A Sea Change in The Social Sector

A SEA CHANGE IN THE SOCIAL SECTOR
Examining Earned-Income Ventures and Entrepreneurial Nonprofits in Rhode Island By Seth J. Marbin Brown University, May 2005 Thesis submitted as partial satisfaction of the requirements for the degree of B.A. in Public and Private Sector Organizations Advisor: Professor Ann Dill, Ph.D. | Reader: Dean Michael Plater, Ph.D.
Abstract
Nonprofits across the nation are increasingly launching earned-income ventures to support their social missions. Even though this is not a new strategy for many nonprofits, for the sector as a whole it is a fundamental shift from traditional sources of revenue. This study identifies and evaluates significant factors associated with nonprofits operating earned-income ventures in Rhode Island and compares these results to data collected for a recently published national study. New data collected from a web-based survey of over 325 Rhode Island nonprofits is analyzed along with data from over 375 nonprofits in a national sample. This study also examines the types of earned-income ventures organizations are operating, the perceived impact, how nonprofits define themselves as entrepreneurial, and the reasons why some organizations have never operated ventures. Insights from Rhode Island nonprofit leaders, academics, and funders are also included in this mixed-methods approach, to help understand the motivations of nonprofits launching and operating earned-income ventures. The findings suggest that Rhode Island organizations are operating earned-income ventures at a rate of three times the comparable national sample. Additionally the majority of ventures are related to the organizations social missions, and the impacts are overwhelmingly positive.
Key Words
Rhode Island, entrepreneurial, nonprofit, organizations, earned-income, ventures, social enterprise, social entrepreneurship.
A Sea Change in the Social Sector: Examining Earned-Income Ventures and Entrepreneurial Nonprofits in Rhode Island Seth J. Marbin | PPSO Senior Honors Thesis | Brown University | May 2005 | Page 1 of 104
Table of Contents
ACKNOWLEDGEMENTS ............................................................................................. 4 INTRODUCTION............................................................................................................. 5 OVERVIEW ....................................................................................................................... 5 STATEMENT OF PURPOSE ................................................................................................. 6 RESEARCH QUESTIONS .................................................................................................... 6 DEFINITIONS .................................................................................................................... 7 WHY RHODE ISLAND? ................................................................................................... 10 LITERATURE REVIEW .............................................................................................. 14 BACKGROUND ................................................................................................................ 14 DESCRIPTION OF THE TREND: FROM THE 1980S TO TODAY ........................................... 15 BENEFITS ....................................................................................................................... 16 CAUTIONS ...................................................................................................................... 16 OPPOSITIONS .................................................................................................................. 17 RELATION TO MISSION................................................................................................... 18 SPECTRUM ..................................................................................................................... 20 PREVIOUS RESEARCH FINDINGS ..................................................................................... 20 WHY THE SEA CHANGE IS OCCURRING .......................................................................... 23 METHODS ...................................................................................................................... 27 THE WEB-BASED SURVEY ............................................................................................. 27 OVERVIEW OF WEB-SURVEY QUESTIONS ...................................................................... 28 RECRUITMENT OF PARTICIPANTS ................................................................................... 29 SURVEY INCENTIVES ...................................................................................................... 30 COMPARISON ANALYSIS ................................................................................................ 30 INTERVIEWS ................................................................................................................... 30 DATA ANALYSIS PROCESS ............................................................................................. 31 RHODE ISLAND FINDINGS ....................................................................................... 33 DEMOGRAPHICS OF THE RI NONPROFIT SAMPLE ........................................................... 33 CHARACTERISTICS OF THE RI EARNED-INCOME VENTURES .......................................... 34 DESCRIPTION OF THE RI EARNED-INCOME VENTURES................................................... 36 PROFILES OF THREE RI EARNED-INCOME VENTURES .................................................... 37 Cookie Place Cafe, Providence - An EIV from the Start .......................................... 37 Edward King House, Newport - Recently Launched an EIV .................................... 38 Crossroads Rhode Island, Providence About to Launch an EIV........................... 39 RELATION OF VENTURES GOALS TO ORGANIZATIONS MISSION .................................. 40 REASONS FOR LAUNCHING (AND NOT LAUNCHING) AN EIV ......................................... 41 PERCEIVED IMPACT OF OPERATING AN EIV................................................................... 44 HOW NONPROFITS DEFINE ENTREPRENEURIAL .......................................................... 45 USEFUL SUPPORT AND ASSISTANCE............................................................................... 49 RECENT RHODE ISLAND DEVELOPMENTS ...................................................................... 50 Amos House, Providence in National Business Plan Competition........................... 50
MBA Students Partnering with Nonprofits to plan EIVs .......................................... 51 Rhode Island Nonprofits Engaged in Learning Community..................................... 51 RHODE ISLAND COMPARED TO THE NATIONAL SAMPLE........................... 52 RHODE ISLAND DESCRIPTIVE STATISTICS ...................................................................... 53 NATIONAL DESCRIPTIVE STATISTICS ............................................................................. 53 BIVARIATE CROSS-TABULATIONS AND CHI-SQUARE TESTS .......................................... 54 Entrepreneurial Organizations ............................................................................ 54 Program Area ........................................................................................................... 54 Age of Organizations ................................................................................................ 55 Budget ....................................................................................................................... 55 LOGISTIC REGRESSION ................................................................................................... 56 Entrepreneurial Organizations ............................................................................ 57 Program Area ........................................................................................................... 57 Age of Organizations ................................................................................................ 58 Budget ....................................................................................................................... 58 LIMITATIONS ............................................................................................................... 59 ETHICAL CONSIDERATIONS ............................................................................................ 63 CONCLUSIONS ............................................................................................................. 64 SUGGESTIONS FOR FUTURE RESEARCH .......................................................................... 66 ATTACHMENTS ........................................................................................................... 67 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. INTERVIEW PARTICIPANTS ..................................................................................... 67 INTERVIEW GUIDE FOR NONPROFITS...................................................................... 68 INTERVIEW GUIDE FOR SUPPORTING ORGANIZATION ............................................ 68 INFORMED CONSENT FORM.................................................................................... 69 POSTCARD.............................................................................................................. 70 E-MAIL ................................................................................................................... 71 MEDIA RELEASE 1 ................................................................................................. 72 MEDIA RELEASE 2 ................................................................................................. 73 PROVIDENCE JOURNAL ARTICLE ............................................................................ 74 SOCIAL VENTURE PARTNERS OF RHODE ISLAND WEBSITE .................................... 75 TRANSCRIPT OF WRNI RADIO ANNOUNCEMENT ................................................... 76 E-NEWSLETTER - RI FOUNDATION ........................................................................ 76 E-NEWSLETTER - KNOWLEDGE EXCHANGE CENTER ............................................. 77 E-NEWSLETTER - PROVIDENCE DEPT OF ART, CULTURE & TOURISM .................... 77 SURVEY ................................................................................................................. 78
APPENDIX...................................................................................................................... 89 WORKS CITED.............................................................................................................. 99
Acknowledgements
The following is a partial list of those who have provided generous support, advice, guidance and encouragement for this thesis. Advisor: Professor Ann Dill, Ph.D., Brown University Reader: Dean Michael Plater, Ph.D., Brown University Deborah Schimberg, Social Venture Partners of Rhode Island Kris Hermanns, David Karoff, and Rick Schwartz, The Rhode Island Foundation Cynthia Massarsky, Samantha Beinhacker, and Betty Velazquez, The Yale School of Management The Goldman Sachs Foundation Partnership on Nonprofit Ventures The Research at Brown (RAB) Grant Committee Ann Kim, Kristine Peterson, Morgan Grefe, and Caitlin Slodden, Brown University Graduate Students Victoria Ball, M.Ed. Stephen Nelson, Ph.D., Brown University John Tyler, Brown University Lynn Carlson, Brown University The Writing Center at Brown Jyothi Nagraj Marbin Bruce Marbin, Jana Zvibleman, and devora marbin Alicia Young, Brown University Joshua Tripp, Community Wealth Ventures J. Gregory Dees, Ph.D., Duke University, The Fuqua School of Business Rolfe Larson, Rolfe Larson Associates William Foster, Bridgespan Consulting
Introduction
Overview
Nonprofits across the nation are increasingly launching earned-income ventures to support their social missions (Frumkin, 2002; Massarsky & Beinhacker, 2002; W. Shore, 2003; Young & Salamon, 2002). Even though this is not a new strategy for many nonprofits, for the sector as a whole it is a fundamental shift from traditional sources of revenue. Instead of relying on donations, grants, and subsidies alone, nonprofits are increasingly charging fees, contracting for services, selling products, leasing property, and engaging in other income-generating activities. Despite rapid growth in the availability of support services to assist nonprofits in launching and sustaining earned-income ventures, popular opinion and previous research are both divided on the merits of these commercial activities. Some praise the leaders of these so-called social enterprises as innovative, forward-thinking, and entrepreneurial. Others have voiced concerns about nonprofits straying from their social missions as they attempt to generate financial capital in new ways, and in some cases, even earn profits. This study presents a portrait of the earned-income ventures operated by nonprofits in Rhode Island, and compares data collected from these organizations to a recently published national study. It includes quantitative analysis of national sample data1 gathered from over 375 organizations and of new data derived from a similar webbased survey of over 350 organizations from across the state of Rhode Island. It also incorporates qualitative findings from interviews with nonprofit leaders, academics, and
1
By Massarsky& Beinhacker (2002)
funders. This mixed-methods approach provides insight into the motivations, pressures, successes, and challenges that organizations face in launching and operating earnedincome ventures. It concludes with recommendations relevant for social enterprises and entrepreneurial nonprofits nationwide.
Statement of Purpose
The purpose of this study is to examine earned-income ventures across the state of Rhode Island, identify and evaluate significant factors affecting their development and compare these organizations to a national sample of nonprofits operating earned-income ventures.
Research Questions
1. How widespread are earned-income ventures (EIVs) among Rhode Island nonprofits? 2. How does operating an EIV impact a nonprofit organization (as perceived by nonprofit leaders)? 3. What are the perceived barriers for organizations that are not operating ventures? 4. How do nonprofits in Rhode Island define and identify with the term entrepreneurial? 5. What types of support and assistance would organizations interested in EIVs find most useful? 6. How do factors (such as self-identification as entrepreneurial, program area, budget, and size) of nonprofits relate to an organizations likelihood of operating an EIV? 7. How do the EIVs of Rhode Island nonprofits compare to the rest of the nation?
Definitions
Because of the wide variety of terms and phrases that are commonly used to describe earned-income ventures and entrepreneurial nonprofits, the following is a discussion of key concepts and terminology. Brief definitions, for the sake of this study, are offered for each concept, followed by explanations of important distinctions, and a few of the many related phrases that are used in both literature and practice. Because this study focuses on organizations in the United States, these definitions are based primarily on American usage of these terms. For the sake of this study, the term nonprofits refers to organizations defined as private institutions serving public purposes and not organized principally to earn a profit (Salamon & Anheier, 1997, p. 15). This term is often described as a misnomer, and is widely misunderstood, because nonprofits are not actually restricted from earning profits, as the name suggests. They are instead restricted from distributing profits to private owners or shareholders as profit-maximizing (also known as for-profit, business, and corporate) firms do (Hansmann, 1980). The tax status of nonprofits is another defining characteristic that is often misunderstood. While there are currently 35 different tax classifications for nonprofit organizations, this study focuses exclusively on those designated as 501(c)(3). This is the most common designation, and includes organizations that are generally exempt from federal income tax and eligible to receive tax-deductible contributions (Internal Revenue Service, 2002). As of 1950, organizations classified as 501(c)(3) have been required to pay Unrelated Business Income Tax on revenue from activities that are not significantly related to their missions (Hines, 1998).
Within the U.S., nonprofits are also commonly referred to as charitable, tax-exempt, voluntary, not-for-profit, third-sector, and social-sector organizations. The term profit is generally defined as the amount of money received (revenue) subtracted from the money spent (costs) in a given time period. This definition is suitable for the sake of this study. However, it is worth mentioning two other common definitions of profit that highlight the complicated nature of this term. Accountants using the accrual basis of accounting deduct explicit costs (those which can directly be
accounted for) from revenue that are recorded in the period in which they are earned or incurred regardless of whether cash is received or disbursed in that period (Venture Line, n.d.). Using this definition a firm can record a profit despite receiving less money than they spent in a given time period. The economists of profit definition begins with the general definition above, yet they deduct both explicit costs (the costs that accountants use) and implicit (or opportunity) costs which are defined as the value of a course of action as measured by the costs associated with alternative courses of action (Mankiw, 2004). Both the accountants and economists definitions highlight complicating factors not taken into consideration in the general definition. The phrase earned-income ventures, as it is defined for this study, refers to activities initiated by nonprofits that generate revenue in direct exchange for products, services, or privileges (Social Enterprise Alliance, 2005). While the phrase social
enterprise may be more commonly used today, Young (2001, p. 1) described it well when he said social enterprise is an imprecise concept in the United States. To illustrate this ambiguity, the term social enterprise can be found referring to a variety of organizational forms in both the nonprofit and for-profit sector including: an earned-
income venture; a nonprofit organization that operates an earned-income venture; a forprofit business which supports a nonprofit, has adopted a social mission or philanthropic strategy; and the emerging sector made up of these various organizational forms. For further reading, Alter (2004) offers a review of various definitions as well as a helpful typology of social enterprises. The phrases: community wealth, mission-driven, and social-purpose are also commonly combined with the words venture, enterprise, and business, to describe income-generating activities within the nonprofit sector. The related concept of social entrepreneurship is worth special consideration because of the evolving debate about its true meaning. Some advocate for a definition of social entrepreneurship that specifically includes earned-income as a defining characteristic, emphasizing that innovation without income is not sustainable in either the nonprofit or the for-profit sectors (Boschee & McClurg, 2003). Others advocate for a more broad definition of social entrepreneurship, describing it as a generic process not specifically dependent on the profit seeking paradigm (Young, 2003, p. 166) and a method for creating social value that includes options from pure philanthropy to the commercial methods of the business sector (Dees, 2001, p. 5). The working paper Social entrepreneurship: What are we talking about? (Mair & Marti, 2004) highlights many more definitions of this phrase currently in use and the evolution of this field of study. The label entrepreneurial is commonly used to describe specific innovative and risk-taking behavior, activities related to earning money, or general approaches to organizing a business. As one of the aims of this study is to better understand how Rhode Island nonprofit leaders define and identify with the concept of entrepreneurial this is
further discussed in the Findings section. According to Drucker (1993, p. 21), since entrepreneur was first used almost 200 years ago to describe leaders in the for-profit sector, there has been total confusion about its definition. In the United States, it is often used to describe one who starts his [or her] own, new and small business, however Drucker (1993, p. 21) makes that case that, not every new small business is entrepreneurial. Citing Drucker, Dees (2001) asserts that launching or operating an earned-income venture does not necessarily make a nonprofit entrepreneurial either. He also suggests that nonprofits can be entrepreneurial in ways that do not involve earning income. One often-cited leader of an entrepreneurial nonprofit said, becoming more entrepreneurial is as much a shift in organizational culture as a broadening of economic opportunity (Strickland, 2003, p. 24). This study focuses on Rhode Island nonprofits and compares these organizations to a national sample. The following section discusses why Rhode Island is a good sample for this comparison.
Why Rhode Island?

