair she received at her baby shower) but actually does little to build a sustainable way for people in those countries to create the businesses to help provide shoes for themselves. 

Tom’s Metallic Tweed Shoes for Baby

Yes. I member a California foundation that poured millions and millions into working with the schools and weren’t getting much in the way of results and someone explained that they had really only put in about as much as the lightbulb changing budget for the Los Angeles Unified School District. These problems are too big for most foundations to move the needle on, or for government to excuse themselves from.

What about the ways in which businesses and nonprofits can work together more? Don’t you think that businesses are starting to approach some things like a nonprofit and vice-versa?

Businesses always absorb what is the culture of the day, in order to sell their products. So for example there was a time when paisley prints were radical and wild. So people who wore paisley or had long hair practically saw this as being anti-corporate. Then business took that over and people with long hair were in commercials for cars. I think that right now we have a similar cultural view, which is about doing good in the world and being community-oriented. Don’t get me wrong, it is important and valuable, but I think like every other cultural movement business uses this and when the cultural movement passes, business will pass too.

Maybe if he hadn’t been wearing a paisley hoodie…

But, corporations are run by and made up of people (just ask Mitt Romney) so those people can always express their generosity and concern about the world, despite the business imperative. We’ve come a long way from Johnson and Johnson’s shareholders suing the company when it attempted to divert some dollars to philanthropic activities. Helping the community is always smart business, so I don’t see that changing.

Sure, but when doing good crashes up against consumerism is where things often grind to a halt. So, for example, all the people who are passionate about sustainable agriculture might not want to realize that the most significant thing they could do about reducing the energy cost in agriculture would be to stop eating lettuce. Lettuce uses more energy cost related to the nutrition it provides than any single produce item on the planet. And yet you don’t see environmentalist calling for the end to eating lettuce. So I think that it can become a symbol of how we want to do things and see ourselves, but we don’t really want to make any changes to our consumer lifestyle.

COLLECTIVE IMPACT

COLLECTIVE IMPACT

On a local level, how do you think that nonprofits can collaborate and get some kind of collective impact?

I think the way that food banks work with their member agencies is an excellent example of bona fide collective impact that is generating extra value. For the most part, the smoke around collective impact and collaboration is not about something that genuinely works but creating the appearance of something that’s going to work. Almost all of these efforts are funder-driven and the funders put money into them and when the funders take the money out, it collapses. And that suggests that it’s it’s not a business model that works.

 So what sort of examples can you give where that’s happened?

Foundation after foundation has created local collaborations and they’re around many different areas. Sometimes they are focused around a particular neighborhood and they’ll create a collaboration of different nonprofits and businesses to work on that neighborhood. Sometimes they might be a collaborative of something like domestic violence shelters working across 6 counties or the like. Many of these collaborations have grown organically over time, so they actually work. But others failed, like the Hewlett Foundation’s neighborhood improvement initiative and Annenberg’s initiative in public schools, the San Francisco Foundation’s Lifeline collaborative. They were put together in a way that didn’t make business sense for any of them and so when the outside money disappeared, the collaborations evaporated. So the collaborative initiatives that last are the ones that genuinely make sense for people and almost all of them are started by the nonprofits themselves, not by funders and their consultants.

I think funders have got to build on existing community strengths. And if there is not an organic community strength in that particular community then maybe you can’t fund them successfully.  Maybe you have to look for a different community or maybe you have to take a longer view and say maybe there are 6 or 7 weak organizations in that community but let’s take a longer view of building their strengths. Instead I think what tends to happen is that a foundation that wants to work in a particular community or field and they see 5 or 6 weak organizations, then they figure if they just had a consultant to bring them together for collective impact, then it will all work out. It won’t.

One of the things that keeps nonprofits honest is that we get feedback from the market and we have two markets – a client or patron market and then we also have a funding market, so we have to work in both of them. Whenever you’re in a situation when you don’t have to work with those markets, then things can go wrong and you’ll never know it. That’s kind of like back in the old Soviet Union when the state decided  what a factory should produce. There was no reason for anybody to get any better. Any institution that is not kept in check by some kind of market goes bad and doesn’t know it.

And so how can a foundation avoid getting into that situation then?

They can support community-based efforts as opposed to starting their own initiatives. I visited a foundation recently and they had on the wall a large poster that they had created with a circle. And in the middle of that circle was their logo, very large. And then around the outside of the circle were other foundations and nonprofits. They said to me that this represents our view of how we collaborate with other people and I felt like – No! – this represents your view of how you’re in the center of the universe.

