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PART III:
APPENDICES
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As is true of all efforts of this
size, this book is the end prod-
uct of many months and many
hands. The material present-
ed herein is the result of three
levels of labor: writing, editing, and cri-
tiquing. With one exception, all included
material went through numerous rewritesby Jed Emerson and Fay Twersky. As the
senior coordinator of this project, Jed
Emerson takes full responsibility for materi-
al presented in this book, statements made,
and any mistakes or unintentional misrep-
resentations which may be discovered after
publication. In addition to the work of the
two content editors, Lydia Ely contributed
significantly as copy editor for the entire
document and also provided content feed-
back as appropriate.
The writing process which resulted in
this book took several forms. First, in somecases, grantees wrote an initial report pre-
senting their perspective on their work. This
report was then reviewed by the staff of
Harder+Company Community Research,
who wrote their own evaluations based
upon the submission of grantees, their
independent review of the written record,
and, in some instances, interviews with key
staff, program participants, or board mem-
bers. Second, specific individuals were
approached with requests to write chapters
from their perspective. Those individuals
are identified below. Third, the director of
the HEDF took this opportunity to write a
number of chapters to reflect on his learn-
ings over the past years. His work was thencritiqued by experts in the field, who are
credited below. If we accidentally did not
include your name in the following credits,
please call Jed to receive your immediate
and heartfelt apology. This has been a long
six months...
We would like to take this opportunity to
thank all those who supported this effort
over the months it took to complete. First,
we would like to especially thank the pro-
gram participants and enterprise employ-
ees who have made these businesses the
successes we feel they are. Second, wewould thank the many grantees who agreed
to honestly discuss their experiences with
us and openly reflect upon the challenges
weve confronted. In addition to the writers
identified below, each of the folks who pro-
vided feedback and comments were invalu-
able to the creation of what we feel is a
pretty good document. We thank you all!
APPENDICES3 407
Writing Credits
Appendix A
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We would also like to express our apprecia-
tion to the staff of Pacific Foundation
Services and Harder+Company Community
Research. We are grateful for the patience
and support of each of you.
Specific Credits:
EXECUTIVE SUMMARY:
JEDEMERSON.Critique by: Vickie Grove,Lydia Ely, Fay Twersky.
Part One: The Organizations and
Lessons Learned
Case Statements:
Studies:
Rubicon Programs, Larkin Business Ventures,
Oak Street House, Central City Hospitality
House, Youth Industry/Healing Kidz: FAYTWERSKY;Critique by: Jed Emerson, AgencyProgram Staff, Lydia Ely.
Summaries:Asian Neighborhood Design, Berkeley
Oakland Support Services, Community
Housing Partnership, Conard House, Career
Choice Project, Keystone Community
Ventures, Manos, InnVision, San Francisco
Network Ministries, Santa Clara Unified
School District South Of Market
Foundation, Women and Their Children
Project, Project WATCH, Oakland Workers
Cooperative Painting Project: JENNIFEREICHMAN (Harder+Company CommunityResearch),JED EMERSON, FAY TWERSKY;
Critique by: Agency Program Staff.
San Mateo Emergency Shelter Network:
CHRIS SUTHERLAND, Peninsula CommunityFoundation.
San Francisco Coalition on Homelessness,
Berkeley Ecumenical Chaplaincy to the
Homeless, The Story Of Three Vineyards:
Homeless Garden Projects: JED EMERSON,Critique by: Fay Twersky, Agency Program Staff
The Numbers:
TrueCost Accounting: A Financial Analysis of the
Non-Profit EnterpriseExperience:JEDEMERSON;
Critiqued by: Catherine Connolly(Independent Consultant), Cynthia Gair
(Keystone Community Ventures); Phil Perry
(Professor of Finance, St. Marys College);
Robert Sher (Associate Professor of Small
Business Development, St. Marys College),
Joel Ficks (Small Business Consultant), Jill
Storey (Keystone Community Ventures).
A Cost-Benefit Analysis of EnterpriseCreation
Funding: Net Present Valueand Projected Returns:
TOM FOSTER (CALResearch), IRAJ IMAM(CALResearch); Critique by: Jed Emerson.
