“The Hybrid Ideal”—John Fulwider on the Potential of Nonprofits with For-Profit Business Models

Starting a nonprofit means diving into a fiercely competitive market that’s getting fiercer. Intimidating? Yes. The cold, hard truth? You bet.

Your organization’s philanthropic motives may set you apart—but only from your perspective. In reality you’re a worthy organization in a sea of other worthy organizations. But a pioneering nonprofit business strategy could make the difference between your new nonprofit and its competitors.

John Fulwider is a coach, speaker and consultant who partnered with Mike Renken, executive director of NeighborWorks Lincoln, to help large and small nonprofits of various missions in their Lincoln, Nebraska community. Fulwider and Renken sought solutions for nonprofits that need to diversify their revenue sources. So they hosted a group discussion on integrating for-profit business practices in nonprofit organizations. Their session focused on a webinar sponsored by the Stanford Social Innovation Review, titled “Hybrid Ideal: Combining Nonprofit and For-Profit Models.”

A hybrid business model, which strikes a balance between social mission and commercial enterprise, is a promising approach for your nonprofit. As Fulwider explained, “Increasingly, as government funding sources have dried up and competition for foundation grants has gotten more intense, organizations need to look to earned revenue opportunities.” As made plain by the enthusiasm among participants in the discussion, the webinar’s proposal for a hybrid ideal has great potential.

To get started on hybridizing your nonprofit’s income strategy, Fulwider advises finding services your nonprofits can charge for, but on a sliding scale. The method “turns your constituent into a customer.” But, of course, “the ultimate goal is the mission. If [your]…organization is considering a hybrid business model, point everything toward the mission.”

Matthew Lee, a Harvard Business School Ph.D. candidate, has as much hope for nonprofit hybrid business models as Fulwider. “Nonprofits can successfully engage in commercial markets more than they have in the past,” Lee said in the webinar. Indeed, the marketplace seems ripe for a productive disruption like this one. Experts cite a bleak fundraising outlook for the rest of 2012—and, more than likely, 2013.

So shake up your nonprofit’s income strategy with a daring business model. To learn more about integrating your nonprofit’s business model with for-profit revenue tactics, consult “In Search of the Hybrid Ideal.”

  • Thanks for covering our webinar, Jill, and thanks to the many talented and creative social entrepreneurs and social sector leaders who attended along with us.

  • paul howard

    The whole concept of “non-profits” is flawed because the government has neither the motivation nor means to monitor them. Jumping to “non-profit” ownership of wholly-owned for-profit subsidiaries in that environment only proves the farce – at a huge cost to US taxpayers.

    • Cornu Copia

      Are you always this negative , petty and fault finding or did you just wake up on this particular morning with a stank attitude about life?

  • Tammy Somisunderstood Linden

    I am looking for some advice – I have a hybrid design and what I need is something to help me link it together – like the nuts and bolts – what comes first – the chicken or the egg? I see that my project is absolutely a non profit – but I don’t want the headaches of the board and all the filings. That said, I wanna make some money and do what I am passionate about – giving to the community. I am happy that I am not the only one who has this situation out there – now need to find how this thing will work, legally, financially and personally.

    • Lincoln J.L. Arneal

      Tammy,

      I think you have two options for your governance:

      1. Go the route of being a full-fledged nonprofit; this will allow you to make a difference in community and stay focused. There are more hoops to go through as you

      2. Become a for-profit startup business. This saves the work of the board and some legal filings, but you will not receive the same tax breaks and other benefits as a nonprofit.

      Ultimately it comes down to what is your mission? Is your mission about giving back to the community and making a difference? If so, then you are more like a nonprofit. Or is your goal to make this a money-making operation beyond sustainability? If that’s the point, then you are better off being normal incorporated business and not filing for nonprofit status. You can still make a difference in your community, but the overall purpose is slightly different.

      If you have any further questions, you can contact John Fulwider via his website (http://johnfulwider.com/)

  • I would like to move forward with this hybrid model. What should be my next move?

  • Tom-Scott Gordon

    “Sustainability” is the misnomer throughout. Nobody sustains in either capacity without the funds to keep the mission in play. I see ours as a Dula-platform operation, destined to occupy Two different buildings, just to appease all comers. As our kids learn to cook and develop baseline social skills they become eligible to join into the for-profit side of our proposed operations, being a restaurant and manufacturing facility… Why they say I need a really special PAIR of lawyers is beyond me. Once we’re on mission we should not need to retain either.