Presentation given by James H. Johnson, Jr. at the 2009 Health Equity Conference.

1. Civic Entrepreneurship:
Revenue Generating
Strategies Government and
Nonprofit Organization
James H. Johnson, Jr.
William Rand Kenan, Jr. Distinguished Professor of Management
Kenan-Flagler Business School
Director, Urban Investment Strategies Center
Frank Hawkins Kenan Institute of Private Enterprise
University of North Carolina at Chapel Hill
September 2009 1

2. Overview
 Civic entrepreneurship approaches to
sustainability
 Drivers of change
 Keys to thriving and prospering in the future
September 2009 2

3. Entrepreneurial Approaches
to Sustainability
 Social vs. Civic Entrepreneurship
 Revenue Generation Options
 Partner Motivations
 Steps to Creating a Strategic Alliance or
Commercial Business Venture
 Critical Success Factors
 Potential Pitfalls
September 2009 3

4. Social Entrepreneurship
A set of behaviors whereby an individual acts as a change
agent in the social sector by:
 adopting a mission to create and sustain social value;
 recognizing and relentlessly pursuing new opportunities to
serve that mission;
 engaging in a process of continuous innovation, adaptation,
and learning;
 acting boldly without being limited to resources currently in
hand; and
 exhibiting a heightened sense of accountability to the
constituencies served and for the outcomes created.
J. Gregory Dees, Kauffman Center for Entrepreneurial Leadership
September 2009 4

5. Civic Entrepreneurship
 Non-Profits: creating social ventures to meet
society’s pressing needs and the financial needs of
their organizations.
 For-Profits: acting in a socially responsible manner
while continuing to operate in the best interests of
shareholders.
 Government: operating efficiently while creating
policies that encourage others to act responsibly.
September 2009 5

6. Civic Entrepreneurship
Driving Forces
Scarcity of Federal Resources
Rise in Venture Philanthropy and
Social Entrepreneurship
Cycle of Fundraising and Distribution
September 2009 6

7. Civic Entrepreneurship
Mission
 To transform the culture of non-profit and
government organizations from a social
welfare-oriented to a business-oriented
model of operation, enabling them to
become creators rather than mere
redistributors of wealth.
September 2009 7

8. Typology of Revenue-
Generating Options
 Cause-related Marketing Alliances
 Affinity Programs
 Exclusive Agreements
 Selling of Space
 Incentive Programs
 Sponsored Programs/Activities
 Commercial Ventures Launched by Nonprofits
September 2009 8

9. Traditional Cause-
Related Marketing
Alliances
 Corporation agrees to donate a specified
amount of cash, food, or equipment in
direct proportion to sales revenue-- often
up to a set amount-- in support of a
specific cause.
September 2009 9

10. Traditional Cause-
Related Marketing
Alliances (cont.d)
 Research confirms that companies
supporting social causes in this way
typically garner greater market share as
more and more people who believe in
the cause begin to purchase their
products or services.
September 2009 10

11. Traditional Cause-Related
Marketing Alliances (cont.d)
 Thus, such initiatives enhance, rather
than diminish, the company’s bottom
line, while contributing to the resolution
of pressing societal problems.
September 2009 11

12. Traditional Cause-Related
Marketing Alliances:
Examples
 American Express and Share Our Strength “Charge
Against Hunger” Campaign
 Visa and “Reading Is Fundamental” Program
 J.C. Penny’s “Can Do” After School Program
 Revelation Corporation of America
(www.revelationamerica.com)
September 2009 12

13. Web-Based Cause-Related
Marketing Alliances:
Charity Malls and
Cause-Focused E-Commerce Companies
 befree.com  igive.com
 benz.com  iwon.com
 charitableway.com  mycause.com
 charitymall.com  noosh.com
 charityville.com  schoolpop.com
 giveforchange.com  shopforchange.com
 givesomethingback.com  4anything.com
 greatergood.com  thehungersite.org
September 2009 13

14. SchoolPop.com
September 2009 14

15. Cause-Related Marketing
Alliances: Public Health
Examples
Company Promotion Contributions($) Benefits
American Charge For The Up to $500,000 Komen
Express Cure Foundation
Avon Kiss Goodbye to N/A Avon
Breast Cancer Foundation*
BMW BMW Ultimate Up to $1,000,000 Komen
Drive Foundation
Eureka Clean For The Up to $250,000 Komen
(Electroux) Cure Foundation
* - Donations to various breast cancer organizations and research institutions
September 2009 15

