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  The Making It! Business Blog
by Nelson Davis

Friday, November 2, 2007
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THIS EDITION: PROFITING FROM NON-PROFITS

This week began for me at a conference in Costa Mesa California called the Non-Profit Philanthropic Summit, or NPP. Promoted by the Greenlining Institute out of Berkley, it was a crisp and informative gathering of representatives from corporate America, law firms and small 501c3 non-profit organizations. It brought me some useful insights on the current state of the get-give-and serve community in our state and I say the future is bright.

 

The biggest take-away for me was the realization that many government agencies are becoming impotent to render the full suite of community services they were formed to deliver and that the private sector is having to fill the gaps. The #2 revelation was that the Fortune 500 end of the business spectrum has to increasingly rely on smaller not-for-profit enterprises to make many parts of their community outreach effective. In other words, these trends are driving fresh opportunity for all involved.

You probably know already that non-profit is a misnomer because if an enterprise doesn’t make a profit, it is soon relegated to non existence. That sparkling future I foresee is based on market forces and shifting needs. For example, Los Angeles-based Operation Hope is a 501c3 entity that was formed on extremely little money by John Bryant directly following the city’s 1992 riots. John Bryant convinced reluctant bankers to ride a bus with him through the affected zones to prove that there was investment potential in the inner city and that it wasn’t a scary place. Financial Literacy became the battle cry for the organization and its bank contributors over time. My guess is that the operation has become more than just hopeful with a long list of contributors and an operating budget of about $10 million annually!

 Some of the corporations represented at the NPP Summit, which was hosted by Bob Gnaizda of the Greenlining Institute included Merrill Lynch, Comerica Bank, Union Bank and IBM. My personal theory is that as the publicly traded companies in corporate American increasingly focus on Wall Street and their stock price, they’ve moved away from the philanthropic examples set by the early 20th Century titans. People like Eli Lilly, Henry Ford and J. Paul Getty, who were followed by people like William Hewitt and Bill Gates, all put their personal stamp on philanthropic causes. That first group spent major resources on building communities along with their category-leading businesses. Today, very large companies often don’t have the founder anymore and need smaller non-profits to help them get it right, whether the money is going to the ballet or the barrio. 

Mr. Bob Gnaizda and his organization have set a target of convincing the corporate givers to commit 2% of their gross revenues to philanthropy. If steely-eyed CEOs and CFOs can see the business and emotional benefits, some will hit that number or even higher. In other words, even small non-profits are a multi-billion dollar business. Not only do they help corporate America with the details, but their closeness to the streets and nimble nature come in handy to touch the community in ways that municipal governments used to do. Library books, reading programs, music and arts education are just some of the areas of service.

Nonprofit America has also responded to the recent challenges it has faced by significantly re-making charitable fundraising. Fundraising has become much more professional during the past twenty years with smart marketing techniques to reach a broader cross-section of the population. New for-profit companies have also gotten into the act, offering a variety of planned giving mechanisms.  

Whenever I hear reporters saying that money is being lost because of a shift in the marketplace, strike, or factory closure, I chuckle. Money doesn’t just disappear, but it certainly does change allegiances from one recipient to another. Many things that happen on Wall Street or Congress affect the state of giving in America because charity is greatest when people feel prosperous. The changing business landscape, either up or down, always presents new opportunities. Like other business segments, the non-profit area is in an exciting transitional phase. It may be smart to add a new arm to your overall business strategy.

 

If you have some thoughts on the subject, share them with me at nelson@MakingItTV.com. 

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