Part Two: Perspectives On The Practice
Of Non-Profit Enterprise
The Employee Perspective: Employee focus
group facilitator and chapter author: ANNEMURRAY (Harder+Company CommunityResearch); Critique by: Fay Twersky, Jed
Emerson
TheBoard of Directors Perspective:JEDEMERSON,based on interviews and material submis-
sions by Penelope Douglass (immediate
past chairperson, Larkin Business Ventures)
andDIANE FLANNERY (CEO, Larkin BusinessVentures); Critique by: Vickie Grove, Lydia
Ely.
TheFunders Perspective:JEDEMERSON; Critiqueby: Alvertha Penny (Hewlett Foundation),
Carol Guyer (James C. Penny Foundation).
Legal Considerations of Non-Profit Enterprise
Development: Brad Caftel, Attorney (NationalEconomic Development and Law Center,
Oakland, CA).
The Non-Profit Franchise: The Ben & Jerrys
Partnershop: CHARLES MULLEN; Critique by:Jed Emerson, Vickie Grove, Diane Flannery.
The Competitive (Dis)Advantage of Non-Profit
408 3 THEROBERTS FOUNDATION:A PROGRESSREPORT
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Enterprise: JED EMERSON; Critique by: FayTwersky
Grants, Debt, and Equity: TheNon-Profit Capital
Market and Its Malcontents: JED EMERSON;Critique by: Dan Leibsohn (National Low-
Income Housing Fund), Paul Sussman(Northern California Community Loan
Fund), Cynthia Gair (Keystone Community
Ventures); Alan Fisher (Community
Reinvestment Committee), Wendy Fleischer
(Corporation for Supportive Housing), Jill
Storey (Keystone Community Ventures).
The Positioning of Non-Profit Enterprise in
the Global Economy:
Understanding theWorld, theRegion, and the
Prospects for Non-Profit Enterprise in theNew
Century: JED EMERSON; Critique by: JimFawley (Associate Professor, St. Marys
College), Ed Skloot (Executive Director,
Surdna Foundation), Carol Guyer (James C.
Penny Foundation), Eric Hanson (Associate
Professor, St. Marys College).
Writings FromJapan, Canada and NewZealand:
NAOKI MORIKAWA, PAUL BORN, WARRENSNOW; Critique by Jed Emerson, Lydia Ely.
Understanding thefor Organizational Developmentof Non-Profit Enterprise:JEDEMERSON; Critiqueby: Vickie Grove, Lydia Ely, Fay Twersky,
Alan Fisher, and Paul Sussman.
Considerations for Individual Development:
Report by Staff of Asian Neighborhood
Design.
Self-Employment and Very Low-IncomeWomen:FAYTWERSKY; Critique by: Jed Emerson,Agency Program Staff.
Issues Concerning theEvaluation of Non-Profit
Enterprise: FAYTWERSKY; Critique by: JedEmerson.
Conclusion: Cross-Cutting Issues for theField of
Non-Profit Enterprise: JED EMERSON andFAYTWERSKY; Critique by Vickie Grove, LydiaEly.
Part Three: Appendices
Appendix A: Writing Credits
Appendix B: Recommended Readings and
Resources:JEDEMERSON
Appendix C: Recommended Listenings:
Sole responsibility ofJED...
Appendix D: Jed Lettermans Top Ten List:Final Last Words of Failed
Social Entrepreneurs:GUESS
APPENDICES3 409
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Ed Skloot, THE NON-PROFIT ENTRE-
PRENEUR (New York: Foundation
Center, 1987). This is still the bible
for the field. In a relatively brief
number of pages, Skloot presents
information on legal concerns,
organizational development, and a
number of other issues of interest tothe social entrepreneur. A great
overview document for the reader
who wants to know it all in as little
time as possible.
Michael Sherraden,ASSETS AND THE
POOR: A NEW AMERICAN WELFARE
POLICY(Amonk, NY: M.E. Sharpe,
Inc., 1991). Welfare as asset accu-
mulation. An excellent and chal-
lenging evaluation of current
welfare policy which moves the
debate away from disbursement
and toward development.
Sherraden also discusses Individual
Development Accounts, which holdgreat promise for the future of
wealth accumulation on the part of
low-income people. All in all, a
great and provocative read.