The nonprofit sector in Rhode Island provided a good sample for this study for three major reasons: it has an interesting history in connection with earned-income ventures, it is representative of the national nonprofit sector in two key revenue streams; and despite rapid growth in recent years, the small geographic size of the state helps foster a comparatively cohesive nonprofit community. According to Beauchemin and Gallo (2003), organizations in Rhode Island report key revenue streams in similar proportions to all U.S. nonprofits. For Rhode Island nonprofits 63% of their revenue comes from programs and services and only 14% from
contributions (which include donations and foundation grants), while organizations nationwide indicated 64% and 14% respectively. Other revenue streams including investment income and government grants are also similar in proportions, although not relevant for this study. The nonprofit sector in Rhode Island has grown rapidly in recent years. From 1990-2000, the number of nonprofit organizations (with more than $25,000 in gross annual receipts) grew by 71.4%, from 842 to 1,443 (Beauchemin & Gallo, 2003). By comparison, the number of total business firms in Rhode Island grew by only .5%, from 25,110 to 25,243, in the same time period (U.S. Census Bureau, 2005). Yet, compared to other states, Rhode Islands small geographic size and resulting structural cohesion were considered advantageous for this study. Because there is only one major newspaper, one public radio station, and one community foundation for the entire state, news and information are relatively easily shared among nonprofits in Rhode Island. This was helpful in securing a higher response rate than previous national studies have achieved. One example of Rhode Islands history with earned-income ventures is illustrated by the story of the nonprofit Rhode Island Hospital and its relationship to the for-profit Rhode Island Hospital Trust Company. This relationship, as told by historian Joseph Garland, provides an interesting example of the development of an earned-income venture.2 The effort to build a hospital in Rhode Island started in 1851 with a traditional nonprofit fundraising strategy. Recognizing a community need, a group of Rhode Island doctors sent a letter to all citizens paying more than $100 in taxes a year asking for a
This illustrative anecdote of the Rhode Island Hospital is based on Garland (1963) and oral history provided by Rick Schwartz of the Rhode Island Foundation.
A Sea Change in the Social Sector: Examining Earned-Income Ventures and Entrepreneurial Nonprofits in Rhode Island Seth J. Marbin | PPSO Senior Honors Thesis | Brown University | May 2005 | Page 11 of 104 2
contribution (Garland, 1963, p. 7). They then approached the City Council, asking them to commit land to the hospital if the private funds could be raised. Neither the Councils support nor the private funds were secured, and to the frustration of many, the first attempt to build a nonprofit hospital in Rhode Island met an untimely demise. In 1857, upon observing the desperate conditions under which his medical friends attempted to treat the poor of Providence, (Garland, 1963, p. 11) a young Brown University graduate named Thomas Ives convinced his dying father to leave $50,000 in his will to help establish a hospital. As wounded soldiers began to return from the Civil War, the community need was magnified, and sickness and suffering, wounds and death, had become the common bonds of people in Rhode Island (Garland, 1963, p. 11). In 1863, the then Captain Thomas Ives returned from the war and revitalized the effort for a hospital. Leveraging the bequest of his father, $25,000 from his uncle, and his own donation of $10,000, Ives secured a state charter and 12 acres of land from the City Council. Over the next year, a committee of Trustees raised $305,000 in donations, which was by far the largest amount that [had] ever been raised for any single object of charity in the State, according to Ives (Garland, 1963, p. 14). Despite the record-breaking fundraising, and an additional $50,000 bequest from Captain Ives when he passed away two years later, rising costs and shortages of labor and materials left the trustees wanting for money to finish the construction so that the hospital could open. In 1867, the trustees developed an arrangement to the mutual benefit of the hospital and their own financial interests (Garland, 1963, p. 15). They leveraged the community support of the hospital (as well as its cultural capital) to create a for-profit
bank known as the Rhode Island Hospital Trust Company.3 This bank was required to make annual payments to the nonprofit Rhode Island Hospital (equaling one-third of its net profits above six percent), in lieu of normal taxes. Thus, over 135 years ago, a bank was created as an earned-income venture to help subsidize a nonprofit hospital. The Hospital Trust Company has since been acquired (and no longer operates under its original name) but in its time, it proved to be a substantial source of income for the hospital (Garland, 1963, p. 16). The Hospital Trust Company also proceeded to found the Rhode Island Community Foundation, the only community foundation serving the state, and one of the collaborators on this research. The Rhode Island Hospital is now a part of a nonprofit healthcare partnership which controls over $1.4 billion in assets, provides over $50.4 million in uncompensated care, and employs more than 10,000 people (Lifespan, 2003). As demonstrated, Rhode Island has an interesting history of earned-income ventures, is comparable to the national nonprofit sector in key revenue areas, and the state cohesion makes it a good population from which to sample. The following Literature Review section will discuss previously published work in the field to help highlight the national history and context of earned-income ventures.
The profit sharing structure of the Rhode Island Hospital Trust Company was based on a model established by the Massachusetts General Hospital in 1814.
Literature Review
Background
Most of those who have written about earned-income ventures in the U.S. start with a reminder that earning income is not a new strategy for all nonprofits. Hospitals and universities, which are recognized as the two largest revenue generators in the sector today, have both historically earned income by charging fees for their services. Human service organizations such as Goodwill Industries have operated retail stores for over 100 years (Goodwill, 2005), the National Geographic Society has been underwriting their educational mission with magazine sales since 1888 (National Geographic, 2003), and the Girls Scouts of the U.S.A. have been selling cookies for almost 90 years (Girl Scouts, 2004). The Cistercian Abbey, a religious congregation in Wisconsin, recently received national media attention for their earned-income venture LaserMonks.com. As they describe it, monks used to survive by copying manuscripts by hand and today they carry on this tradition by selling toner and ink cartridges on the internet. They date the history of revenue-generating activity in their religious order back 900 years (McCoy, 2004). Today, the range of nonprofits launching earned-income ventures, the types of ventures they are operating, the resources available for guidance and support, and the attention focused on these enterprising activities are all growing exponentially. The following section describes how the trend has evolved over the last 25 years.
Description of the Trend: From the 1980s to Today

