Today Maurice Bretzfield (www.mauricebretzfield.com) internet and business strategist is a guest blogger and talks about how shelters can survive uncertain economic times.

Women’s shelters across our country are facing a crisis. The economic downturn has caused a perfect storm of increased demand for services and decreased funding. The decrease in contributions to the support of these shelters has been across the board – since 2008 shelters have seen that federal, state and local governments are no longer able to provide the levels of support they once did and individual donations have decreased as well. So, what are these vital contributors to our society’s welfare to do?

Prior to 2008, and for the last several decades preceding our economic crisis, while never easy, fundraising and community support was sufficient to fund the needs of most shelters. Average tried and true efforts were effective enough to raise those funds and while some more than others were creative in their fundraising methods not a lot of “out of the box” thinking was needed. Those days are gone and we can’t expect them to return anytime soon, if ever.  As Thomas L. Friedman puts it, “average is over”. 

To thrive in these new environment shelter operators must start to think differently.

While fulfilling a compelling community need the truth is that shelters are businesses too. Shelters need to start to think like businesses and they need to begin to search for ways to earn profit from their activities. That’s right, profit.

The Red Wiggler Foundation in Montgomery County, Maryland, operates an organic farm that provides gainful employment for adults with developmental disabilities. According to its IRS 990 form, Red Wiggler’s contribution and grant income dropped by more than half in 2010. But that same year, its program service revenue—money it raised at least in part by selling the produce from the farm—rose 41 percent.”

Most shelters have a Director of Development. It’s time now for a Director of Marketing who will develop salable products and market the organization’s products to buyers who find value in the organization’s results driven and metrically supported output. This requires that non-profits refocus from emphasizing their activities (what they do every day) and focus on the benefits produced by those activities. The Chief Marketing Officer’s primary responsibility is to find customers who value, in monetary terms, the results the organization produces.

In order to prosper shelter operators will have to start to think “out of the box”. I’m not talking “thrift shops” here. This is about creating business alliances with companies who value what you do and see a potential for a positive contribution to their bottom line.

The first step is to do a thorough analysis of what outcomes the non-profit actually produces (or is capable of producing) and then developing metrics that prove those outcomes. The next step is to find “customers” who value the outcome and then sell them your product. While this may seem daunting to some, it’s not. There are many businesses in our communities who suffer right along with victims. While their suffering may not be physical or sexual domestic violence has an emotional impact on companies and certainly an economic one.

Corporate donors are inundated with appeals from non-profits that are based on the “feel good” aspect of what they do. In this new environment shelters must align their appeals, based on the measurable outcomes that they produce, with corporate financial goals. This means that instead of appealing to these potential donors based on the emotive aspect of what the shelters does it must align measurable impact and “sell” this impact to corporations based on that company’s financial goals.

We all know that at least twenty-five percent of all women in America will at sometime in their lives be victims of domestic violence. That means that twenty-five percent of all of the women working in corporate America will be victims and that most of the cost of this violence is borne by the companies that they work for. These costs manifest in lost productivity and increased health-care costs. By appealing to the corporate bottom line and “selling” the corporation a program that will increase the productivity of these women and reduce overall corporate health-care costs shelters can develop new streams of income.

Corporations worldwide have and are strengthening their Corporate Social Responsibility (CSR) initiatives to satisfy their own needs because when they are properly implemented CSR initiatives contribute to shareholder value, the public image of the corporation and the overall well-being of the corporation and its employees. Those needs are based on the self-interest of the corporation (and sometimes its executives) because of the impact on the corporations’ bottom line.

The good news is that many corporations have begun to value social change and much of the social change delivered by shelters can directly impacts a company’s bottom line.

Sometime ago I was saddened to learn of a non-profit in Southwest Florida (Budget cuts affecting non-profit food distributions) that had recently lost $750,000 in state funding; funding that had been used to transport 100,000 meals a year for people who need them.

I was even more saddened to learn that this non-profit’s reaction to the loss of this funding was to simply capitulate in belief that there was no alternative to their dilemma. According to Kristina Rodriguez the nutrition direction at the Senior Friendship Center “there’s nobody stepping behind them to replace it, so people will just go without the food”.

I wrote to them suggesting an alternative. That idea is that they go into the trucking business. By doing so they will employ people, guarantee the food supplies that they need and at least partially ensure the future of their organization and found an interesting idea for them (Charity Trucks).

The non-profit sector in general is a unique and wonderful component of American society and has been for at least a century. Encouraged by our tax structure there are now over 1.5 million non-profit organizations in the United States. Unfortunately most are experiencing cut backs in federal, state and local funding. Those that are able to maintain their donor base are finding that their average donation is dwindling while the demand for their services, due to our economic situation is increasing.

Welcome to the new normal. The days of appealing to donors based on “the good work we do” is over. Nothing ever goes back to the way it was and I believe that the non-profit administrator who thinks that they can sustain their programs on the largesse of donors is fooling themselves.  In order to survive and meet the needs of the community in the future non-profits must become entrepreneurial.

This will not be easy. It will take a fundamental shift in thinking. I hear often that “we can’t earn a profit without jeopardizing our non-profit status”. Yes you can, and you must. If you don’t the survival of your organization will become tenuous at best.

One way to accomplish your funding needs is to create a hybrid non-profit/for-profit as many “social entrepreneurs” are doing. A hybrid is an innovative approach that allows organizations to utilize the benefits of both; it’s time for non-profits to utilize wholly owned profit-making subsidiaries.

This will be a difficult concept for some shelter organizations that have always relied on donations. But the time is here and, after all, the survival of your programs may be at stake.

Whether or not a hybrid structure works for you depends on your unique circumstances. A hybrid is only one mechanism and not the right vehicle in all situations. The structure is not the point though, becoming entrepreneurial is. This will require a lot of introspection and creative thought and will require non-profits to think in new ways. Change is always difficult but in today’s “new normal” change is a requirement not an option.