In my last blog post, I talked briefly about the emerging “fourth sector” as referenced in an interesting NYT article on the same subject. In this same vein, I have recently become aware of the burgeoning “social franchising” movement within the fourth sector.
Quite simply, social franchising is when a non-profit organization (NPO) starts or acquires a for-profit franchise whose offerings are congruous with the NPO’s mission and whose revenues can be reinvested into the NPO to decrease its dependence on outside fundraising. Fascinating and innovative idea, right? Absolutely.
However, an NPO that’s considering adding to its to-do list the prospect of managing a business is like a juggler going from tossing balls to flipping running chainsaws for the first time — and without ever stopping!
Now, if this metaphor may sound a bit hyperbolic for some, I recommend that your NPO does not start/acquire a business. If your NPO’s board does not have a respectful amount of intimidation about undertaking such a move, I predict dark times for your organization’s operations. But doom and gloom aside, the upside is that with the proper due diligence, strategic heft and market opportunity, some NPOs cannot only stand to benefit from this potential worthwhile juggling act, is not only worthwhile for some NPOs, it may actually be vital for many in this latter subset.
With the right professional (and perhaps governmental) assistance as well as advice from other like NPOs who have successfully hybridized their operations, there may well evolve a distinct species of NPO that flourishes from this nascent business model.
Of course, the next logical question is: “Is my NPO that kind of species?” There are at least two key considerations in answering that question. First, does one need to try this high-risk endeavor in order to determine if one’s NPO is the right entity for such a pursuit? If not, the second consideration should be if your NPO can be comprehensively evaluated before launching a for-profit enterprise, what does that evaluation entail?
Before we talk evaluation, allow me to paint a broader picture of this general opportunity. To do so, in my next blog post, I will highlight some NPOs that have adopted the social franchising model. I hope that by so doing, it will provide a clearer context for those of you who may consider this model for your NPO.