Article in The Albuquerque Tribune: Biz Wisdom

In a tiny greenhouse in Corrales, ARCA clients Susan Marthey and Mike Dushi fill tiny cups with wheatgrass seeds and sprinkle them into fertilizer-filled black trays laid atop the table between them.

Marthey distributes the seeds with her fingers, carefully pushing them to each tray’s edges, while Dushi pours the seeds from cup to tray with no handling in between.For the two Friday-morning farmers – who receive services from ARCA, an organization for the developmentally disabled – it’s another day on the job.

Yet for nonprofits, businesses like ARCA’s wheatgrass operation represent a growing trend of charitable organizations embracing ideas from the for-profit world to capture increasingly elusive funds.

In October, ARCA and three other Albuquerque nonprofits completed the Pathfinder program, a 24-month series of classes and consultations put on by the Minneapolis-based National Center for Social Entrepreneurs in collaboration with local businesses and nonprofits. The program gives nonprofits advice on everything from performing market research to transforming their resources into a successful business.

“We teach them how to do things for themselves, and how to turn the things that they know how to do already . . . into revenue-generating endeavors,” said Bob Price, the center’s chairman.

Much of the push for the Pathfinder program came out of a meeting of about 25 Albuquerque businesses and organizations in July 2003. The gathering was spearheaded by Diane Harrison Ogawa, director of community relations at Public Service Company of New Mexico and executive director of the PNM Foundation.

Donors, swamped with requests for funds, were searching for ways to meet the needs of nonprofits.

“For us, it’s thinking about what value can we as a corporation really bring to a nonprofit partner,” Ogawa said. “At times when you have reduced corporate resources . . . you have to look beyond a dollar to think about how you can build a relationship with a nonprofit.”

After a presentation by Price – who also serves on the board of PNM Resources Inc., PNM’s parent company – participants concluded that one of the best ways to help nonprofits was to teach them the tools to help themselves. The group raised more than $100,000 for the first year of a three-year investment in the Pathfinder program.

“Although it’s not the panacea, there are really important parts of this that can work in the nonprofit sector,” Ogawa said. “We’ve tried to think how we can be more than just a check.”

Self-sufficient

ARCA’s participation in the Pathfinder program inspired an expansion of its 6-month-old wheatgrass operation done with Corrales Organics into a full-blown organic vegetable business. By January 2005, the plan is for ARCA’s clients to be growing numerous organic crops in a new $72,000 greenhouse nearly twice the size of the existing wheatgrass greenhouse.

ARCA will market, sell, bill for and deliver the crops, and it expects to serve five to 10 more disabled individuals through the operation.

“Just growing things that are organic, growing things that can be consumed by the general public is a thrill for a lot of our folks,” said Jim Douglas, greenhouse manager for ARCA. “It’s a win-win situation. It allows ARCA to be more self-sufficient, but it also allows us to fulfill the mission.”

Profits for the organic vegetable business are expected to be around $40,000 to $50,000 at first, said Elaine Solimon, ARCA’s executive director. That’s roughly 0.2 percent of the organization’s total funds of about $23 million a year for the past several years.

“We have our sights set on higher,” Solimon said. “We do want to build on the successes of our early experiences and then branch out.”

ARCA also plans to sell its in-house training programs – for $30 to $80 per person enrolled – to other nonprofits and for-profit businesses providing similar community services. About 30 businesses and nonprofits have signed up, and Solimon expects the classes to bring in $20,000 to $25,000 in 2005.

“I think that for many not-for-profits, there’s been a past reliance on governmental support, and that is shrinking, so we need to be more creative,” she said. “I absolutely believe that we’ll look back on these years and wonder why we didn’t latch onto these concepts earlier.”

Money in the bank

Melody Wattenbarger, executive director of the Roadrunner Food Bank, said the Pathfinder program changed her group’s approach to snagging elusive funding dollars.

“We learned how to put together a real business plan that we can take to bankers and venture kind of funders to get people to actually invest in our work rather than just donate,” she said. “There’s definitely been an evolution.”

One of the organization’s first businesses planned for early 2005 will involve selling Southwestern food products to other food banks. Because Roadrunner can buy the food in mass quantities, smaller food banks can buy it from them for less than they would pay on their own.

Roadrunner also plans to begin delivering more than just food. Paper supplies, janitorial goods and personal hygiene products are all on the menu as possible new moneymakers.

“Organizations that have no food program may still need those other things,” Wattenbarger said. “It isn’t a huge departure from what we do now.”

Wattenbarger estimates that Roadrunner’s various business ventures will bring in about $300,000 a year in their fifth year of operation. It costs roughly $2.5 million a year to run the food bank, she said, and that amount is likely to increase – rapid growth marks Roadrunner’s history – by the time the business ventures have matured.