During the 1980s, in one of the earliest studies seeking to understand the trend of nonprofits turning to enterprise as an alternative to traditional funding sources, Crimmins and Keil (1983) described a sense of explosive activity in the sector. Five years later, Skloot (1988, p. 3) described a small yet growing interest in and trend toward nonprofit enterprise. Government cutbacks in the 1980s, that caused both funding shortages and increased demand for nonprofit services, are cited as the primary reasons that nonprofits began adopting earned-income ventures in such large numbers during this decade (Crimmins & Keil, 1983; Salamon, 1996). In the 1990s, Shore (1995) outlined a strategy for a revolution among nonprofit leaders to create rather than simply re-distribute wealth. Speaking about the growth of job-training ventures, Emerson and Twersky (1996, p. 211) reported, increasing numbers of non-profits are developing enterprises to employ formerly homeless and other low-income people. Dees (1998, p. 55) described a growing number of nonprofits, turning to the for-profit world to leverage or replace their traditional sources of funding. Weisbrod described a commercial transformation and declared, massive change is occurring in the nonprofit sector (1998, p. 1). In the new millennium, Massarsky and Beinhacker (2002, p. 13) observed, the trend to venture has increased significantly over the past twenty years, and Shore (W. Shore, 2003, p. 7) reported that generating resources through profitable enterprise to promote social change, has expanded far beyond what has previously been reported, or could even be imagined. Just this year, Foster and Bradach (2005, p. 92) declared,
today it seems routine earned-income initiatives are becoming accepted -- even expected -- throughout the nonprofit world.
Benefits
Much of the previous literature focuses on benefits of operating earned-income ventures. Advantages, often labled halo effects (Massarsky & Beinhacker, 2002) or halo benefits (Hochberg, 2002) are described as positive influences on an organizations culture, current and prospective staff, reputation in the community, and ability to achieve their mission. In addition, earned-income ventures can help organizations accomplish much more than they could by relying only on the limited philanthropic and government resources (Dees, 2004, p. 3). For those who describe earned-income ventures as beneficial to their parent organizations, the level of importance varies. Some describe ventures as valuable in moving an organization towards self-sufficiency (Burns, 2003; King, 2003), while others describe earned-income ventures as essential for the survival of their organizations (Strickland, 2003; Walls, 2003). Boschee (2001, p. 1) stated that entrepreneurship in the delivery of social services is not only legitimate, but necessary.
Cautions
The majority of those who have discussed the benefits of earned-income ventures also emphasize that these ventures are not right for all nonprofit organizations. Many caution organizations interested in adopting earned-income ventures as a quick fix. Over twenty years ago, Crimmins and Keil (1983, p. 32) predicted, no matter how successful enterprise ventures become in the sector, they will not be able to cure all of its financial
ills. That same year, in a book generally dedicated to promoting earned-income ventures, Haycock (1988, p. 147) published ten case studies highlighting pitfalls of earned income for the small nonprofit. Through a mostly economics-based approach, Weisbrod and his colleagues (1998a) highlighted some benefits and numerous challenges of running earned-income ventures including: goal displacement, competition with the for-profit sector, and mission-drift that can accompany earned-income ventures. Bradley (2004, p. xvi) described earned-income ventures as risky business. And Dees (1998, p. 56) warned of many dangers for nonprofits and said, in the best of circumstances, nonprofits face operational and cultural challenges in the pursuit of commercial funding. In the worst, commercial operations can undercut an organization's social mission.
Oppositions
While many have expressed hesitation about nonprofits launching earned-income ventures, Costello was one of the early voices of active opposition. In her review of Shores call on nonprofit leaders to seize earned-income opportunities, Costello (1996, para 16) voiced concerns about a potential increase in nonprofits dedication to feeding the bottom line rather than the bread line. Two articles that appeared within the last six months have raised similar concerns. In The Pitfalls of Profit, Weisbrod (2004, p. 46) highlights case studies of ventures gone bad, and encourages a rebalancing of the tax-code to provide more incentives for donations and to discourage nonprofits from engaging in commercial activity. Should Nonprofits Seek Profits? (Foster & Bradach, 2005) tells the stories of a few incredibly unprofitable and mission-detracting ventures, while casting doubts about the accuracy of
financial accounting throughout the sector and questioning the profitability claims and methodology of previous studies.
Relation to Mission
Foster and Bradachs (2005) conclusion to Should Nonprofits Seek Profits? calls for organization to put mission first when considering earned-income ventures at the risk of harming society itself. While few have used such strong cautionary language, the idea that ventures are better off when they are related to an organizations mission seems to be the one point about which almost everyone who has studied the topic can agree. Yet determining what exactly relates to an organizations mission is far from easy or clear, and the current fundraising alternatives can have similar mission-detracting effects. Froehlich (1999) wrote, we worry and speculate about mission dilution and legitimacy erosion as distractions emerge from the [nonprofits] necessary economic endeavors. Yet, these are and always have been the facts of life for a nonprofit organization. DiMaggio (1988) raised the question of mission-drift related to enterprise in artsrelated organizations, and Frumkin (2002, p. 30) found that despite the worries of some previous observers of nonprofits commercial activities, there is no clear evidence that the new form of financing fueling the sectors growth has significantly undermined the ability of nonprofit organizations to fulfill their missions." Weisbrod (2004, p. 46) added that it is difficult to determine what distorts an organizations mission. It is also worth noting that it is difficult to determine if the mission has in fact been distorted, given that missions often evolve and change over time.
As discussed in the Definitions section, the extent to which earned-income ventures relate to an organizations mission is important for tax purposes because nonprofits are required to pay taxes on income not substantially related to their missions. The relation to mission question is also crucial in examining the diffusion of earned-income throughout the sector because the missions of nonprofits are one of the key justifications for their differential tax and legal status. As Brown and Slivinsky (2003) wrote, it is hard to overstate the importance of mission in shaping the economic study of nonprofits. Weisbrod concluded that, increased commercialization is not ideal, but identified the more important question: is it preferable to alternative options? He identified the alternative options as increased dependence on government or decreased output of collective goods (1998a, p. 298). Further complicating matters, Weisbrod wrote, the precise nature of sacrifices that nonprofits make to raise money is seldom clear-cut (1998a, p. 298). This was reiterated recently by Shuman and Fuller (2005), who discussed the paradox of many fundraising efforts that nonprofits now engage in that require catering to those with abundant resources, to shift small amounts of those resources to organizations attempting to redistribute resources. Shuman and Fuller (2005) concluded with a call for nonprofits to embrace the power of entrepreneurship for social change. After a thorough examination of a group of nonprofits operating earned-income ventures, Emerson and Twersky (1996, p. 13) reported, our experience has been that, when managed appropriately, sound business practice can help drive the realization of the organizations social mission.
Spectrum
Recognizing the vast array of program areas in which nonprofits operate, the ambiguity of missions and the variety of activities that are considered earned-income ventures, previous authors have tried to make sense of social enterprises along continuums. Dees (1998) offers a Spectrum of Social Enterprise that relates venturing activity to an organizations mission, and Crimmins and Keil (1983) developed the Spectrum of Nonprofit Enterprise that relates enterprises to an organizations programmatic area. Both highlight the wide range of activities that any individual nonprofit organizations can undertake related to earned-income ventures.
Previous Research Findings

