Weighing the Benefits and Risks
It is crucial to recognize that starting a for-profit venture can offer both benefits and risks for a nonprofit.

 

Benefits

Risks

Money can be generated to support the agency’s mission, increasing sustainability

Money  and time may be pulled away from mission-related activities to support the fledgling business

Creates unrestricted funds that  can be used for operating expenses or other costs traditional funders won’t cover

Management of the business may require skills that aren’t currently possessed by existing agency staff

For some nonprofits, the business may serve as an integral part of mission fulfillment (like with sheltered workshops or job training programs)

If the business doesn’t fit well with the mission, it could damage the agency’s reputation in the community or alienate long-term employees, board members and donors

Could increase agency visibility and attract new donors

Competing with local for-profit companies may engender ill-will.

May allow the organization to spend less time on other fundraising strategies, such as special events or grantwriting

If the business fails, the resulting financial problems could cripple the agency and, in the worst case scenario, force it to shut down.

 

 

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