National Economic Development
and Law Center, TAKING THE
ENTERPRENEURIAL APPROACH: VOLUMES
I-III (Oakland, CA). One of the most
comprehensive collections of arti-
cles and resources available. Each
volume addresses another step in
the process of non-profit enterprise
creation. While some of the articles
could be updated, the fundamen-
tals presented in this collection arecritical for those interested in an in-
depth discussion regarding a wide
array of issues. A solid addition to
your library and useful resource. (At
a collective width of nearly three
inches, it is not a good stocking
stuffer, however!) (510-251-2600)
410 3 THEROBERTS FOUNDATION:A PROGRESSREPORT
Recommended Readingsand Resources
Appendix B
Awide variety of resources are available to the
social entrepreneur in search of information.
The following are some of our favorites. If
you have all these, you are pretty much set.
If a book or resource has been particularly
helpful to you, please notify our office so we might share itwith others!
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Martin Fridson,FINANCIAL STATEMENT
ANALYSIS: A PRACTITIONERS GUIDE
(New York: John Wiley & Sons,
1991). Killer guide to tearing up
financials. Teaches you where peo-
ple hide bad numbers and how to
find them. Good to know, fun touse. You should probably not
approach this book until after you
have developed some basic
accounting and financial analysis
skills, but dont wait too long. You
should know your numbers better
than your accountant does!
David Hammack, Dennis Young,
Eds., NON-PROFIT ORGANIZATIONS IN
AMARKET ECONOMY: UNDERSTANDING
NEWROLES, ISSUES ANDTRENDS (San
Francisco: Jossey-Bass Publishers,
1993). Its a new world, and youd
better know where you fit in! This
book is a blast, covering a lot of
ground and introducing a number of
issues. Each chapter stands alone,
so you dont have read it all at one
sitting. Tons of fun.
Leonard Fuld, THE NEWCOMPETITOR
INTELLIGENCE: THE COMPLETE
RESOURCE FOR FINDING, ANALYZING
AND USING INFORMATIONABOUTYOURCOMPETITORS (New York: John Wiley
& Sons, 1995). Ethical but aggres-
sive guidance for doing just what it
says. Many non-profit managers are
great at researching public policy or
social issues, but cant find their
way out of a stack of books in the
reference section of the business
library. This book is all you need to
research the industry youre inter-
ested in entering by gathering infor-
mation on a lead player you may
wish to emulate.
Michael Thomsett,THELITTLE BLACK
BOOK OF BUSINESS MATH (New York:
American Management Association,
1988). For those of us who flunked
high school algebra and have
always hated numbers. If youre
going to run a business you have to
internalize the mantra, Numbers
are our friends. This book is a con-
cise, easy guide to learning what
you should have known years ago.
Its petite size makes it easy to stick
into your briefcase for quick consul-
tations prior to those meetings withbankers...
Jae Shim and Joel Siegel, THE VEST-
POCKET CFO (Englewood Cliffs, NJ:
Prentice Hall Books, 1992). For
where theLittleBlack Bookdrops off.
TheVest-Pocket CFO will actually not
fit in your vest, but is excellent.
Explains ratios, break-evens, and
more financial analysis tools/issues
then you will probably ever use.
Bob Stone, SUCCESSFUL DIRECT
MARKETING METHODS (Lincolnwood,
Illinois: NTC Business Books,
1995). A GREAT reference book for
the small business person sans
marketing department. Focused,
well-researched advice to get the
most out of your marketing efforts.
Robert Hisrich and Michael Peters,
ENTREPRENEURSHIP: STARTING, DEVE-
LOPING AND MANAGING A NEW
ENTERPRISE (Chicago: Irwin Press,1995). A more in-depth look at vir-
tually every aspect of entrepreneur-
ship. In this good counterpart to
the outline planning guides pre-
sented below, Hisrich and Peters
take the reader through the history,
idea, planning, financing, and virtu-
ally every other aspect of the emerg-
ing enterprise.
Mike McKeever, HOW TO WRITE A
BUSINESS PLAN (Berkeley, CA: Nolo
Press, 1992). A friendly, informative,and very useful business planning
guide. Excellent for folks with little
business development background.