Massarsky and Beinhacker (2002, p. 1) set out to survey the landscape of enterprise in the nonprofit sector. Through a national survey of 519 nonprofit organizations they discovered 42% of the organizations in their sample were currently operating earned-income ventures (EIVs); a clear majority of ventures were servicerelated; organizations operating EIVs tended to be older than those not operating EIVs; and arts and culture organizations were more likely to operate EIVs than organizations focused on other program areas. The study Enterprising nonprofits: Revenue generation in the nonprofit sector by Massarsky and Beinhacker was the basis and inspiration for the quantitative portion of this thesis. Through comparison to their results, this thesis seeks to extend their exploration of organizational characteristics related to nonprofits operating earned-income ventures. Massarsky and Beinhacker suggested that, future research might answer the question as to whether the differences [in the program area of organizations operating
EIVs] stem from inherent properties of the kinds of goods and services produced in these varied sectors, or whether they relate more to cultural and organizational differences among the organizations (Massarsky & Beinhacker, 2002, p. p3). They also identified business planning as one of the key success factors of earned-income ventures and found only 55% of the organizations operating EIVs had written business plans. They concluded that this could be improved though focused attention and resources, which led to the development of the first National Business Plan Competition for Nonprofit Organizations (now in its third year). In 2002, Community Wealth Ventures conducted a national survey of 72 nonprofits operating business ventures, defined as a business that generates revenue from the sale of products and/or services to the customers beyond the organizations immediate constituents (2003, p. 112). In their sample, the organizations operating business ventures tended to be: social service organizations with employment and training missions; at least 9 years old; and operating multiple ventures. Thrifts stores were the most common ventures represented in their sample, 89% of respondents indicated that their venture related directly or nearly-directly to the mission of their organization, and 69% reported either making a profit or breaking even (Community Wealth Ventures, 2003). In industries such as day care, nursing homes, and hospitals, nonprofits are already in direct competition with for-profit firms. Previous research suggests that although the nonprofit organizations in these industries might appear to be highly commercial they continue to offer a variety of benefits which characterize them as more mission-related than profit maximizing. Weisbrod (Weisbrod, 1998a) found that when
compared to their for-profit counterparts, nonprofits continue to offer: higher-quality services, lower prices, and continued access to services for those who can not afford to pay. A common concern of those in the nonprofit sector is how operating earnedincome ventures might impact their ability to continue to attract donations and other resources. Herman and Redina (2001) sought to answer this question through a situational analysis study of 70 volunteers. They measured how donors would respond to nonprofit organizations engaging in commercial activities and discovered evidence to suggest that donors would be more likely to support mission-related commercial income activities than those that do not advance the organizations mission. Because self-identification as entrepreneurial was shown to be interrelated with operating earned-income ventures by Massarsky and Beinhacker (2002), the question of how nonprofits define entrepreneurial is an important one. A study of the personal characteristics of women entrepreneurs in the nonprofit sector in India found agreement with characteristics previously identified with women entrepreneurs in the for-profit sector including, they are risk takers, come from financially secure backgrounds, have access to childcare and support for household duties, and place a high premium on independence (Handy & Ranade, 2000, p. 2). And Dart (2004a) constructed a typology of the related concept of being business-like which is used as a starting place for this studys examination of how nonprofits in Rhode Island identify with and define entrepreneurial.
Why the Sea Change is Occurring

