NonProfit Business Ventures on the Web

H. C. Covington (
Tue, 2 Dec 1997 04:29:22 -0600

H. C. Sonny Covington @ I CAN! America
Lafayette -  New Iberia, LA  70563-1722
(318) 364-6239  Fax 318-367-9141
December 1997

Business Ventures on the Web

While most nonprofits initiate business ventures for the purpose of
generating new revenue, some have other goals as well. One of the most
important of these is to provide work opportunities for the people they
Organizations that deal with the homeless have been particularly active in
this regard. Besides housing and drug or mental health treatment, the most
pressing need of homeless individuals is employment. That's why an
increasing number of homelessness groups are creating their own business
enterprises -- to produce a mechanism for returning their clients to the

Examples of these enterprises have been assembled on the World Wide Web
under the rubric of Homeless Economic Development (HED). Impact Online,
which describes itself as the first Web-based nonprofit, has launched the
site as part of its ongoing effort to assist other nonprofits in using the
Internet for outreach and communication.

The site can be accessed on the World Wide Web at the URL The examples gathered there cover a broad
spectrum of business venture opportunities. They also suggest the range of
business partnerships that are being formed between nonprofit agencies and
for-profit firms.
Currently, all the organizations with pages on the site are grantees of the
Roberts Foundation's Homeless Economic Development Fund. Jed Emerson,
director of the Fund, sees the Web site as a good vehicle for educating the
public about the problems of homelessness. "It's also a way for
practitioners to find out more about the kinds of social entrepreneurship
that are out there," he says.

Emerson emphasizes that the site is not intended as a tool for "selling" the
idea of business ventures. "Obviously, we believe in the value of nonprofit
entrepreneurship," he says. "But it's not for everyone." And it isn't easy.

When you really become a social entrepreneur, everything changes. The whole
process involves a radical change in the way nonprofits behave, so it can be
extremely disruptive for an organization. But that's also one reason we like
it. To succeed, you have to think outside the box."

Emerson notes that in its first three years of operation, the Homeless
Economic Development Fund came in under budget because he couldn't find
enough organizations with the capacity to execute enterprise development
successfully. "Most nonprofits have a poor grasp of financial accounting,
don't understand the markets they are entering, misread their consumers,
haven't anticipated staff/board opposition to the idea of creating a
business, and so on," he says. In other words, they simply aren't prepared
to enter the commercial marketplace. From a funder's standpoint, those
organizations' business plans aren't worth investing in.
"For the most part, we award planning grants -- from $10,000 to $15,000,"
Emerson explains. "We don't expect an organization to have a fully formed
idea of what they're going to do. But they do have to have the capacity to
carry through on an idea. We help them plan, and supply the capital they
need to get started. I'd rather lose that seed money, if an organization
comes to the conclusion that a particular venture isn't right for them, than
have them lose an even larger amount and jeopardize their other programs as
a result of poor planning.

"Even if the business venture doesn't come to fruition, the process can lead
to a whole new level of sophistication on the part of a nonprofit," he says.
"It gets to be smarter about how it manages other aspects of its work."

Later this summer, the Roberts Foundation will publish a book-length report
on the Homeless Economic Development project. An excerpt from that book,
about why nonprofit business ventures often fail, appears on page 14.

To find out more about the successful enterprises collected on the HED Web
site, we spoke with representatives of several of them. In addition, we
asked about the impact that their exposure on the World Wide Web has had --
and what role they think the Internet can play for nonprofit business
ventures in general.
Ashbury Images

The impetus for Ashbury Images, a supplier of silk-screened T-shirts and
other garments, came from a homeless-shelter resident who had once worked as
a screen printer. Founded in 1990, the business grew in its first three
years to take in more than $75,000 in revenue and employ four formerly
homeless individuals at full production.

Today Ashbury employs people from several Bay area shelters. Operating as a
business rather than a social service agency, its goal is to instill a sense
of self-sufficiency and accountability by providing meaningful employment at
a "livable wage."

"Our best marketing tool has been word of mouth," says Marc Coudeyre,
Ashbury Images' enterprise director. "People who know us tell their friends,
and so far that's generated all the business we can handle. But we'd like to
be able to move and expand, and when we do, we may be in a better position
to make use of the Web site."

Rubicon Programs

Of all the pages at the HED site, the ones for Rubicon Bakery and Catering,
a division of Rubicon Programs, Inc., in Richmond, Calif., are easily the
most attractive. They were professionally designed by the I SPOT Design
Group, which also maintains them.

