While efforts by nonprofits to operate for-profit ventures have been heralded as a way to generate revenue, a new report released by a leader in social enterprise identifies inherent difficulties.
After interviewing other nonprofits and studying its parent group’s own social-enterprise venture, the Seedco Policy Center compiled a report detailing the pitfalls of such efforts, as well as offering pointers for making them work.
Social enterprise can generate income to help nonprofits further their missions, the report says, but it is often difficult to meet the competing needs of clients, customers, funders and investors, all of which can lead to frustration and failure.
Despite the careful planning Seedco conducted prior to launching its Community Childcare Assistance effort, which was to provide back-up child care for low-wage workers, the initiative encountered many obstacles, the report says.
Through its experiences, Seedco recommends social-enterprise ventures used mixed-revenue models, rather than relying on their ventures to be completely self-sustaining.
Many successful ventures have received subsidies from funders, or through paying lower wages, the report says.
The report also recommends having an extensive incubation period for projects, as well as launching the effort in several locations when possible in order to gain insights into what is and is not viable.