(Screenshot via YouTube)
The social sector is oversaturated with nonprofits, many of which are entirely too similar and most of which are competing for the same grants. It’s one of many reasons why mission-minded entrepreneurs might think about founding for-profit social enterprises rather than the traditional 501(c)3.
But what do you do if you’re a for-profit social enterprise like GIS mapping firm Azavea pursuing community-facing initiatives such as OpenDataPhilly — initiatives that are actually costing your business money?
You think about launching a nonprofit to raise the funds to keep those programs going. It’s a conversation currently happening at the B Corp, according to founder and President Robert Cheetham.
“We’re still a for-profit company and philanthropic foundations can’t make grants to us to pursue even community facing or mission-driven activities,” said Cheetham. Those activities include popular fellowship program Summer of Maps. “The fact that we’re a for-profit company has meant some foundations can’t even sponsor a fellow. Our ability to raise funds to help scale and fund the program is limited because we’re a business.”
Azavea’s for-profit structure doesn’t always serve the business well, said Cheetham. Spinning off a nonprofit to sit parallel to the company as its fundraising arm has its perks (think Untours Foundation or even Google.org).
Launching a nonprofit also has its dilemmas, and Cheetham said he has three primary reservations:
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- Oversaturation — “Do I want to be the one responsible for creating one more nonprofit?” asked Cheetham. “Is this really necessary?” The founder said he’s looked at fiscal agency and other alternatives.
- Management — There’s always the chance a separate nonprofit will be more trouble to manage than it is worth in terms of the benefits it will bring. Taxes, accounting, overhead costs — that all takes time and capacity.
- Fundraising — Fundraising also takes time and capacity. “Will we be able to raise enough funds to make it worthwhile?” he asked.
A decision is not imminent, Cheetham said, but the conversation has been getting a little more serious every year. The founder said Azavea “might go another year” before making a decision.
“I think these are difficult decisions that in many respects are driven by organizations that sort of straddle a boundary between commercial organization and mission-driven organization,” he said. “As there are more organizations like B Corps these questions will continue to come up.”-30-
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