Tim McCarthy and the Business of Good

Newsletter: Revenue Recipes for the Depression

Mar 1, 2009 11:11:00 AM / by Tim McCarthy

The days of traditional fund raising from traditional methods such as direct mail and golf tournaments are declining and will be replaced by more stable revenue generators such as social business models. [more]

Most of the work I do with businesses and non-profits ultimately relates to driving revenue.

Daily I work on innovative fund raising methods for our non-profit partners and revenue generating ideas for our business collaborations.

It's a tough job that few like to - but someone has to - do.

My salesmen brothers, Miller and Terry, say "nothing happens until somebody sells something."

So, I wonder, if nothing happens without sales, why do most people avoid it?

Maybe we just hate rejection. In business, no one wants to be told a client no longer loves you. And who wants to hear from a friend that they won't pay to attend a fund raising reception with you?

This thought leads to the purpose of this article. That is, during this difficult economy when there is less total money available, we have to work harder and smarter to generate revenue.

During the boom times (and our boom was a very long boom) almost any sales strategy worked. Traditional methods were fine, whether you were in the advertising business or the fund raising business.

In my advertising business, though the concept was unique, our sales and marketing were traditional.

In one of my non-profit ventures, we built a traditional golf tournament using standard methods from $65,000 to $200,000 net in four years.

But now those days are over, at least temporarily.

On the business side, I'm less sure that innovation is the answer. I believe in fact that our main business partnerships must simply go back to the fundamentals of reaching out to more prospects and getting in front of them.

We are in a situation much like that old United Airlines television commercial where the boss gathers everyone in the conference room to tell them they just lost their biggest client. The folks in the room ask "what are we going to do about it?" and he walks around handing each one an airline ticket to the city where their clients are and says "we're going to go and visit all our clients."

The punch line is when they say "what are you going to do", the boss shows them his airline ticket and says "I'm going to visit the client we just lost."

The businesses that will make it to the other side of this mess will be the ones who hunker down and do what they already do well, better. And they will raise their revenue simply by getting out there and being with their clients and prospects more.

It's different in fund raising, in my opinion.

In fund raising, I believe that traditional methods no longer work.

That is, there are only so many golf outings and auctions people can attend, particularly if they just lost their job. And direct mail has been on the decline for years so how would we expect that to get better in a recession?

Donors' budgets are dwindling with their stock market holdings and non-profit endowments are suffering in the market's dive as well.

But something even more threatening, something that began before the crash, is that our donor profile is changing dramatically. The number of people who are happy to just write a check and be happy to see their name in your program is decreasing rapidly.

On the other hand, the people who want to ENGAGE in philanthropy and in social business ventures are on the rise, led by unique and diverse characters such as Warren Buffett, Bill Gates, Sergey Brin, Bill Shore and Muhammad Yunus.

Our website's featured "Bookshelf" reading this month is Yunus' new book, "Creating a World Without Poverty." Among other points, the book relates to the need for new revenue generating models for our missions. Yunus believes we are in a time of great change in the business of good and stimulates my thinking about how we might get in the flow of that great change.

Imagine if instead of putting on another golf tournament, I could help someone raise twice as much by marketing hand-made clothing made by the very poor women we met in El Salvador?

What if, instead of having a $100,000 direct mail budget, I used the same money to develop a tea co-op for the African poor to be sold in Cleveland area coffee shops.

And here's my favorite: what if we developed a bakery in Cleveland staffed by inner city high school dropouts who would while working for us become skilled master bakers?

These are the kinds of non-traditional revenue streams that could sustain and build the missions of wonderful non-profits such as International Partners in Mission and Saint Martin DePorres High School, two non-profits we've recently featured on our website.

Businesses of good have shown growing consumer appeal in the last decade. Our kids have shown a desire to use products and services that also sustain social missions.

So, my recipe for revenue in this down cycle for non-profits is to begin changing your revenue model. If at all possible, start a social business.

It's Covey's "win-win" on steroids.

Tags: Monthly Newsletter, Social Impact & Responsibility, Business & Entrepreneurship, Organizational & Operational Excellence

Tim McCarthy

Written by Tim McCarthy

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