EARNED INCOME

I did a recent post about earned income for nonprofits. What is your take on this area?

A former consulting client of mine, for example, was running an organization they did a lot of psychological counseling for people and families across the spectrum. They received funding to support this work and then when that funding declined, they focused more on earned income. So, they were able to successfully grow their earned income side, and their budget didn’t look any smaller. But if you look closer, they’re now primarily serving people that can afford to pay rather than across the economic spectrum. And I think that this story writ large has been the hidden story of the move toward earned income.

You don’t feel that this can be balanced by having scholarships or sliding scales?

I think it can be mitigated and it’s a partial answer for some organizations but we need to be alert that so far at least many of the earned income gains have come at the cost of helping middle class people rather than economically disadvantaged people.

Many food banks resell purchased food or require a shared maintenance fee of a few cents a pound for some food items that they provide to member agencies. Some food banks don’t do that but we have found that in situations where there is no fee, it leads to inefficiencies with organizations taking more than they need.

So you introduced in a market element, right?

Yes, we’re not charging individuals, we’re asking organizations to take a financial stake in what we’re doing.

You should realize that I’m not trying to sound like I’m anti-earned income. I’m just saying earned income is not a replacement either for charitable dollars or government money.

I read your recent Blue Avocado post “In the Titanic Recession, Which Nonprofits Get the Lifeboats?” and this touches on the ideas you have just expressed about a shift from services to the very poor.

Yes, nonprofits that provide “the most basic anti-poverty for the poor and homeless failed at around twice the rate of more mainstream services.” Also, only about 16% of foundation funding is targeted to low income communities.

Which you lay at the doorstep of the focus on “innovation, social enterprise, outcome metrics and the coolness factor.” Jan, this is hitting me where I live!

It should! But I think food banks are hardly the type of organizations that are in this situation. They are doing some of the most important and pressing human work. And these and other organizations are where the money and focus should go.

Thanks Jan. There is a lot to think about there. Please continue to challenge us.

Earned Income for Nonprofits: Four Dirty Little Words?

What happens to fundraising if we follow the preventative healthcare model that has been expounded on this blog? What if, in a few short years, our programs are demonstrating wonderful health impacts? How is that going to play with our existing donor base?

Would it mean that our direct mail might have to stop looking like this:

Our operators are standing by for your calls.
And start looking like this…
Now we all know that the Ghost of Food Banking Past  (yes, I’m exaggerating to make a point) helps keep those donations flowing in, so that we can get food out to people who can truly benefit from it. Yet once we begin to focus on that same food leading to health outcomes, are we going to be able to pull on the hunger heart strings in the same way?
I don’t think so.
We asked our direct mail company why some recent mailers had brought soft returns, and their response was that our mailers were too positive. The kids looked too happy.
Tricks of the Photographic Model Industry # 234: Hop em up on Mountain Dew and then switch out the Hot Cheetos for fresh fruits and vegetables right before the cameras start clicking.

We all know it.

In the hunger business, negative sells.

Positive is understood by a different type of donor or  foundation, looking beyond immediate the immediate need, towards a long-term solution.

Nevertheless, I guarantee that whatever organization you represent, in the next 3 years you are going to have to come face to face with the need for an increase in …EARNED INCOME.

Much as you want to wear the garlic around your neck and make crosses out of two rolled-up annual reports, you are still going to have find more money from non-charitable sources – there is simply no way around it in the world we find ourselves in.

I attended a workshop with noted nonprofit consultant Andy Robinson last week, that focused on this very area. Andy is the author of Selling Social Change (Without Selling Out) – and the title suggests that he understands a little of the ambivalence in nonprofit organizations around this subject. I’d like to share some of the things that came up in the session.

Nonprofits need to decide what is the best mix of resources that is going to make them sustainable. We all agree that the old borders between non-profit, business and government are eroding. Businesses acting like nonprofits, nonprofits acting like businesses and the government…well that situation has always been fluid.

Let’s consider the pros and cons of generating earned income, starting with the positive:

• Diversified funding base – a key to sustainability

• An expanded prospect pool for individual gifts – doing business can be a great way of meeting people who can be inspired by your mission and give.

• It reduces reliance on grant income and also provides unrestricted funds.

• It provides new publicity and advocacy opportunities.