Nolo Press publishes some of the
best business and legal self-help
material in the country. Their cata-
logue includes many dynamite
offerings. (510-549-1976)
Keith Schilit, THE ENTREPRENEURS
GUIDE TO PREPARING A WINNING
BUSINESS PLAN ANDRAISING VENTURE
CAPITAL (Englewood Cliffs, NJ:
Prentice Hall, 1990). An excellent,
concise guide that takes the reader
through a step-by-step process ofwriting a business plan.
BIZPLAN BUILDER (Mountain View,
CA: JIAN Tools, 1995). Living by the
motto, To do great important tasks,
two things are necessary... a plan
and not quite enough time, BizPlan
provides you with a set of template
electronic word processing and
spreadsheet files. This computer-
ized business planning resource
asks you questions; as you answer
them, your business plan almost
writes itself. You still need to have
the information, but BizPlan is a
good resource for those unsure of
how to begin or in need of someone
to ask the right questions. (415-
254-5600)
THE NON-PROFIT RESOURCE CENTER
(7731 Belle Point Drive, Greenbelt,
MD, 20770, (301)507-6247). The
Resource Center provides one, two
and three-day trainings for non-profit managers and accountants
regarding the ins and outs of unre-
lated business income tax, IRS reg-
ulations, and general non-profit tax
reporting. Non-profits entering the
enterprise development arena
should seriously consider charging
one key board member and one
staff person with the responsibility
for tracking all tax and regulatory
issues for the organization. The
Resource Center workshops and
materials provide the best orienta-tion to these topics I have seen in
terms the average CFO or Treasurer
will immediately grasp and be able
to use. The Center also provides
direct tax consultation with non-
profits in addition to several publi-
cations and newsletters.
APPENDICES3 411
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THENATIONALECONOMICDEVELOPMENT
AND LAWCENTER (Oakland, CA, (510)
251-2600). The NEDLC serves as a
national clearinghouse on commu-
nity economic development. In
addition to an excellent resource
library, the Center offers legal con-sulting to non-profits involved in
community development, manages
a sectoral analysis project, and
sponsors a regional economic
development initiative, among oth-
er activities.
THE NATIONAL CENTER FOR SOCIAL
ENTREPRENEURSHIP,(Southgate Office
Plaza, Suite 975, 50001 W. 80th St.,
Minneapolis, MN, 55437, (617)831-
5506. Jerr Boschee, President and
CEO.) An excellent organization
providing workshops and consulta-
tion for the emerging entrepreneur.
Good for groups at the front-end of
the process and in need of a generaloverview. Definitely worth a call to
get their resource listing and see if
theyre doing anything in a town
near you!
Two additional resource books
which will be helpful to the non-
profit enterprise manager come
from the practice of economic
development in the Third World. AN
INSTITUTIONAL GUIDE FOR ENTERPRISE
DEVELOPMENT ORGANIZATIONS pro-
vides practitioners with an excellent
overview of organizational develop-
ment stages, such as strategic plan-
ning or self-evaluation, and is
presented in an easy to follow for-mat. MONITORING AND EVALUATING
SMALL BUSINESS PROJECTS: A STEP
BY STEP GUIDE FOR PRIVATE
DEVELOPMENT ORGANIZATIONS is a
second publication covering the
fundamentals of small business
evaluation. Very good stuff. Both
can be ordered through PACT, 777
United Nations Plaza, New York, NY,
10017.
412 3 THEROBERTS FOUNDATION:A PROGRESSREPORT
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APPENDICES3 413
It seems as if every day one hears about yet one more
home page or Internet service which might be worth
surfing to. Not surprisingly, a variety of efforts are
underway to tap this resource to the benefit of non-
profits in general and non-profit entrepreneurs in
particular. While excellent resources are available at
some sites, these offerings require users to access infor-
mation through fairly expensive on-line providers.
However, other sources are increasingly available to
those surfing the free resources of the Net.
Founded in 1995, Impact Onlines (IO) mission is to
use the Internet to reach and support individuals who
want to make a difference in their communities. In opera-
tion only one year, IO has received significant recognition
for its work, including The Point Communications award
as one of the top five percent sites on the Internet, the
Whats Cool listing at Netscape, the Tripod Tools for Life
Award, and Best Site of the Week Award at America
Online.