16. Cause-Related Marketing
Alliances: Public Health
Examples (cont.d)
Company Promotion Contributions($) Benefits
Yoplait Save Lids to Up to $750,000 Komen
(General Mills) Save Lives Foundation
Creative Triumph $526,532 Alzheimer’s
Memories Album Association
Consultants
Dreyer’s & Pink Ribbon Up to $250,000 City of Hope
Edy’s
September 2009 16

17. Affinity Programs
 A variant of cause-related marketing
alliances. In exchange for the
opportunity to provide products or
services to association members at a
reduced cost, corporations agree to
donate a specified percentage of profits
to a charitable cause.
September 2009 17

18. Affinity Programs (cont.d)
 Target two types of associations
 Trade -
representing businesses
 Professional -
representing individuals
September 2009 18

19. Associations
 “Associations are an underserved market
niche that is open to any business willing to
understand their unique needs…the
association marketplace is one of the finest
niche-marketing opportunities to be found.”
Daniel Bicker, Camelot Travel Services, Englewood, CO.
September 2009 19

20. Key Facts About
Associations in the U.S.
 Over 100,000 associations exist in the U.S.
 More than 80% of associations have 1 to 20
employees and have annual budgets under
$1 million.
 Small businesses are represented at the
national level by more than 25 associations.
 Most Americans belong to at least one
association; over 40% belong to 4 or more.
September 2009 20

21. Key Facts About
Affinity Programs
 Used to market products for more than 20 years.
 Rely on the good name of the association to market
products or services.
 Allow members to gain improved access or pricing
on products/services, and enable business partners
generate increased sales.
 Help to attract and retain members while decreasing
association dependence on membership dues.
September 2009 21

22. Key Facts About Affinity
Programs (cont.d)
 Co-branded Credit Cards are the most
popular example of Affinity Programs
 Cards appeal to consumers with specific
interests or desires
 Examples include the following…
September 2009 22

23. MBNA International
MBNA also has cards
with:
NHL
Gateway
LL Bean
NFL
NASCAR
Universities
September 2009 23

24. First USA Visa: Companies
Broadcasting Companies, Magazines
Retail, Financial Institutions
Internet Companies
Travel and Entertainment Companies
September 2009 24

25. First USA Visa: Organizations
Animal and Environmental Organizations
Colleges/Universities
Military
Professional Associations
Special Interest Groups
Sports Organizations
Fraternities and Sororities
Symphonies
September 2009 25

26. Bank of America N.A.
September 2009 26

27. Examples of Associations
Involved in Affinity
Programs
NAME MEMBERSHIP
National Association of Realtors 720,000
Assoc. of the Bar of the City of NY 20,000
Greater Washington Society of Assoc. 3,400
Executives
American Academy of Periodontology 7,000
Aircraft Owners and Pilots Association 341,000
U.S. Chambers of Commerce 215,000
September 2009 27

28. Cities Involved in Affinity
Programs
 Shaker Heights, OH
 Boston, MA
 South Orange, NJ
 San Francisco, CA
 Plano, TX
 Charlotte, NC
September 2009 28

29. Affinity Programs:
Opportunities for
Development
 Group Purchasing Program
 Financial Services
 Insurance
 Information and Education
 Marketing and Advertising
September 2009 29

30. Advantages of Affinity
Programs
 Portability
 Satisfied Customers
 Royalties
September 2009 30

31. Nonprofit
Organizations with
Affinity Portals
 AFL-CIO
 National Federation of Republican Women
 National Association for Underwater Instructors
September 2009 31

32. Exclusive Agreements:
Definition
 Local governments and other public sector
organizations grant private sector companies
exclusive rights to provide a particular product
or service to their clientele in exchange for
signing bonuses, a percentage of profits, and
other perks.
September 2009 32

33. Exclusive Agreements:
Organizations
 Cities
 Public Schools
 Public School Districts
 Other Non-profit Organizations (e.g.,
zoos)
September 2009 33

34. Exclusive Agreements:
Examples
“Pouring Rights” Contracts
ENTITY COMPANY VALUE *
San Diego, CA Pepsi $6.7 m
Huntington Beach, CA Coke $6 m
Madison (WI) Metro School Coke $1.5 m
District
Colorado Springs (CO) Coke $8.0 m
School District
Denver Public School Pepsi $1.5 m
District
* Contracts typically range from 5 to 15 years.
September 2009 34

