Tuesday, March 31, 2009

REDF

Over 9 years ago, I attended the Christian Community Development Association (CCDA) annual conference in New York City. The highlight for me was participating in a seminar on social enterprise presented by Melinda Tuan of the Roberts Economic Development Foundation, now known as REDF. After the conference, I spent some valuable time with Melinda learning more about REDF’s social enterprise work and its efforts as a venture philanthropist organization in the San Francisco area.

REDF has a three-fold mission. It seeks to create job opportunities in the San Francisco Bay area for individuals with significant barriers to employability by assisting a select number of social ventures. The organization also advances the methodology of measuring performance in social enterprise organizations. REDF leads the field in this area as I detailed in a past post on Social Return on Investment. And finally, REDF supports the growth of social enterprise by sharing what it has learned with other organizations throughout the country.

A few years after the CCDA conference, Melinda Tuan left REDF for the East Coast where she now works for Rockefeller Philanthropy Advisors as a Senior Fellow. I’ve enjoyed periodically seeking out her advice.

When other organizations ask for help on starting faith ventures, I am quick to recommend the REDF web site. It is an extremely valuable one-stop information resource for nonprofits running social enterprise businesses. The web site provides numerous reports and downloadable management tools. I recently discovered REDF’s Thrift Store Management Dashboard, which is very valuable tool for a nonprofit seeking to increase the performance of its thrift store.

Monday, March 30, 2009

Unrelated Business Income Tax

In the past, I have explored the differences between organizing a faith venture business as a non-profit or a for-profit entity. Both of these organizational structures have definite advantages and disadvantages.

For organizations exploring a non-profit business venture, I am frequently questioned over the issue of unrelated business income tax (UBIT). The UBIT tax applies to income earned in activities not “substantially related” to the charity’s exempt purpose. Thrift store operations are automatically exempt. But other business activities need to be designed to actively incorporate the charity’s mission or else to allow room in the budget for UBIT tax expenses.

As is often the case with IRS organizational issues, the definition of “substantially related” has some gray areas that need to be explored. These difficulties arise when organizations see the business as primarily an income generating enterprise to support other charitable activities.

But, overall, the UBIT tax is not to be feared…especially for organizations that are incorporating their mission into the business activity. Just this past week, the Internal Revenue Service has issued an updated Publication 598 on the issue.

Thursday, March 26, 2009

The Best Laid Plans

I love it when a plan comes together. Because often, it looks like there is no plan at all.

About two months ago, I started doodling with the idea of building cabinets at Bud's Warehouse. Our supply of donated cabinets has not kept up with recent customer demand. But meanwhile, we have lots of donated cabinet doors left over from a large 10 semi-truck load we received four years ago. I dreamt of creating some new jobs and meeting the needs of our customers by building cabinets. I ran some basic cost numbers. I explored how much wood would cost for the boxes.

That was about as far as I got. But I kept writing notes reminding myself to explore building cabinets.

Then, unexpectedly, the same cabinet door supplier from 4 years ago called us. They have 15 semi-loads of cabinet doors and box-making wood that they wanted to donate. It is over 10,000 square feet of material. But we had to get it in the next month. Panic. We have nowhere to put the material.

A couple of phone calls later we found some donated temporary warehouse space. At the same time, we discovered a program that wants to pay individuals to train in our cabinet-making operation. We also identified a potential manager. And someone referred us to a manager in the State of Colorado's inmate cabinet making program.

I like it when a plan comes together. It can't fail when it's from God.

Wednesday, March 4, 2009

The Long-Tail of Content and the Evolution of a Web Site

Seth Godin tells a humorous story about the dangers of applying for a nanny position in the era of Myspace. He makes the point that "Google never forgets." In his opinion, the best strategy is to "overload Google with a long tail of good stuff and to always act as if you're on Candid Camera, because you are." Good advice.

Last week, I had a long conversation with one of my board members at Belay Enterprises about this very idea. We need a new web site. But I think the rules have changed since the last time.

When I started at Belay ten years ago, our primary marketing activities involved public relations to obtain free media exposure, direct mail campaigns targeted at friends of Bud's, and newspaper classified ads. Today, most of our new customers arrive via the internet or from the recommendation of others. Encouraging a positive online reputation and a favorable in-house shopping experience are the most important organizational marketing activities we undertake.

The rise of customer review web sites like Yelp.com encourages this new world of transparency. On a weekly basis, customers are sharing with the world their experience with us...both the good and the bad. (Overwhelmingly good, I might add with the occasional negative review.) But this points to the very issue Seth Godin details in his blog post. Bud's and Belay need a "long tail" of good stuff on the web to provide perspective to the occasional bad review. I think this shows the need for a web site that is less of a traditional informational resource, but one that is more fluid with a blog like interface that evolves over time with lots of new content. Unfortunately, that is more difficult to accomplish. But I'm convinced that in this new marketing environment it will be an extremely successful strategy. I think faith venture and kingdom businesses that are seeking to rebuild lives offer a compelling story that naturally spreads across the internet.... especially when you give it a little push through strategic placement. Stay tuned as this develops.

Belay Venture Partners Program Selects First Founder

I’m excited to announce that Belay Enterprises has chosen Brittany Marlett as our first participant in the Venture Partners Program. B...