Impact Online encourages its surfers to volunteer,
make donations, and make socially responsible product
purchases. Their goal is achieved through publishing
information about social issues and non-profit organiza-
tions on the Impact Online World Wide Web site.
Of greatest interest to social entrepreneurs is IOs
Web page promoting homeless economic development
organizations. In addition to current offerings, it is
planned that by late 1996, copies of this report will also
be available at the Impact Online Web site:
http://www.impactonline.org.hedf/.
Impact Online attempts to serve the non-profit com-
munity by acting as a resource for reliable and compre-
hensive information. IO has done extensive work
analyzing strategies for electronic community outreach
and has explored innovative methods of on-line fundrais-
ing. IO makes this knowledge available to non-profit
managers through workshops, an on-line course for non-
profits, lectures at conferences nationwide, and Web
development services specifically aimed at meeting the
needs of non-profits.
The Impact Online Web site is located at
http://www.impactonline.organd, with 25,000 hits rep-
resenting some 2,000 visitors daily, is thought to be one
of the highest volume non-profit Web sites currently
operating.
Beyond the offerings of Impact Online, a wide array of
non-profit and small business resources may be found on
the Internet. The Enterprise Foundation and others are
taking the lead to establish electronic libraries from
which practitioners may download files on a variety of
issues. The Small Business Administration and
Department of Commerce both offer a wide range of
information and resources.
For practitioners located within the state of
California, a potentially valuable on-line resource worth
exploring is TeamCalifornia Online (800-55-CAL35).
Once you have received the free software and registered,
TCO provides access to economic development libraries,
files and on-line conferences with professionals, eco-
nomic development corporations, educational institu-
tions, and others involved in the field. This is a
completely free service sponsored by Southern California
Edison Company and definitely worth checking out for
news, ideas and professional support.
The cost of on-line service is decreasing with eachpassing day, and there is little to stop the inquisitive
entrepreneur from surfing her way to greater knowledge
and information. If you are not on-line and you are inter-
ested enough to be reading this book, you should consid-
er getting wired today!
IMPACT ONLINE
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414 3 THEROBERTS FOUNDATION:A PROGRESSREPORT
Anything by Fugazi, but especiallyIn On TheKill TakerorSteady
Diet of Nothing.
Bleach, by Nirvana. If you own theNirvana,MTVUnpluggedCD,please discard it immediately.
Anything by Husker Du. Ourtoken representative from theeighties, Husker Du laid muchof the foundation for thealternative scene which wasto spring forth in later years.
Doo Bop, by Miles Davis. Milesmeets Hip Hop. How can yougo wrong?
Viva Zapata, Seven Year Bitch. RiotGrrl music at its best.
Odelay, Beck. White Boy Rap forPunks.
Anything by The Pixies, but weespecially likeBossanovaand
ComeOn Pilgrim.
Dear You, by Jawbreaker, an SFfavoritegreat live...
Demo Tape, Baby Snufkin, BayAreas best World-Beat Punkmusic...David Byrne meetsIggy Pop...
Meantime, by Helmet. Seriousheadbanging music for whenyou arent sure if your motiva-
tion is monetarily or sociallybased...
Roots, by Sepultura. SouthAmerican Heavy Metal meetsindigenous Brazilians...
Anything by The Melvins, but weespecially recommend
HoudiniandStoner Witch.
Easter, by Patti Smith. The seven-ties memories come floodingback. A gesture to the past...
Salt Peter, by Ruby. When you fin-ish your business plan andare ready to dance...
Dry, by PJ Harvey. All her materialis great, but the first time outwas especially fun.
Foo Fighters, Daves life after
Nirvana...
Dilate,by Ani DiFranco. Folk-punk
for the nineties...one of the
best CDs of the year...
Remember: If its too loud, youre too old!
(and, of course, were all getting older...).
Recommended Listenings
Appendix C
W
hile it is widely known that our officereceives a good number of calls fromnon-profit managers in search of infor-mation and resources to assist them inoperating social purpose businesses, a
lesser known fact is that we also receive a number ofinquiries regarding what music is the most appropri-ate soundtrack to support the dialogue of the NewSocial Entrepreneurs.