Rubicon Programs trains homeless and disabled people to work in the food
services industry. Rubicon Bakery and Catering gives them a chance to gain
hands-on skills in a real workplace environment. During their training,
participants in the program work alongside professional bakery staff to
"prepare specialty desserts for the wholesale market, cafeteria-style
lunches for the Rubicon Day Center, and high-quality meals for catered

"Mainly we sell premium desserts to Bay area grocery chains and
restaurants," explains Carrie Portis, business enterprises manager at
Rubicon Programs."Since we don't ship outside the area, we don't really need
to advertise our products around the world."

But now that her organization is in the process of revamping its promotional
materials, she is trying to figure out how to use the Web site more
effectively. "One thing I learned is that designing a good Web site is
relatively easy," she says. "Things like retail packaging and house displays
are a whole lot harder."

Larkin Business Ventures

Larkin Business Ventures (LBV) is an outgrowth of Larkin Street Youth
Center, a San Francisco agency that helps homeless youth find viable
alternatives to life on the streets. LBV seeks out innovative business
opportunities that can employ young people with limited job skills.

Its first two ventures are a Ben & Jerry's ice cream shop in San Francisco's
Marina District and another Ben & Jerry's franchise that puts vending carts
at various locations around the city, including Candlestick Park. All of the
young people employed in the two operations have completed the Larkin Street
Vocational Training Program and participated in Ben & Jerry's own training
program, "Scoop U." Profits from the two businesses are directed back to LBV
to build additional companies and support further training and employment
initiatives for homeless youth in San Francisco.

The LBV pages on the Homeless Economic Development Web site provide basic
information on the organization, and illustrate the scoop shop with a couple
of color snapshots. So far feedback has been minimal. "An ice cream store is
a neighborhood business," says Sharon Wurtzel, LBV's president "As a
marketing vehicle for the shop, the Web isn't necessarily right. But as a
marketing vehicle for the organization, I think it can be quite effective."

Hospitality House

Hospitality House has served San Francisco's Tenderloin district since 1967,
when a huge influx of young people migrated to the neighborhood during the
so-called "Summer of Love." A coalition of local churches, universities and
businesses formed the organization as an alternative to traditional agencies
that were deemed unresponsive to the needs of this new population. The
organization uses the venerable "settlement house" approach, which has been
assisting newcomers since the turn of the century, to provide direct
services and encourage inter-agency cooperation.

Hospitality House's Web page describes it as "the only local agency offering
immediate survival assistance and transitional support services to both
homeless youth and adults." In addition to emergency shelter and housing,
the agency offers job placement, computer training and other vocational
development activities, individual counseling, and mail/messages services.

Its commercial arts program provides free access to instruction, materials,
studio space, and exhibitions. ArtStart, the enterprises arm of the program,
functions as the artists' agent. Half the revenues generated by this
operation become commission payments to participants in the program.

ArtStart produces litho-offset and one-of-a-kind handmade holiday cards,
300,000 of which have been sold since 1988. Homeless and low-income
participants are also employed in printing, mail-order distribution, and
sales of the cards.

The Hospitality House Web page tells visitors that they can "choose from our
exclusive selection or talk to us about incorporating original designs or
your company logo." It also urges visitors to support the program: "When you
send Hospitality House cards, you are not only giving festive and
distinctive greetings to family, friends, clients and colleagues, you are
giving an opportunity to homeless and low-income men, women and youth..."

Unfortunately, the page includes no e-mail response form. There's mention of
a "cyber store" to complement the operation's retail outlet in downtown San
Francisco, but neither the address of the retail outlet nor the URL for the
"cyber store" is listed on the page, which makes it difficult for anyone to
follow through with an order.

Pioneer Human Services

Seattle-based Pioneer Human Services is the oldest and largest organization
represented on the HED Web site. Founded in the early 1960s, Pioneer serves
more than 3,000 clients, employs approximately 350 people, and produces $16
million worth of goods and services annually.

Its core program integrates residential treatment with vocational education.
Residents receive on-the-job training at one of four Pioneer-owned
businesses. These include a nonprofit real estate holding company, a light
metal fabrication facility that produces aircraft parts for Boeing Corp., an
institutional food service that prepares 300,000 meals annually, and a
wholesale food distribution business that operates in five western states.

Sales and services from these enterprises account for two-thirds of
Pioneer's $25-million annual budget. The rest comes from government
contracts and residential and treatment fees.

According to Cameron Fellows, senior vice president of Pioneer Human
Services, their HED Web page has yet to generate much response. "But we
really didn't expect any," he says. "We're happy to be there and tell our
story. But we're not trying to get anything out of it. We're a totally
self-sustaining 501(c)(3), so we don't have to chase contributions."

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