• It builds new skills and leadership with the organization.

That sounds great, but what about the downside:

• Most obvious is risk – sometimes you are going lose money. Research by the U.S. Bureau of Labor Statistics shows that nearly six in ten businesses shut down within the first four years of operation. You could bring your nonprofit down with your business if your comb-over is not as impressive as Donald Trump’s.

• The up front costs – it takes money to earn money, so the lower the start-up costs the better.

• Mission creep. If your commercial empire takes off, you may find the tail wagging the dog.

• You already have enough work to do, so this will need dedicated staff time. Otherwise it’s a hobby and hobbies don’t make money.

• One other concern is the potential tax liability. if you are a charitable organization and are charging for services that are directly connected to mission, you don’t have to pay tax on that income. However, if you set up an unrelated business, you may have to pay UBIT (Unrelated Business Income Tax). Finding that connection can be important. The YMCA used to regularly get sued in different states by other for-profit health clubs saying their charitably subsidized clubs presented unfair competition. However, the Y won every one of those cases because they could clearly point to their actions as a way of delivering on their mission statement. Girl Scout cookies get away with the same thing, because they teach leadership – girls track product, log payments, use merciless sales techniques…

Now get out there and sell, and don’t think about the nutrition issues! Whaddya mean ‘mint thins’ is an oxymoron?

• One key area of concern that I voiced to Andy at the workshop, was the need to educate contributors so they realize that you as a charitable organization still need donations.

It is clear that market research and feasibility studies, no matter how simple, are a vital first stage. As a nonprofit you need to consider what services could you sell? What publications? What cause-related marketing? What goods (wholesale preferably).

There was naturally some pushback from workshop attendees about the notion of charging for services, many of which in one form or another would have been offered free by the organization. Andy referenced a study that looked at vocational training courses that were either free or charged a modest fee. Far better outcomes were identified amongst those who paid something for the service. They valued it more. Whether this is a sad reflection of our society or not, it is a reflection. People value what they pay for and do not value so much what they get free.

This is a stimulating challenge for us in non-profits. Sliding scales, scholarships, are both possible. Andy suggest we do some testing with any charge for services and track the results. From my perspective the difference between a business and a nonprofit charging for services is that the non-profit is not afraid to potentially put itself out of business, by providing a product which can help the recipient move beyond the need for those services, or into a place of new possibility where they can generate more for themselves and their families. That ‘more’ might be money or community or advocacy for improvement in their neighborhood. In contrast, a for-profit wants to keep you endlessly coming back to buy ‘newer, better’ versions of the same thing.

Don’t try this at home, folks.

As a food bank, we are looking very carefully at earned income. We have always been in the earned income business, in that we charge a very modest shared maintenance fee on some food items that we provide (which prevents agencies from just taking more food than they can effectively use, and which goes some small way to defray the costs of running the warehouses). This is a clear case of putting a value on something that would be valued less if it was free. We also do our own attempt at social engineering by spending hundreds of thousands of dollars on purchasing fresh produce and making that available with no shared maintenance fee, because we want to drive agencies to provide more fresh produce to their clients.

We are already expanding our resale food selections (where we buy food and resell to agencies), charging a modest 10% mark up, with the stipulation that we will only charge this if we are able to provide the food cheaper than they could source it via a local wholesaler or superstore. We want to expand this to make more food and non-food (cleaning products, paper goods etc) available to the full range of local non-profit organizations. (Member and non-member alike).

This approach is already happening successfully with Second Harvest Food Bank of Central Florida’s Power Purchase program. The CEO, Dave Krepcho, affirmed this morning that their purchase program has the dual role of providing lower prices to agencies and netting surplus revenue. “If they can get it cheaper somewhere else, we suggest they do so…This year the net revenue number will be approximately $250,000 on close to $3 million in sales. We are designing a Community Kitchen program now so that it will be economically self-sufficient in three years. I affirm your looking into entrepreneurial programs, it’s the direction we must go.” 

I also recently looked at a study done by another urban food bank that examined at the feasibility of undertaking such a resale program and decided it would not be successful for them. There were a concentration of Catholic agencies in their area who were mandated to purchase from a central purchasing agent (no jokes about the Pope getting his cut, please) and that there was a possibility of a similar arrangement being in place with local YMCAs. This negative report, which highlights all of the challenges (many of which would not necessarily apply to us in Santa Barbara) is extremely useful to us. If we move into a business area with a clear understanding of the challenges we would face, as opposed to clutching starry-eyed dreams of flowing streams of golden sustained income, then we will be far more likely to be successful.