35. Exclusive Agreements:
Examples
“Pouring Rights” Contracts (cont.d)
ENTITY COMPANY VALUE*
Town of Amherst (NY) Pepsi $550,000
Recreation Center
Crete-Monee District 201-U American $2.7 m
(Chicago Schools) Bottling
Company
Keller School District (TX) Coke $4.2 m
Wilson County Schools Coke $4.4 m
(NC)
* Contracts typically range from 5 to 15 years.
September 2009 35

36. Exclusive Agreements:
Examples
“Pouring Rights” Contracts (cont.d)
ENTITY COMPANY VALUE*
Bozeman School District Pepsi $120,000
(Montana)
Louisville (KY) Zoological Coke $550,000
Garden
Hurst-Euless-Bedford Pepsi $1.95 m
Independent School District
(TX)
* Contracts typically range from 5 to 15 years.
September 2009 36

37. Selling of Space
 Billboards  Computer Screen Savers
 Telephone Kiosks  Cafeteria Menus
 Trashcans  Book Covers
 Buses/Vans/Taxi-Cabs  School Rooftops
 Airports  Fruit
 ATMs  Scoreboards, Fences,
etc.
September 2009 37

38. Incentive Programs
 Provide Equipment or Cash
 Sharon Luggage “The Pack that Gives Back”
Program
 Apples for Learning
 Promote Learning
 Pizza Hut “Book It” Program
 General Mills “Box Tops for Education”
September 2009 38

39. Sponsored
Programs/Activities
 Corporations prepare materials that are designed
to enhance the quality of entrepreneurial
education in public schools.
 Merrill Lynch’s “Money Matters in
the Millennium”
 BIC’s “Quality Comes in Writing”
Program
September 2009 39

40. Corporate Ventures
Launched By Nonprofits
Social business enterprises are specifically set
up to generate revenue.
Products
Habitat for Humanity - Tee Shirts, Gifts
Services
Nature Conservancy - Educational Tours
Storefronts
The World Wildlife Fund Canada
Online Shops
American Civil Liberties Union
National Rifle Association
Save the Children
September 2009 40

41. Partner Motivations
Non-Profit/Government
Increase Revenue
Access to Resources
Enhance Capacity to Offer Services
Corporation
Solve Business Problems
Build Customer Loyalty
Enhance Public Relations
Access to New Markets
September 2009 41

42. Steps in Creating a
Strategic Alliance
 Research the company’s history of donations and
future plans for charitable contributions - understand
their motivations
 Present your added value – “What do you bring to
the table?”
 Build on what works; eliminate what doesn’t - rely on
the existing expertise of both organizations
 Begin with the end in mind - outcome focus
 Communicate and follow up
September 2009 42

43. Steps in Creating a Social
Purpose Enterprise
 Get Buy In - Internally and Externally
 Create A Task Force
 Brainstorm Ideas
 Conduct Feasibility Studies
 Develop Business Plan
September 2009 43

44. Critical Success
Factors
 Clarity of Purpose
 Dedication of Partners
 Customer/Community Focus
 Congruency of Mission and Goals
 Planning
 Communication
 Expertise
September 2009 44

45. Potential Pitfalls
 Community Perspective
 Generation of revenue is perceived as moving
away from mission --- any or all stakeholders
 Human and Capital Resources
 Limitations of what is available to launch venture
 Legal Implications
 Make sure revenue doesn’t “inure” to benefit of
an individual or outside interest.
 Business launched has to be directly related to
mission of nonprofit.
September 2009 45

46. Path to Independence
Transformation of a Nonprofit/Government Entity
Obtain Modify Form Leverage Achieve
Business Internal Strategic Dollars Mission
Skills Operations Alliances Spent of NP
September 2009 46

47. The Civic Entrepreneur
Effect Probability
of Success
Financial Profitability
Stabilty
Business
Acumen
Dependence
on External
Funds
September 2009 47

48. Implications For
Financial Health
 Change is the only constant
 Business intelligence gathering is paramount
 Speed
 Agility
 Flexibility
September 2009 48

49. Implications for
Managers and Leaders
 Competitive drive
 Voracious consumer of competitive intelligence
 Tenacity
 Persistence
 Entrepreneurial spirit
 Soft skills
 Hard work
September 2009 49