As this study suggests, there is a sea change, or fundamental shift, occurring in the nonprofit sector: nonprofits are operating earned-income ventures and social enterprises at increasingly high rates. While there has been little empirical research about why this change is occurring, Weisbrod (1998a, p. 305) offers one compelling reason: in the nonprofit sector, expanded commercial activities are the most promising revenue sources. Dees (1998) explained the rising tide of commercialism in the nonprofit sector as a combination of five forces: a world-wide pro-business zeitgeist, attempts by the organizations to model the independence they seek to instill in their clients, the search for financial sustainability, the influence of funding agents, and competition among nonprofits for limited funding. Dart (2004b) explored the emergence of social enterprise through legitimacy and institutional theories. This section continues this exploration of change through sociological theories and discusses some economic theories of organizations and the market-based environment in which they operate to add to these explanations of the emergence of earned-income ventures. The sociological theory of resource dependency suggests that all organizations exchange resources with their surrounding environments as a condition for survival (Scott, 1992, p. 114). Most of the resources that nonprofits need to operate are similar to those needed by for-profits, including staff, electricity, and meeting space; yet, some are more unique. Legitimacy, as defined by Suchman (1995, p. 574) as a generalized perception or assumption that the actions of an entity are socially desirable, proper or appropriate..., can be seen as one resource which has a distinctive value for nonprofit organizations. Because most nonprofits rely on donations for at least one source of
funding, and people are less likely to donate money to an organization whose legitimacy they have reason to question, nonprofits have a unique need to be seen as legitimate in order to successfully raise donations. This is particularly true for nonprofit organizations that do no produce outputs that are easily quantified or measured. Resource dependency is premised on the theory of scarcity (Robbins, 1932) which suggests that all resources are in limited supply. While some resources might be easily quantified and measured, most of what nonprofits produce (or provide as a service to the community) are not. Because the price of these resources is the primary means of measuring their value, the symbolic value of money itself is also important. As Smith observed, We say of a rich man that he is worth a great deal, and of a poor man that he is worth very little money (Smith, 1776, para. 1). In this sense, money is not only a measure of assets; it is often a measure of worth as well. This can also be observed in evaluations of organizations. Regardless of its ability to deliver on its social mission, a nonprofit that was unable to pay its bills would generally be thought to have little value and ones that have more resources are often assumed to be worth more. Institutional theories of organizations assert that an organizations life chances improve when its behaviors are aligned with the norms and social expectations of the larger society (Tucker & Baum, 1992, p. 62). These are grounded in open-systems theories which suggest that the environments in which organizations operate influence their structure (Handel, 2003). These environments have been characterized as primarily institutional or technical. Institutional environments are those in which cultural symbols and belief systems are of primary importance (Meyer & Rowan, 1977), while technical environments place importance on characteristics such as an organizations
speed of production, and specific quality or financial metrics. Most nonprofits operate in institutional environments. These institutional organizations are characterized by a more symbolic bottom line, represented by prestige, support, and legitimacy (Dill, 1994, p. 351). This is in contrast to organizations operating in technical environments which look to profit margin and market share as indicators of success (Dill, 1994, p. 351). The theory of institutional isomorphism (DiMaggio & Powell, 1983) suggests that organizations adapt their structure as a result of forces which can be characterized as: mimetic, coercive, or normative. Coercive forces are attempts by outside agencies to influence organizations structure or activities. Normative forces are described as those that spread through professional networks or trade associations, and mimetic forces arise as a result of perceived benefits to the organization for adopting a particular structure or set of activities. Though there is strong evidence of isomorphism within the nonprofit community in Rhode Island, the drivers of the institutionalization of earned-income ventures are far from clear. There is little evidence to suggest that nonprofits are being formally coerced to engage in income-generating activities, however for some, informal coercion (in the sense of influence across an unequal power structure) may be a factor. Level-funding from the state was cited by multiple organizations as a specific reason for developing ventures or increasing the scope of their ventures. The work of Social Venture Partners of Rhode Island and the Rhode Island Foundation (both partners in this research) may also be having influencing effects on local nonprofits. Both organizations have offered funding specifically for social
enterprises and they have worked together to host several workshops and forums on topics related to social enterprises and earned-income ventures. The chance that some organizations might be adapting their structure to include earned-income ventures to be seen in a good light by these funding agents should not be overlooked, yet the data from this study suggests that mimetic forces are the primary motivators of nonprofits adapting earned-income ventures. Nonprofits in Rhode Island appear to be launching earned-income ventures largely because they view it as a way to attract positive community relations and thus legitimacy.
Methods
This study was conducted in three parts: a web-based survey, semi-structured interviews, and a comparison analysis. The survey was available online from February 1st -15th, 2005. The interviews were conducted in March and April, 2005 and the results were then analyzed and compared to national data that was collected through a separate initiative in 2002. The following section provides more detail about the methods used to collect and analyze the data.
The Web-Based Survey

The survey [attachment 15] was hosted online by Zoomerang.com, and was accessible through a link on the Social Venture Partners of Rhode Island website [attachment 10]. The questions were based on those developed by Massarsky and Beinhacker of the Yale School of Management the Goldman Sachs Foundation Partnership on Nonprofit Ventures. The survey consisted of 80 possible questions and skip-logic was used to reduce the number of questions asked of any given respondent. Based on previous answers each respondent was asked a minimum of 18 and a maximum of 48 questions. These were a mix of multiple-choice, yes-no, open-ended, and ranking-type questions. The eight questions used in the skip-logic sequence were mandatory, and the other 72 were optional. The primary change between the survey used in this study and that of the previous one was the result of a technical limitation of the software. The Massarsky-Beinhacker survey asked detailed side-by-side questions about the two ventures that provided the
greatest benefit to the organization. This survey only asked details about the one most successful venture because the side-by-side method was not possible, and asking the questions separately would have resulted in 15-20 additional questions. Other changes involved very limited re-wording of questions, removal of answer choices, and the addition of a few questions such as: What is the mission of your organization? Who manages your venture? What is the managers formal business training?
Overview of Web-Survey Questions

The first seven questions were identical for all respondents and addressed the Informed Consent Statement and issues such as program area, mission, general budget, organizational scope and size. As an example of how the skip logic worked, question #9 asked: Do you consider your organization to be entrepreneurial? If the respondent chose yes they were asked question #10: In what ways is your nonprofit entrepreneurial? What entrepreneurial strategies are you using? If they chose no to question #9, they skipped question #10. The answer to question #11 was the primary determinant in the length of the survey and types of questions for each respondent. It provided a definition of earnedincome and then asked: Has your organization ever operated an earned-income venture? Yes, currently operating 1 or more earned-income venture Not currently, but operated 1 or more in the past Never operated an earned-income venture
Respondents who chose answer #1 or #2 were asked up to 37 more detailed questions about their organizations, the earned-income venture(s) they were operating
and the effects of the ventures on their organization. Those who indicated that they had never operated an earned-income venture were asked up to 10 more questions. The final questions, asked of all organizations, address issues including: plans to start any ventures in the next year, types of support that might be helpful in doing so, how participants heard about the study, and personal and organizational contact information.
Recruitment of Participants
The web-based survey was open to all 501(c)(3) organizations operating within the state of Rhode Island. This population is estimated to be about 5000 organizations, but because many smaller and religious nonprofits are not required to file tax returns the exact size of this population is unknown. The mailing addresses for these organizations were collected from one public database (Internal Revenue Service, 2005a) containing 4564 records, and two private databases. Duplicates, charitable trusts, and scholarship funds were removed and the remaining 4652 addresses were then verified through the National Change of Address (NCOA) and Coding Accuracy Support System (CASS) services provided by Melissa Data Services. The final list consisted of 4342 organizations that were each mailed a postcard [attachment 5] on 2/28/05 inviting them to participate. Five of these postcards were returned as undeliverable. An email invitation [attachment 6] was sent directly to 1691 organizations on 3/2/05. A total of 370 of these emails were returned as undeliverable. On 3/7/05 media releases were distributed from the Rhode Island Foundation [attachment 7] and the Brown University News Service [attachment 8] to all local newspapers, television and radio stations. As a result, a brief article [attachment 9] appeared in the Providence Journal on 3/12/05, and announcements [attachment 11]
were also made on the WRNI radio station on the last day of the study, 3/15/05. Enewsletters from three separate organizations [attachments 12, 13 and 14] contained descriptions of the survey and links to the website.
Survey Incentives
As incentives, recruitment materials highlighted that each participant who filled out the web-based survey was eligible to receive: A link via email to download an electronic copy of the final report; A chance to be profiled in the report (if selected for a follow up interview); A chance to win one of 5 certificates for $25-off the next New Business Ventures for Nonprofits Workshop hosted by Social Venture Partners of Rhode Island and run by The Grantsmanship Center; A chance to win one of 3 copies of Generating and Sustaining Nonprofit Earned Income: A Guide to Successful Enterprise Strategies Edited by S. Beinhacker, C. Massarsky, and S. Oster (List Price: $45).
Comparison Analysis
The results from the Rhode Island web-based survey were compared to data collected by Massarsky and Beinhacker for their report Enterprising Nonprofits: Revenue Generation in the Nonprofit Sector (Massarsky & Beinhacker, 2002). The Rhode Island sample includes 329 organizations collected over a two-week period in 2005, and the national sample includes 519 nonprofits from across the country, collected over a two-and-a-half-month period in 2001.
Interviews
A series of 22 interviews were conducted in March and April, 2005 [attachment 1]. Of these, 11 interviews were conducted with nonprofit leaders, most of which were currently operating earned-income ventures. Interviewees were selected to participate
based on attempts to balance a diverse set of organizational demographic considerations including, size, location, budget, program area and venturing status. These interviews were conducted over-the-phone, lasted about one half hour, and used a nine-question guide [attachment 2]. Eleven interviews were conducted with individuals recommended by partnering organizations as supporters of the Rhode Island nonprofit sector. These interviews used a separate question guide [attachment 3] that asked questions about their observations and opinions of nonprofits operating earned-income ventures. These interviews consisted of 2 funders, 3 supporting organizations, 2 academics and 3 representatives from state offices. As incentives, all interview participants were eligible to receive a link to an electronic download of the report, and were considered for the Profiles section and quotes in the final report.
Data Analysis Process