The number one challenge identified was the issue of pricing. Most ventures fail by not knowing how to price services effecively. We don’t know how long it will take us to do something, and often the cost of a unit of service remains opaque to us. Andy believed that nonprofits almost  always underprice the value of the services they provide.

When looking at your business proposition, you need to consider whether it represents a ‘market push’ whereby you need to convince the market of the need for your service (like the electric toothbrush vs. the old school manual) or ‘market pull’ whereby there is enough existing demand, that if you provide enough services, you can meet currently existing needs.

The other painful reality is that being a nonprofit is not going to get you any free pass on the customer service side. If you don’t get things right the first time, they won’t be back again, no matter how compelling your mission is.

It is helpful to consider case studies, so we can consider a range of approaches nonprofits are taking to make earned income work. At one end, you can take an organization like Minnnesota Public radio which after 25 years was spun off as a for-profit subsidiary for $175 million dollars, most of which went to their endowment. Another interesting organization is the Okanogan Highlands bottling company, which you can find at www.purewater.org.

It is a fascinating case study, because they had a specific ‘ill’ that they were fighting against, which was a gold mine. It would bring pollution and they provided studies which showed that the value of the water they could bring out of the same site in the form of bottled mineral water would actually be more valuable than if it operated as a gold mine. They did this by commissioning studies that demonstrated how much water was used to extract the gold. You should check out the video they have at their website, because they show how the empty bottles can be repurposed as advocacy tools to send to our representatives at the congressional and senatorial level, to convince them of the efficacy of their course. Perhaps there is a way your agency could incorporate the same approach to get the message across.

Nativeseeds.org is a great website to look for the kind of  nonprofit that recoups 30 to 40 percent of their income through sales of food, crafts and products.

As organizations, we often have fabulous ideas at the programmatic level. How can this be monetized? Check out www.swop.net to look at how they developed their ‘products’ to move from a text book on Chicano studies (which had resulted from a ‘market opportunity’ they identified, because this area was being ignored in traditional history programing). So they created a text book, which then became a DVD, a coloring book, a mural magnet series, a t-shirt etc. This is a pretty politically-minded right-on organization and they’re selling refrigerator magnets? Maybe it’s time we questioned the stereotypes! If the content is solid, the expression of that content can play out across a number of media.

Another example organization is www.globalexchange.org. They are a human rights organization that focuses on tourism. Their proposition – both a value proposition and an advocacy proposition is “What would happen if we brought the people who were interested in an international social cause to the place in the world where that cause is actually playing out. A week in the jungle with the Sandinistas? Not quite. Nevertheless it has resulted in an organization that has 3 million dollars a year in tourist income. Is there a way we can  involve people in the excitement of our day-to-day mission? And then charge them for the pleasure?

A food bank was also considered in our discussion, the Food Bank of Western Massachusetts. www.foodbankwma.org. They used a CSA model for a farm they purchased. The plan involves CSA shareholders paying the full cost of $200k per year but only taking half of the food that is generated. The rest goes to the food bank.

One final example was www.pedalpower.org, which was a community bike organization that had a fascinating  business proposition. Rather than upset the existing marketplace, which you could argue something like the CSA proposal might do, they presented themselves to existing business organizations an entity that would build the market. They would focus on the low-end of the market and offer people sliding scales of rates. They could either fix their own bikes with supervision or with Pedalpower stepping in with physical help. They sold this to the other businesses in the market with the explanation that they were drawing people in at the bottom end of the market. Once people entered the market and wanted to find more sophisticated bikes, they would seek out the other businesses in the market. It worked and the other businesses began to offer them free spare parts and other help.

The final example we considered was www.farestart.org in Seattle. Like Catalyst Kitchens and other organizations, they focus on teaching culinary skills and how to hold a job. They also help with job placement. This was an organization that acutually switched from being a for-profit to a nonprofit organization.

We have all been victims of workshops with consultants who want to draw you in with the promise of education, which is really a promotion for their services or their books. I have no reservation in letting you know that Andy’s book is simply essential for any nonprofit hoping to focus energy on new sources of earned income. It will make you think long and hard about how earned income could work for your organization.

Good luck, and let’s start shaking up the old nonprofit/business divide even further. We have much to learn from each other.