Mind the Gap Strategy #2

The Nonprofit Conversion Program

Craig Blakely
by Craig Blakely | Apr 01, 2013
| 1 Comment

Summary:

Until the Great Recession, flush foundation and government funding allowed non-profit organizations to grow and multiply, to follow funding into areas way beyond their original mission or core competence, to dramatically increase overhead costs, and to divert entrepreneurial talent that should have gone into for-profit enterprises in the inner city. With funding cutbacks, the nonprofit sector is clearly unsustainable and needs to dramatically restructure. The Nonprofit Conversion Program would take a page from the defense conversion process after the end of the Cold War when the U.S. Economic Development Admin. conducted a structured assessment of the talent, technology, and customer and supplier networks of defense contractors and recommended ways they could merge or develop new non-defense products and services. To soften job losses, the grant would fund a structured nonprofit conversion process to identify strategic mergers and new ways to reduce overhead, reduce demand for grant funding, generate more revenue from providing services, and if possible become self-supporting social enterprises. Advice would be sought from the leading social enterprise organization in the U.S. – the Minnesota-based Social Enterprise Alliance – to identify technical assistance providers to help nonprofits undergo the assessment process described above. Hard questions will have to be answered about the original mission of the organization, its overhead and funding trends, its current core competencies, its competitors and potential partners, new missions it might explore, and new revenue sources it might generate from new services it might provide. And advice would be sought from existing foundations on how they might offer successful “graduates” of the nonprofit conversion process transitional funding to help them implement the most viable conversion strategies by merging, specializing, becoming social enterprises, or going out of business.

About You

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About You

First Name

Craig

Last Name

Blakely

City

Saint Paul

County

USA

Country

United States, MN

Website (if you have one)

Names of others who helped contribute to my idea

How did you hear about the Forever Saint Paul Challenge?

Email.

About Your Organization (if applicable)

Organization Name (if applicable)

Saint Paul Department of Planning and Economic Development

Organization Website

Organization Phone

Organization Address

25 West 4th Street, Suite 1300

City

Saint Paul

Organization Country

United States, MN

Your idea

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Title of your idea

Mind the Gap Strategy #2: The Nonprofit Conversion Program

Give us the highlights of your idea for making Saint Paul great (2,000 characters maximum or approx. 250 words)

Until the Great Recession, flush foundation and government funding allowed non-profit organizations to grow and multiply, to follow funding into areas way beyond their original mission or core competence, to dramatically increase overhead costs, and to divert entrepreneurial talent that should have gone into for-profit enterprises in the inner city. With funding cutbacks, the nonprofit sector is clearly unsustainable and needs to dramatically restructure. The Nonprofit Conversion Program would take a page from the defense conversion process after the end of the Cold War when the U.S. Economic Development Admin. conducted a structured assessment of the talent, technology, and customer and supplier networks of defense contractors and recommended ways they could merge or develop new non-defense products and services. To soften job losses, the grant would fund a structured nonprofit conversion process to identify strategic mergers and new ways to reduce overhead, reduce demand for grant funding, generate more revenue from providing services, and if possible become self-supporting social enterprises. Advice would be sought from the leading social enterprise organization in the U.S. – the Minnesota-based Social Enterprise Alliance – to identify technical assistance providers to help nonprofits undergo the assessment process described above. Hard questions will have to be answered about the original mission of the organization, its overhead and funding trends, its current core competencies, its competitors and potential partners, new missions it might explore, and new revenue sources it might generate from new services it might provide. And advice would be sought from existing foundations on how they might offer successful “graduates” of the nonprofit conversion process transitional funding to help them implement the most viable conversion strategies by merging, specializing, becoming social enterprises, or going out of business.

Website address (if applicable)

Innovation

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What makes your idea different or unexpected? (4000 characters maximum or approx. 500 words)

Though our nonprofit industry cluster is clearly unsustainable, it is not polite to say so. Most agencies stumble along from grant-to-grant hoping something will save them. But if a similarly-sized for-profit sector were facing similar threats, governments and foundations would by now already have mobilized resources and developed strategies to soften the blow. The idea that nonprofits can be equated with defense industries is jarring, given their different scales and purposes. But the main lesson of defense conversion is still relevant: the easiest way to save jobs in unsustainable industries is not to liquidate the businesses and retrain employees, but to use the talent, technology, and relationships of existing nonprofits to develop new products and services for new customers.

Impact

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This Entry is about (Issues)

How will your idea make a difference in Saint Paul? (4000 characters maximum or approx. 500 words)

Even as nonprofits have dramatically increased overhead, duplication, and competition for funding, another model – the social enterprise -- has matured, assisted by the Social Enterprise Alliance, and embodied by organizations like Rebuild Resources. Though it will require a paradigm shift, and great entrepreneurial energy and imagination, the impact of the Nonprofit Conversion Program will be easy to see as formerly small and separate nonprofits merge into more effective and more specialized organizations that have much lower overhead costs and generate much more revenue from the products and services they provide. In the end, the impact of this program will be visible in the survival of a leaner and more effective nonprofit sector in Saint Paul.

Sustainability

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Why do you think people will recognize or remember your idea after it comes to life? How might it inspire others to do something similar in their community? (4000 characters maximum or approx. 500 words)

The question is hard for most nonprofits to answer for it is hard for an individual to admit that he has lost his way, let alone for any organization to admit that it is unsustainable, even with $1 million of extra “mad money.” But helping the cultural, social service, and community development agencies that comprise the nonprofit industry cluster become more sustainable is the essence of this proposal. Fortunately the structured process of defense conversion provides a model nonprofits can follow to ask the tough existential questions about how they plan to survive the coming shake-out. If successful, the Nonprofit Conversion Program will become a national model for restructuring an unsustainable nonprofit sector by identifying new partners, new missions, and new revenue sources.

Additional resources for this competition are available for download here:

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