The quantitative data from the Rhode Island web-survey was first examined through Zoomerang.coms cross tabulation function. The Rhode Island and national were data were then analyzed with STATA 8, the general-purpose statistical software package. The open-ended responses were analyzed using the ThoughtSCAN keyword analyzer and then through manual content analysis. The interviews were primarily treated as brief exploratory case-studies. The quantitative data analysis involved five steps. First, the research questions were established and outcome and control variables were identified. Next the variables were examined and collapsed into categories making sure not to distort the distribution of
the raw data.4 Next the relationship of each independent variable was compared to the dependent variable with Bivariate Cross Tabulations and Chi Squared Tests (on both the Rhode Island and national data). The data was then pooled and compared for statistical significance. And finally, logistic regression was run on the Rhode Island, national and pooled sample, regressing the dependent (dichotomous) variable on the collapsed independent variables.
e.g. on the survey there were originally nine sub-categories for the program variable human services These included human services-employment and jobs and human services-youth development. For analysis, these were all collapsed into the one human service category.
Rhode Island Findings

Demographics of the RI Nonprofit Sample
The following is a description of the 329 Rhode Island nonprofit organizations that responded to the Web-Based Survey. The largest groups of respondents had program areas focused on Human Services (21%), had been in operation for at least 20 years (52%), and had budgets less than $250,000 (44%). The majority of organizations selfidentified as entrepreneurial (53%), and they were currently operating one or more earned-income venture (62%). [Table 23] The two program areas least represented in the sample were International Foreign Affairs and Miscellaneous and Mutual Membership Benefit Organizations with 1% and 2%, respectively. There were noticeably fewer organizations that had been in operation for six to ten years, and they constituted only 13% of the sample. Organizations with larger budgets, greater than $5 million, only constituted 12% of the sample. Organizations that self-identified as entrepreneurial (53%) were the majority of respondents, yet there was almost an equal number that identified as nonentrepreneurial (47%). [Table 1] The clear majority of organizations (61.8%) in this sample are currently operating at least one earned-income venture. Those which have never operated an EIV constitute 32.3% and those that are not currently, but operated one or more in the past only make up 6% of the sample. [Table 2]
Table 1: Self-Identification as Entrepreneurial (of Full RI Nonprofit Sample)

60%
Entrepreneurial 1. Yes 2. No N=298
% 53 47 100
40% 20% 0% Yes No
Table 2: Operation of Earned-Income Ventures (of Full RI Nonprofit Sample)

80%
Operating EIV 1. Yes currently 2. Never 3. Not currently but did so in the past N=285
% 62 33 6 100
60% 40% 20% 0% Currently Never In Past
Characteristics of the RI Earned-Income Ventures

The following sections describe the 142 organizations surveyed that are currently operating earned-income ventures. As shown in [Table 3], 58% of these organizations are operating more than one venture. Forty-Six percent of all the ventures (N=220) in operation are service-related / fee-for-service and fifty-six percent of the organizations (N=140) report that service-related ventures are bringing the greatest social and financial benefits to their nonprofit organization. As [Table 4] shows, the vast majority of these ventures (80% of N=138) are structured as in-house operations, which means
they are operated within the parent nonprofit organization, as opposed to being operated as separate for-profit or nonprofit entities.
Table 3: Number of EIVs in Operation (of RI Nonprofits Operating 1 or More)
60%
Number of EIVs 1. One 2. Two 3. More than Two N=142
% 43 23 35 101
40% 20% 0% One Two > Two
Table 4: Characteristics of the EIVs Characteristics 2. Types of EIV in Operation Service-related (fees for service) Product-related sales/manufacturing Cause-related marketing/licensing Renting/leasing property (e.g., building rentals) Other N=142 3. EIVs that Provide the Greatest Social and Financial Benefits Service-related (fees for service) Product-related sales/manufacturing Cause-related marketing/licensing Renting/leasing property (e.g., building rentals) Other earned-income ventures N=140 4. Legal Form of the EIV In-house operation Separate nonprofit entity Separate for-profit entity Other N=138 Count %
102 49 11 40 Total 18 220*
46% 22% 5% 18% 8% 100%
79 21 4 21 Total 15 140
56% 15% 3% 15% 11% 100%
Total
111 13 6 8 138
80% 9% 4% 6% 100%
Note: * Total count is greater than N because respondents were asked to check all that apply.
Description of the RI Earned-Income Ventures

Earned-income ventures provide products and services across a wide range of categories. These ventures can be broadly grouped as products, services, marketing/ licensing, and property-related. Examples of products include magazine subscriptions and houses constructed and then sold at-cost directly to home owners with an interest-free mortgage. Examples of services include on-site medical and dental services for a residential vocational program for underprivileged young adults and a confidential document destruction business providing pick-up, destruction and disposal of paper. More sample descriptions of these ventures can be found in [Table 5] and [Table 6].
Table 5: Sample Descriptions of Product and Service-Related EIVs Products
Collaborative energy purchasing Fresh farm produce sold at farmers markets and through a sliding-scale community supported agriculture (CSA) program Houses constructed and then sold at-cost directly to home owners, with an interest free mortgage.
Services
Banners on the website for local restaurants and retailers Confidential document destruction business providing pick-up, destruction and disposal of paper. Consulting fees and trademark licensing royalties for organizing events across North America. Culinary and nutrition education program designed to promote locally grown produce and improve the nutrition of low-income families through outreach and education at RI farmers markets. Graphic design studio that provides services for companies such as logo design, annual reports, and stationery design. HIV case management services
Magazine subscriptions
Mailing house
Manufacturing various sewn products for the federal government using visually disabled labor. Paintings, t-shirts, clocks, cards and poetry chap books Publications, curriculum and other programmatic materials Sales of t-shirts and baseball hats Thrift store, and bulk clothing sales
Low-cost sterilization surgery for community pets Marketing and box office service for arts and cultural groups On site medical and dental services a residential, vocational program for underprivileged young adults Restaurant and piano bar Revolving loan fund Special educational licensed facilities for IEP behaviorally disordered middle and high school youth. Victim training for staff and allied professionals in justice related fields
Table 6: Sample Descriptions of Property, Marketing/Licensing-Related, and Other EIVs Property

Apartment rentals Commercial space for medical professional practices Leased space to a theatre Low income housing units Own and operate apartment housing complexes for the physically disabled Own the building and rent space to a deli business Recovery and sober housing program Rent rooms at-cost to other nonprofits Rent two units of a four-story building to residential tenants. Rental of affordable housing for families and elderly Rental of facility for social events Rental of part of building as office space. Rental of residential dwelling to a family Rental of space to community development corporation, Town Civic organization and a regional school.
Marketing/Licensing
Point of purchase candy sales @ banks Production of items (t-shirts, magnets, mugs, etc) with organization-related images Staging or 'piggybacking' on concert events
Other
Advertising Income Government Contracts Membership Fees Special Events
Profiles of Three RI Earned-Income Ventures

