Should Not For Profit Organizations have Revenue Goals?

Cup of Coffee

I had a wonderful meeting over a cup of coffee at Perk Up this morning with John Fallon, the CEO of NPower Indiana. John has been in the job for about a year and a half, and this was the first time we’d talked. I thoroughly enjoyed the conversation. One of the topics that came up was the notion of Social Entrepreneurism. John defines it as finding ways for Not For Profit organizations to generate some revenue for their cause other than thru donations. Essentially, selling goods or services whose proceeds fund the operation of the organization. I define it a little differently, but that’s for another post. The question that must be answered is whether NFPs should have revenue goals.

I think that many long-time members of the Third Sector believe that NFPs cannot generate revenue. I’ve heard as much from more than one board member. Nevermind the success of revenue generating organizations like Goodwill Industries, there seems to be a general disgust on the part of many NFP leaders at the thought of revenue generation thru sales. John made the strong argument that this may be the way to keep an organization afloat since many funders don’t want to contribute to general operations, believing that “overhead” is not worthy of their dollars. (Another topic for a future post.)

I support the concept of NFPs generating revenue for operations thru sales. I hesitate at the point of giving them revenue goals because I fear that achieving those easier-to-measure-than-mission-outcomes goals will become the tail that wags the dog. On the other hand, if the same process that guides the decision process for fundraising events is used, a good organization can generate more money for less effort than planning another golf outing or fancy dinner. I, for one, would much rather purchase a product or service that I can use than attend another event where everyone stares at me because, that’s right, I came and didn’t put on a tie.

It’s OK with me, and John I think, for a nonprofit organization to generate revenue from sales to support its mission. It really is OK with the IRS too. So, what’s stopping more organizations from taking a shot at capitalism to keep their cause alive?

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