Photography: Nathan Dumlao
As purpose-driven entrepreneurs, we have a significant opportunity to combine the best of nonprofit and for-profit giving models. During the holiday season, nonprofits are doing their year-end campaigns before tax deadlines. At the same time, for-profits are sending cards and holiday discounts to their favorite customers, clients and vendors. I prefer to build upon these fantastic year-end traditions by using my own hybrid giving model that’s a win-win for my social enterprise year-round.
What I Learned From a Guy Named Paul
First, you should know that before I became a social entrepreneur, I worked for a large national nonprofit in their major gifts department. I was part grant writer and part assistant to a guy named Paul, who oversaw donor gifts of six to seven figures. We crossed over with other fundraising efforts, like walks and school campaigns. I learned a lot about fundraising while I was there. Most importantly, I learned that fundraising is all about building relationships. Gifts from supporters aren’t just an opportunity to gain money from philanthropists to fund great causes; they are an opportunity to build long-term relationships and give people the opportunity to connect their passions with making a difference.
My husband and I took a lot of these lessons to heart while getting the money together for our new social enterprise, Overflow Coffee Bar. Most of the money we raised was through crowdfunding. While we never got any six or seven-figure gifts, we did get a few five-figure ones. Plus, we built long-term relationships and gave people the opportunity to show their care for coffee farmers and their passion for local community building here in Chicago.
Questions About Funding as a Social Enterprise Startup
What a lot of social enterprises don’t talk about is what happens next. What are the sources of funding year after year, especially during those critical first five years in business? What percentage of revenue can you realistically expect from sales of your product or service? Should you pursue a nonprofit or benefit corporation legal structure? Should you apply for funding from public and private grants?
Answering these questions requires some creativity and ingenuity on behalf of the social entrepreneur who is building a business from scratch. Larger nonprofits starting revenue-generating social enterprise projects might be able to use donations or government contracts to get the new initiative up and running. A scalable for-profit social enterprise might go the route of angel investment. But for community-based, brick-and-mortar coffee shops like ours, there isn’t a quick solution.
Thankfully, during our first year, I came up with a great idea that has literally saved our business. In one word, that idea is membership.
Membership: The Two-Way Highway of Giving and Receiving
Just like museums, zoos and opera houses have memberships that give their regular customers discounts throughout the year, we developed a coffee bar membership program as a win-win for both our customers and for us. It’s what I call a “two-way highway of giving and receiving.” In exchange for purchasing a membership, our customers receive 10% off everything throughout the year. Plus, if they become a member between Thanksgiving and New Year’s, they receive a special gift. For us, we use their membership fee to manage our cash flow during the slow season from January through March.
Here are some specific ways we’ve made our membership program work as a mutually beneficial strategy:
Amanda Neely and her husband, Brandon, opened Overflow Coffee Bar, L3C in 2011 as a social enterprise focused on achieving a social mission prior to making a profit. Amanda loves creatively solving the challenges inherent to growing and starting a business, and enjoys sharing her experiential knowledge as a certified life and business coach. Amanda and Brandon are also expecting “little Neely” to their coffee-loving family in April 2018! Connect with Amanda on Instagram @overflowamanda.