Cookie Place Cafe, Providence - An EIV from the Start
Most customers dont know we are a nonprofit. We dont usually market ourselves as a nonprofit, says Cookie Place Cafe Executive Director William Monahan. What Cookie Place is best known for is great cookies! For the last 23 years, Cookie Place, located in downtown Providence, has provided employment and training for persons with psychiatric disabilities. Cookie Place operates a cafe, which serves breakfast and lunch, as well as a catering business that supplies pastries, sandwiches and beverages to local companies and private events. They have been recognized by Rhode Island Monthly Magazine for the Best Cookies in Rhode Island for four years. Cookie Place was founded as a nonprofit with government grants. Currently it earns about half its operating budget through product-related revenue and the other half
from state grants through the department of Mental Health, Retardation and Hospitals. For the last 6 years, as costs have risen, Cookie Place has received level funding from the state. As a result, it has diversified its product line, with whoopee pies and birthday cakes, to generate more revenue, and is developing a web site to raise awareness of the organization.
Edward King House, Newport - Recently Launched an EIV
The Edward King House is an historic mansion that was given to the people of Newport as a gift in 1912 by George Gordon King. It has operated as a nonprofit library and park, as well as a senior center with the mission to provide program activities to seniors. It has a diverse revenue stream which includes six different sources of income: donations from individuals, government and foundation grants, membership dues, service-related revenues, and endowment income. [Table 7] shows more details of the funding mix, of which government grants constitute 40%. According to the director, David Dean, level funding from the state has served as an incentive for Edward King House to develop an earned-income venture. He recently launched a venture to rent the historic landmark building for weddings and events on weekends when it is not in use as a senior center.
Table 7: Funding Streams of the Edward King House

50 40 30 20 10 0 Foundation Government grants grants 10 40 Donations from 10 Endowment Membership income dues 10 5 Servicerelated 20
% of Funding
Crossroads Rhode Island, Providence About to Launch an EIV
Providing crisis intervention, housing, health care, and vocational services, Crossroads Rhode Island, formerly known as Travelers Aid of Rhode Island, is the largest homeless services organization in the state. According to Joe Potenza, the Director of Vocational Services, while Travelers Aid operated some fee-for-service programs throughout their 115 year history, they have never operated any real earned-income ventures (which he distinguishes as ventures that seek to make money, rather than just cover costs). Opening this spring, the Crossroads Copy Shop will provide bulk photocopying, electronic printing, and publishing services, and possibly an offset press. According to Executive Director, Ann Nolan, this micro-business, which will operate as a program of the parent nonprofit, will enhance the organizations ability to achieve its mission. "We've learned that the chances for [our clients] success are greatly enhanced when access to affordable housing is combined with social service intervention and
vocational training for a period of six months to a year," said Nolan ("Crossroads Rhode Island," 2005).
Relation of Ventures Goals to Organizations Mission

Previous literature has raised the potential for mission drift as one of the central questions when examining the impact of earned-income ventures. Because missions are often general, and evolve over time, it is difficult to examine how they may have drifted as a result of operating an earned-income venture. In examining what Rhode Island nonprofit leaders have to say about the topic, it appears that the ventures they are operating are highly related to their mission. As [Table 8] shows, eighty-seven percent said that the goals of their venture are related a lot or to a great extent (4 or 5 out of a 5 point scale) to the mission of their organization.
Table 8: How Related the Goals of the EIV are to the Mission of the Organization
80% 60% 40% 20% 0% 1 2 3 4 5
1. 2. 3. 4. 5.
Relation to Mission Not at all A little bit Somewhat A lot To a great extent N=134
% 3 4 6 24 63
Reasons for Launching (and Not Launching) an EIV

In order to fully understand the diffusion of earned-income ventures throughout the nonprofit sector this study captured the perceptions of those that are currently operating ventures as well as those that have never operated ventures. Sixty-six percent of organizations currently operating an earned-income venture (N=119) indicated that generating income/surplus for programs was a very important reason for launching their earned-income venture. As [Table 9] shows, the second most important reason is generating positive community relations, (58% of N=118) followed closely by moving the organization towards self-sufficiency (56% on N=115) and diversifying the organizations revenue stream (48% on N=117). The least important reason among the fixed-answer choices, was providing employment/ training/ therapeutic opportunities to constituents which 50% (N=111) of the respondents indicated was not important.
Table 9: Reasons for Launching an EIV by Category and Level of Importance Category 1. Generate income/surplus for programs 2. Generate positive community relations 3. Move organization towards selfsufficiency 4. Diversify revenue stream 5. Help revitalize the neighborhood/community 6. Provide employment/training/therapeutic opportunities to constituents Not Important 8% 12% 13% 21% 32% 50% Somewhat Important 27% 30% 31% 32% 28% 17% Very Important 66% 58% 56% 48% 40% 33% N= 119 118 115 117 116 111
The following typify the range of responses about other reasons organizations have for operating earned-income ventures:
Our agency is dedicated to providing information, direct client services, professional development and system change... Some of these activities fit nicely within the guidelines of public and/or private funding sources. Others do not, yet must be provided to accomplish our mission. We really had no choice except to develop fee-for-service programs. Part of our mission is to provide space to arts non-profits at below-market rates. We are doing so through a separate for-profit entity so that we can take advantage of federal historic tax credits during our multi-year process of renovations. People value things more if they have to pay for them.
As [Table 10] shows, there seem to be many organizations that are interested in starting ventures, yet have not done so because of a lack of resources. Among those organizations that have never operated an EIV, two of the most commonly identified reason are the lack of personnel resources to develop and manage the venture (36% of N=93), and the lack financial resources to start a venture (26%). Of particular interest are the 22% that are concerned about exemption status and/or tax issues. It is also surprising that 30% of this group have never considered the idea.
Table 10: Reasons for Not Launching an EIV (by Organizations That Have Never Operated) Reasons 1. Lack personnel resources to develop and manage the venture 2. Never considered idea 3. Venturing not part of our mission 4. Lack financial resources to launch 5. Concerned about exemption status and/or tax issues 6. Concerned about operational/financial risks 7. Restricted by funding 8. Lack board interest/support 9. Other (please specify): N=93
Note: Does not total to 100% because respondents were asked to choose all that apply.
% 36 30 29 26 22 13 13 8 14
30% 20% 10% 0% 1 2 3 4 5 6 7 8 9 40%
Perceived Impact of Operating an EIV

Overall, the leaders of nonprofits operating earned-income ventures perceive the impact of the ventures to be very positive. This is consistent across the nine different categories of impact addressed by the survey. Eighty-two percent of the respondents (N=116) report that operating an EIV has had a positive or very positive impact on the reputation of their nonprofit organization; 78% (N=117) indicate a positive or very positive impact on their organizations mission; and 73% (N=115) indicate that operating an EIV has had a positive or very positive impact on their service and program delivery. Only 2% of respondents indicate any negative impact across the nine categories of questions. See [Table 11] [Table 12] and [Table 23].
Table 11: Perceived Impact of Operating an EIV on Nonprofit Organizations (Collapsed Across Nine Categories)
80%
Impact Negative Neutral/No Impact Positive Average N=115
% 2 25 73
60% 40% 20% 0% Negative Neutral Positive
Table 12: Perceived Impact of Operating an EIV on Nonprofit Organizations

70% 60% 50% 40% 30% 20% 10% 0%
very negative 0% 0% 0% 2% 1% 1% 2% 0% 0% somew hat negative 1% 2% 1% 4% 0% 1% 2% 0% 2% neutral/no impact 8% 9% 10% 17% 29% 33% 40% 44% 35% somew hat positive 9% 12% 17% 24% 22% 26% 16% 18% 25% very positive 59% 48% 40% 26% 19% 19% 16% 16% 13%
negative 0% 0% 0% 0% 1% 0% 0% 0% 0%
positive 23% 30% 33% 27% 29% 19% 25% 22% 25%
Reputation Mission Service Program Self-Sufficiency Attract Donors Entrepr. Culture Attract Volunt Attract Staff Board Leaders
How Nonprofits Define Entrepreneurial

