Mile High WorkShop Pushing Boundaries of a Nonprofit
-Guest post by Drew Hackman of Startup Hacker Consulting
If you haven’t taken a look at what I do at Startup Hacker Consulting, then you may not know why I founded it. You may not be familiar with the phrases “social enterprise,” “social entrepreneurship,” “social impact organization,” or a “hybrid model.” You may not know how organizations that fall under these umbrellas are revolutionizing the way we approach problem-solving when it comes to fixing social issues.
Well, you’re in luck, because I’m going to lay it out. And then, if you keep reading, you’ll see my shining star example: Mile High WorkShop in Denver, CO.
Quickly, let’s set the stage…
Defining Social Enterprise
What is social entrepreneurship or a social enterprise? My ideal definition of a social enterprise is an organization whose mission is to improve the human condition or the environment and whose financial success and longevity are intrinsically tied to achieving its social mission; that is, the organization is self-sustaining – financial success does not come without achieving the social/environmental mission. It does not rely heavily on outside funding, grants, donations, or gifts. The entrepreneurial aspect of this is simply the wrinkle that implies the organization is for-profit rather than nonprofit.
To distinguish between for- and nonprofit: because of the unfortunate misnomer of “non-profit” or “not-for-profit,” a common public misconception is that nonprofits cannot generate revenue. False. Red flag. Do not pass go, do not collect two hundred dollars. Nonprofits can (and absolutely should) generate revenue. Monetizing products and services is one of the crucial elements of creating a self-sustaining organization. The difference, however, between a nonprofit that generates revenue and a for-profit that generates revenue is what you do with the money.
A for-profit entity may have investors, may be publicly traded, may have a C-suite that gets dividends and stock options – in a for-profit, you are allowed (and are nearly required) to reward your investors and shareholders.
A nonprofit, on the other hand, has none of these. All of the revenue generated goes right back into the organization, either by going into the budget (e.g., overhead and salaries, marketing, legal and accounting costs), or towards alleviating the cause itself. But that does not mean you can’t generate revenue and it does not mean you have to be in the red, as the name “nonprofit” would suggest. In fact, according to a 2013 study by the National Center for Charitable Statistics, revenue provided almost half (47.5 percent) of the total income for public charities.
We’ve seen a huge paradigm shift for nonprofits in the last decade, moving towards the social enterprise model (“hybrid model”), reducing the reliance on grants, donations, government funding, and fundraising events. Some, in fact, go so far as to have a goal to eliminate the need for grant funding once they get their feet under them.
Mile High WorkShop: Pushing Boundaries
One such organization is the Mile High WorkShop (MHWS) in Denver, CO. Founded in 2014, one of Mile High WorkShop’s explicit goals is to completely eliminate their dependence on grant funding by 2019. How do they plan to do it? With a self-sustaining model.
Their mission: To create employment opportunities and provide job training for members of our community seeking to rebuild from addictions, homelessness, and incarceration.
Their vision: Mile High WorkShop envisions a more prosperous city where barriers to employment are eliminated and every member of the community is empowered with dignity through meaningful work.
Their method: They provide contract manufacturing services to small businesses that cannot afford their own production facilities. Their employees: the targeted population MHWS is trying to help: “members of the community seeking to rebuild from addictions, homelessness, and incarceration.”
The self-sustaining mechanisms in action: a small business needs a manufacturing service; in this case, woodworking (one of the many manufacturing services that MHWS offers). The small business contracts MHWS for the work, MHWS’ employees (the afflicted population in their mission) use the skills they’ve been taught, and a beautiful product is produced that meets the needs of the customer.
The success or failure of MHWS as a nonprofit business depends on many of the same factors as their for-profit counterparts: the ability to produce high-quality work for low cost, employee happiness and culture, margins, marketing, identifying and reaching their ideal customers, to name a few. It looks and feels and smells like a business, but it has a clear social mission, and no investors to appease. They can continue to generate revenue and make strides towards their mission at the same time.
But the coolest part of MHWS is how they measure success. Because of the turnstile nature that their mission implicates, their goal is to place their employees in permanent jobs or schools after acquiring the hard and soft skills of working in the facility. They actually pride themselves on having a high turnover rate because it means they’re accomplishing their mission. They take it one step further and monitor the progress of their employees once they’ve left – that is, they want to ensure they’re not creating any unintended consequences by moving employees up and out, only to see them fail at other facilities and in other jobs.
All the while: hoping to eliminate the need for any outside funding. Self-sustaining? Check. Solving a social issue? Check.
Want to learn how you can apply these same principals to your organization? Check out our brand new course titled, “How to Spark New Funding Sources for Your Nonprofit.”