Many practitioners recognize that while some sort of
musical accompaniment is called for, the music of the six-
ties is boring and the mainstream music of the seventies
and beyond seems simply a misguided effort to commu-
nicate the meaningful degree of angst and rage suitable
for the dawn of a new breed of mutant manager living in
the constant tension of a non-profit/for-profit world. To
do our part to assure every New Social Entrepreneur has
at least the basics of a decent CD library for the new cen-
tury, our office humbly offers the following collection of
must have items for any truly engaged, emerging New
Social Entrepreneur. These recordings are provided to
you, the reader, in no particular order, at no extra charge,
and with only a modicum of humor, since we take our
tunes extremely seriously:
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APPENDICES3 415
10. After the Sizzler folks moved out, we thought it
was a perfect opportunity to start a community
restaurant.
(If a site is churning, dont start the same business
as others who have failed, betting that since youre a non-
profit you can do it for less. They couldnt and youwont. There are REASONS businesses in your neighbor-
hoods have failed. Usually its location, location, loca-
tionand the fact that it was the WRONG BUSINESS! In
the case of Larkin Business Ventures, it took over 11
months of searching before an appropriate site was
found. If you are dead set on a previously identified loca-
tion, consider ventures which move product out of the
neighborhood in exchange for capital which is brought
into your neighborhood.)
9. $5,000 should have been plenty of money for our
planning process!
(There are certainly those businesses which have
been developed on the backs of envelopes, and others
which were started on a few hundred dollars. Yours will
not be one of them! Converting a non-profit social ser-
vice organization into a social entrepreneur organization
involves time, which means money. You can do a great
deal with volunteers and program participants, but you
will need a staff person who is charged with giving this
project the highest priority. Give yourself adequate time
to establish a venture committee, design a common time
frame, agree on measurable goals, and make an organiza-
tional commitment to the process. Once the doors are
open you cant return to a planning mode. The greatest
luxury you have is the period before you launch your ven-ture when you can analyze your organization, prepare the
board/staff/clients, decide on an enterprise, raise as
much of the money as you think you will need, and then
add more time and money to your planning budget.
Adequate planning dollars alone will not make the differ-
ence, but will provide you with the cushion you need to
plan your attack).
8. But there was such a NEED for an organic produce
grocery...
(Non-profits are developed to identify and respond toSOCIAL NEED, not MARKET DEMAND. Be sure you are
clear on the difference. The fact that a neighborhood may
need quality organic produce is one thing; whether or not
community residents can afford to pay for organic pro-
duce is another. Do significant market and pricing
research to know who your customers are and what their
ability to pay is. Build from there in order to assess your
ideas viability.)
Jed Lettermans Top Ten List:FAMOUS LAST WORDS OF
FAILED SOCIAL ENTREPRENEURS
Appendix D
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416 3 THEROBERTS FOUNDATION:A PROGRESSREPORT
7. Our goal was clear: Create meaningful employ-
ment; provide $10 an hour wages; generate
$500,000 a year for our agency; engage in envi-
ronmentally friendly commerce; provide personal
growth opportunities for our employees; be some-
where for neighborhood kids to go after school...
(As you go through the process of a start-up, under-
stand one thing: you are not going to end poverty in
America, you are not going to create a cash cow, and you
are probably not going to be able to create a utopian work
environment. If you are lucky and the business gods
smile upon you, you will manage to stay in business, pro-
vide decent transitional work opportunities for folks you
care about, and hopefully not take more than three years
of subsidy from your parent organization. Maintain your
focus: Your first goal must be to identify a demand in the
marketplace and provide the highest quality service or
product to your consumer at the most competitive price
you can. PERIOD. The rest is icing on the cake and will
come only when you achieve the first goal of profitability.)
6. We have such a great causehow could they NOT
buy from us?
(The fact that you employ formerly homeless/low-
income folks is a DISINCENTIVE in the marketplace! In
our evaluations of consumer satisfaction, the fact that
ventures were operated by a non-profit employing for-
merly homeless people came in fourth, fifth, or sixth as
an issue of concern. Primary consumer issues related toquality, the demand for the product or service, and price.
