Updating a tested model: Nonprofit community center's for-profit business adds revenue, opportunities

(Times Union (Albany, NY) Via Acquire Media NewsEdge) Jan. 11--After 87 years of sticking strictly to the nonprofit model, Trinity Institute-Homer Perkins Center Inc. branched out last year.

The board of the Albany-based community center/drug treatment facility decided to create a for-profit apartment cleaning business.

The reasoning behind the decision was twofold. First, Ultimate Housing Services creates an additional revenue stream for a charity affected by shrinking donations and government grants. Second, it provides an employment opportunity for clients or recent graduates of the nonprofit's programs.

"It takes our clients to the next step and helps them get some job experience," said Harris Oberlander, chief executive officer of Trinity.

At the same time, it shows others in the South End community where the center operates that local businesses can succeed.

"It's a resource and investment, not only for us but for the community. It's investment in a broader sense," Oberlander said. "When people see businesses are being created and jobs are being added, it will spread that spirit and other people will take that risk."

More and more, nonprofits are opening for-profit arms as a way to generate extra income for their main mission.

Trinity, which serves about 10,000 clients a year, has annual revenue of about $2.2 million. So the $16,000 that Ultimate Housing Services took in from its May inception to the end of the year was just a drop in the bucket. But Oberlander is hoping that as the business progresses, the profits will get larger.

Doug Sauer, executive director of the Council of Community Services Inc., an Albany-based adviser to nonprofits, said profit centers often can be carved out of services a group already provides.

"For example, if you have people who do weatherization for the elderly and low-income populations, they can be switched over to work crews for light construction," he said.

Sauer's own group, which provides financial and legal assistance to nonprofits, opened a for-profit insurance broker arm, which brings in cash it can use at will.

"A lot of grant money is restricted as to what you can use it for," he said. "But nonprofits also need unrestricted funds they can use to cover all of its expenses."

However, creating a for-profit business is not always a wise solution to a nonprofit's struggle, said Bill Dessingue, executive director of the Clifton Park-based Charitable Venture Foundation, a private foundation that also advises nonprofits.

It's often hard enough for traditional for-profits to make money, let alone having to provide enough revenue to cover overhead as well as funnel money into a larger nonprofit.

"You are going to have projects that don't make money, and all investments take a lot of time and energy," Dessingue said. "Don't think that an entrepreneurial venture will be a panacea."

Danielle Furfaro can be reached at 454-5097 or by e-mail at dfurfaro@timesunion.com

To see more of the Albany Times Union, or to subscribe to the newspaper, go to http://www.timesunion.com.

Copyright (c) 2009, Albany Times Union, N.Y.
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA

Developed by

Mercury Web Solutions