In the past 10 years, Wattenbarger notes the food bank went from handling about 1 million pounds of food a year to 1.5 million pounds of food a month. It’s a struggle to meet the demand, she said, especially in a changing funding landscape.

“Some of the traditional kinds of funding sources are either not available or are available . . . less,” she said. “We have never had enough resources to meet the need.”

Feeling the pressure

In 2003, charitable giving nationwide was 1.2 percent less than in 2000 when accounting for inflation, even though it hit a whopping $240.72 billion, according to Giving USA. In the same three-year time span, the number of 501(c)(3)s – the most common type of nonprofit – registered with the Internal Revenue Service went from 819,008 to 964,418, a 17.8 percent increase nationwide.

In New Mexico the number of nonprofits registered with the IRS went from 5,100 in 2000 to 6,000 to 2003, up 17.6 percent, according to Suzanne Coffman, director of communications with GuideStar, a company that tracks nonprofits.

“How to do more with less faces everybody today,” said LaDonna Hopkins, vice president and chief development officer of the United Way of Central New Mexico.”

The weapons of war

The Youth Development Inc. Foundation, the newly announced fund-raising arm of YDI, is facing it right back with an array of exotic big-business weaponry: interrelationship diagraphs, Ishikawa diagrams and Gantt charts to name a few.

To the untrained eye, an interrelationship diagraph looks like a pile of noodles tossed on a plate. A tangle of arrows shoot from one bubble of text to another, above which float mysterious numbers. An Ishikawa diagram – looking something like an arrowhead on its side – is slightly less confusing. Gantt charts, with their lists of to-do tasks, are the friendliest of the bunch.

To Thomas Garcia, the YDI Foundation’s executive vice president and chief operating officer, they’re the poetry of for-profits.

The charts, graphs and diagrams are the sharp edge of a blade called Total Quality Management, a structured way that a business goes after its goals and evaluates its performance while doing so. TQM’s intent is to maximize a company’s efficiency.

“That is a huge business tool . . . used at most corporations that I’ve been on boards of,” Garcia said. “This is probably the first foundation to fundamentally incorporate TQM processes and process improvement initiatives.”

The YDI Foundation also borrows from business in the composition of its board of directors. Garcia says raising money is a task best accomplished by successful entrepreneurs and, as a result, the foundation’s board comprises a who’s who of New Mexico business leaders.

“We fundamentally recruited board members who were executives from the business community . . . in order to bring about a clear distribution of talent that represented all industry segments within New Mexico and at the highest level possible,” Garcia said.

Even the titles at the YDI Foundation reflect a corporate management style. Instead of an executive director, it has a CEO. Instead of program directors, it has vice presidents. Garcia calls it a change in “philosophy and direction.”

That direction includes, like at other nonprofits, a number of revenue generating businesses. YDI recently began selling its tutoring service in conjunction with Kaplan Inc. It rents out its office’s conference, meeting rooms and parking spaces. An online store selling YDI merchandise, such as T-shirts, is in the works.

Any money YDI makes goes toward helping its roughly 20,000 clients with everything from tutoring to drug problems, Garcia said.

Other nonprofit leaders echo his point: Any foray into for-profit businesses is just one more tool to accomplish a nonprofit’s mission.

It’s to help people like Susan Marthey and Mike Dushi, and if the quiet, satisfied smile tucked into the corner of Dushi’s lips as he wraps up a morning of wheatgrass farming is any indication, then it might just be working.

*** SIDEBAR ***

In January, New Mexico nonprofits will have a new resource for training and education: the Center for Nonprofit Excellence.

The center is a project of the United Way of Central New Mexico and the Albuquerque Community Foundation, a local fund-raising organization. United Way, at 302 Eighth St. N.W., will house the center’s offices and provide its director from its roster of employees.

It will offer training for nonprofit board members and a continuation of the Pathfinder program, an 24-month series of seminars and consultations that teach nonprofits for-profit business strategies.

“It’s a place where we could really grow the quality of the volunteers, the quality of the staff,” says Joanne Fine, chief communications officer for United Way of Central New Mexico. “This need for business skills to be ratcheted up is pervasive, and it’s something that United Way and the Community Foundation are interested in doing.”

*** FACT BOX ***

MORE NEED, LESS MONEY

Here are recent figures on nonprofits and charitable giving:

501(c)(3)s registered nationwide with the IRS

In 2000: 819,008

In 2003: 964,418

Change: Up 17.8 percent

501(c)(3)s registered in New Mexico

In 2000: 5,100

In 2003: 6,000

Change: Up 17.6 percent

Charitable giving

In 2000: $227.69 billion ($243.28 billion in 2003 dollars calculated using the consumer price index)

In 2003: $240.72 billion

Change: 1.2 percent less in inflation-adjusted dollars

Source: Internal Revenue Service, GuideStar.org and Giving USA

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This was published in the Albuquerque Tribune on November 22, 2004.

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