Often, the fact that you are a non-profit doing good will
go against you and be something you will have to over-
come in your relationships with the business community.
And, finally, most formerly homeless people do not
appreciate being used as marketing vehicles. The people
you most care about will probably not want you to men-
tion their past difficulties at all in your marketing and
promotional materials. Dont use the crutch of being a
non-profit to try and win a foot race.)
5. Our board president always wanted us to open a T-shirt shop...nows our chance!
(Again, be clear on your purpose: to stay in business
and create jobs for your folks. There is no room for per-
sonal agendas or pet ideas. If the numbers in your
assessment dont support the degree of risk, dont do it,
regardless of emotional or political investment of
board/staff or participants.)
4. Were losing our federal grant...wed better start a
business soon!
(The goal of starting a business should be consistent
with your mission. While anticipation of future cutbacks
may be a motivation to re-assess your organizations
place in the community, creating a business is not thefirst appropriate response to impending funding cut-
backs and will almost always create more problems than
it will solve. First revisit your mission, evaluate your val-
ues, and then conclude whether or not a venture is con-
sistent with who you are as an entity. DO IT FOR THE
RIGHT REASONS! NOT BECAUSE YOU GOT A BUSI-
NESS PLANNING GRANT OR BECAUSE YOURE LOS-
ING A PROGRAM GRANT! While necessity may be the
mother of invention, successful enterprises evolve 75%
out of passion, and 25% out of desperation.)
3. If we only had more money, we would have done a
better job...
(Mainstream businesses are usually said to fail for
two reasons: lack of management expertise and lack of
capital. Social Entrepreneurs fail for one reason: lack of
management expertise. The Homeless Economic
Development Fund came in under budget each of its first
three years because the director could not find organiza-
tions he felt had the capacity to successfully execute
enterprise development. Most non-profits have a poor
grasp of financial accounting, dont understand the mar-
kets they are entering, misread their consumers, haventanticipated staff/board opposition to the idea of creating
a business, and on and on. Do your homework! Develop
your capacity first, create the business idea second and
the money will follow).
2. But they SAID they would pay us by the end of the
month!
(Also known as: May I have a bite of your sandwich?
Someone just ate my lunch... Non-profits think they
know a great deal about competition for money, and as
far as public funding goes, many have great skills. Privatesector markets are another matter. Its a jungle out there.
Businesses compete brutally, both with ethics and with-
out, and they compete to win. Your customers are feel-
ing the pinch in trying to find the absolute lowest price
with the highest value. Your suppliers are feeling the
pinch in moving inventory and balancing cashflow.
Sitting between these two forces, you will feel the pinch,
too. Realize it now and plan accordingly. Build in
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APPENDICES3 417
allowances for bad debt, missed projections, equipment
breakdown and anything else you can think of which may
affect your bottom line. Remember: If you slip, you will
fall and if you fall, you will fail. Make strategic alliances
which complement your weaknesses and anticipate the
problems you will have, since you will have to deal with a
hundred problems you never thought of. Dont be taken
down by the obvious problems you should be able to see
from the starting line. Protect yourself and play to win.)
And now....the Number One Famous Last Word of
Failed Social Entrepreneurs:
1. But were a NON-PROFIT! Were not supposed to
make money!
(Social workers (and their sympathizers) are raised by
experience and training to distrust money, business and
capitalism. We develop a mind-set that views money as
evil. Grow up. Money is valueless; Its what people do
with money that counts. Your job is to get as much of it
as you can so you can stay in business, hire people in
need, pay a good wage, contribute funds to your pro-
gram, and stabilize your community. Greed may not be
good, but money is. After all, there is no glamour in
poverty. Go out there and get your piece of the pie and
then feed it to the masses. If you arent comfortable with
that idea, dont start playing the game. Or else you willfind your last words on this list!)
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THE HOMELESS ECONOMICDEVELOPMENT FUND
c/o The Roberts FoundationBox 29906
San Francisco, CA 94129-0906
(415) 561-6533
OR E-MAIL US AT
CAPITALISM FOR A CAUSE.