or the past five years, Mission Edge has worked with more than 160 nonprofit organizations of all sizes and in all sectors. Many of these organizations share two fundamental characteristics. First, they have a passionate, talented staff and community supporters who care deeply about the problems they are trying to solve. And second, they struggle to make their annual budget, lacking the consistent funding to deliver on their promise as organizations.
The average nonprofit has only 1.7 months of operating capital in reserve, leaving very little room for error and certainly less for innovation.
This was made very clear in the most recent State of Nonprofits Quarterly Report put out by the University of San Diego, which found that the average nonprofit has only 1.7 months of operating capital in reserve, leaving very little room for error and certainly less for innovation. At the same time, 62% of the nonprofits in San Diego have operating budgets of less than $50,000 per year; meaning that more than 6,000 nonprofits are barely getting by, living on the edge of solvency and, whatever their altruistic intentions are, not doing much in terms of programs. It’s hard to have a major impact if your budget is less than $50k per year.
We believe there is a better way, and we are thrilled to be working in partnership with San Diego Workforce Partnership and REDF to launch the inaugural San Diego Social Enterprise Accelerator, a public-private initiative that will assist nine nonprofit organizations in developing sustainable revenue-based business models as a part of their social mission. The accelerator will combine financial support of $245,000 and technical assistance in the form of business model development, financial planning, operational support and marketing.
The goal of the Accelerator is to help these organizations test assumptions about their customers and market, develop a business canvas that answers essential questions about their products or services, and see if the market will pay for some or all of what they provide. It’s a classic rapid innovation process that is used in for-profits, and it will help nonprofits develop opportunities to better control their revenue streams.
The nine organizations selected for the inaugural cohort of the Accelerator have double bottom line missions and represent different stages of the business lifecycle. Double bottom lines measure fiscal performance by adding a second bottom line that measures social impact. The funded organizations range from early-stage start-ups planning to employ and train their first employee, to established social enterprises aiming to take the next step in their growth, to nonprofits looking to diversify revenue through a new business line. The selected social enterprises are: Kitchens for Good, Dreams for Change, Goodwill Industries, Home Start Thrift Store, International Rescue Committee, Center for Employment Opportunities, San Diego Coffee Training Institute, City Heights Coffee House and Youth Campaigns. While each organization differs in size and sector focus, all share the common goal of becoming more financially sustainable.