There were almost equal numbers of respondents that self-identified as entrepreneurial (53%) versus non-entrepreneurial (47%). Seventy-four percent of the organizations that identified as entrepreneurial (N=140) are currently operating one or more earned-income venture as show in [Table 13]. Interestingly, the majority of those that said they were not-entrepreneurial (56% of N=129), also indicate they are currently operating one or more venture.
Table 13: The Relationship between "Entrepreneurial" and Operating an EIV
80% 60% 40% 20% 0% Currently operating 1 or more EIV 74% 56% Never operated an EIV 26% 44%
Yes No
According to Darts typology (Dart, 2004a), nonprofits engage in business-like behavior in terms of four distinct categories: goals, service delivery, management, and organizational rhetoric. While some use business-like and entrepreneurial to mean the same thing, there appears to be an important distinction between these two concepts when applied to nonprofit organizational behavior. The primary value of Darts framework for the sake of this study is the concept of business-like rhetoric. When examining the responses to the open-ended survey questions, there are inherent limitations to distinguishing entrepreneurial rhetoric from behavior. Nonetheless, the following themes emerged from the 140 responses collected. The clearest theme of what it means to be entrepreneurial relates to the act of operating or managing an earned-income venture. This includes activity which Darts topology would classify as service delivery, yet also includes activities outside of the nonprofits typical programs and services.
When asked about entrepreneurial strategies, nonprofit leaders cited a wide range of ventures that involve outputs of goods ors services in exchange for money, including: selling products retail and wholesale (such as souvenirs, food, poinsettias and art), purchasing and renting property, staging concerts and events, licensing, and charging fees (often on a sliding scale). A small group of respondents also included planning for an EIV as entrepreneurial. Examples of these entrepreneurial planning responses included: looking into marketing a specialty food product, looking into construction and management of an office building, and planning to sell teacher training programs to schools and districts. The second theme consistent with Darts framework is the use of entrepreneurial as a more general approach to work and managerial decision making. Responses were exemplified by the following: remaining flexible so that we may quickly and effectively address new opportunities and needs, always improving, developing and implementing innovative programs based on market and demographic trends and customer feedback, and moving swiftly and adroitly, using the materials we have at hand, outsourcing services using the internet to our advantage. The third theme is related to entrepreneurial activities described as innovative or unique behavior. This seems to be the key distinction of business-like and entrepreneurial and thus has no direct relation in Darts framework. For those that used entrepreneurial in the unique sense, they described their organizations as the only one in the state, or the country to focus on doing what they do or working with their specific population. For others it involved a unique approach to partnering and collaborating with other nonprofits, with businesses, or with the government.
Typifying how some consider their organizations as entrepreneurial, despite never having operated an earned-income venture, one leader said her nonprofit was:
entrepreneurial as a grassroots organization when it originated over 30 years ago[and] it continues to be entrepreneurial under the current leadership emphasizing business and financial strategies which includes honest evaluation of program effectiveness, resource usage and collaboration to deliver both efficient and innovative programs. Another in the same never-ventured category described his organization as entrepreneurial because it: uses grant funds and specified donations as 'venture capital' to try and test new program ideas. Although he went on to say, we are not entrepreneurial in the more traditional sense of developing small business opportunities or impacting economic conditions. At the other end of the spectrum, the leader of an organization that is currently operating more than two earned-income ventures, said:
Even if we could, we would not offer our programs completely for free because people would not value them. Earning money from programs is just a matter of factWe don't think of it as being entrepreneurial at all. But we would fail if we didn't charge for programs because we do not have enough un-earned income to sustain operations and because donors would be less supportive if they thought everyone was getting a free ride. Examination of the ways in which nonprofits use entrepreneurial indicates that earned-income strategies are the primary definition of what it means to be entrepreneurial. Yet for some, as evidenced by the last quote, earning income alone is not necessarily entrepreneurial. There are at least three other distinct ways that nonprofits characterize their behavior as entrepreneurial. These include: planning to operate an
earned-income venture, a general approach to work and decision making, and unique and innovative behavior. Thus in the nonprofit sector, as in the for-profit sector (as discussed in the Definitions section) there still appears to be significant debate about what it means to be truly entrepreneurial.
Useful Support and Assistance

As shown in [Table 14] and [Table 15] both organizations currently operating ventures (65% of N=118) and those that have never, but are interested in operating ventures (86% of N=64) indicate that access to capital / financial resources would be the most useful types of support and assistance to help them launch and sustain their ventures. Peer support, mentoring and workshops/seminars rate last for both groups.
Table 14: How Useful Various Types of Support and Assistance Would Be to Organizations Currently Operating EIVs
80% 60% 40% 20% 0%
Capital/ financial resources 2% 13% 86%
Technical Business assist/ plan consulting assistance 8% 22% 70% 6% 30% 64%
Market research 5% 37% 58%
Mentoring 11% 38% 52%
Peer support 13% 41% 47%
Workshop/ seminars 9% 44% 47%
not somewhat very
Table 15: How Useful Various Types of Support and Assistance Would Be to Organizations That Have Never, But Are Interested In Operating an EIV
80% 60% 40% 20% 0%
Capital/ financial resources 15% 21% 65%
Market research 15% 31% 54%
Business Technical plan assist/ assistance consulting 15% 40% 45% 14% 44% 42%
Workshop/ seminars 18% 45% 37%
Mentoring 29% 36% 35%
Peer support 23% 45% 32%
not somewhat very
Recent Rhode Island Developments

Three recent developments in Rhode Islands nonprofit sector are worth mentioning as they relate to earned-income ventures. One organization has emerged as a finalist in a national business plan competition, a group of business students recently helped write business plans for five earned-income ventures, and other nonprofits have joined together to form a learning community on the topic of social enterprise. The following section outlines the story of each of these developments.
Amos House, Providence in National Business Plan Competition
Amos House is a social service organization located in Providence that provides hospitality and direct services to the homeless and poor of Rhode Island(Amos House, 2005). Amos House recently launched a new micro business called Amos House Works that that provides job training programs for clients and healthy meals for area schools and other customers. Their catering venture was recently selected as a finalist
from over 450 entrants in the National Business Plan Competition for Nonprofit Organizations organized by the Yale School of Management the Goldman Sachs Foundation Partnership on Nonprofit Ventures.
MBA Students Partnering with Nonprofits to plan EIVs
While most of their business school peers were focused on learning how to maximize profits, this spring, a group of University of Rhode Island MBA students spent their final semester learning how to apply financial ratios and marketing techniques to help nonprofit organizations. Five teams of students from Professor Deborah Rosens Marketing course teamed up with local nonprofits to write business plans for their earned-income ventures. These ventures include: a rest-stop cafe which will be opening up along the states busiest bike trail operated by Corliss Institute, a service and jobtraining organization focused on Rhode Islands deaf community; and a plant design and care service for corporations that may be launched soon by GroundWork Providence.
Rhode Island Nonprofits Engaged in Learning Community
A group of seven Rhode Island nonprofit organizations have joined together to form a learning-community to jointly explore issue of social enterprise. We anticipate that through shared research, reflection, and analysis we will be able to embark on more successful enterprises ourselves thereby strengthening our organizations and ultimately better serving our clients and meeting our missions writes the facilitator, MJ Kaplan, of Kaplan Consulting (2005). Led by Carol Malysz, Director of the Center for Women and Enterprise, and coordinated by Deborah Schimberg of Social Venture Partners of Rhode Island, the group recently applied for a planning grant through Third Sector New England.
Rhode Island Compared to the National Sample

In order to compare Rhode Island to the rest of the nation, bivariate crosstabulations, chi-square tests, and logistic regressions were run on both the Rhode Island sample and the raw data from the national Massarsky-Beinhacker (Massarsky & Beinhacker, 2002) study. Both data sets were coded to match the variables described in [Table 16] and responses that had missing data for any of these variables were removed. The resulting samples were comprised of 260 cases for Rhode Island and 389 cases for the national sample.
Table 16: Description of Variables Variable Name EIV (dependent) Description operating an earned-income venture does respondent consider organization to be entrepreneurial organizations primary program area Answer Choices Never = never operated an EIV5 Currently = currently operating 1 or more EIV Yes No arts = Arts/Culture/Humanities educ = Education enviro = Environment/Animals health = Health hservice = Human Services pub = Public/Society Benefit relig = Religion Other < $250K $250$999K $1-$5M >$5M <5 years 6-10 years 11-20 years >20 years
Entrepreneurial
Program
Budget
total budget size for the organization
age
total number of years organization has been in operation
Note: The data associated with the answer choice, operated one or more earned-income ventures in the past, but not currently was excluded from this model.
Rhode Island Descriptive Statistics

Of the relevant Rhode Island sample, 66% (N=260) of the organizations report that they are currently operating an EIV and only 34% report that they have never operated an EIV. There are an almost even number of those organizations that identify as entrepreneurial (53%) as those that indicate they are not (47%). Human services organizations make up the largest program area category (22%), and religious organizations only comprise 2% of the sample. Organizations that are at least 20 years old account for 51% of the population, and organizations that are 6-10 years old make up only 13% of the sample. Organizations with budgets less than $250,000 are the most represented category of budget size with 44%, and organizations with the largest budgets, over $5 million, only account for 12% of the sample.
National Descriptive Statistics

Of the comparable national sample (N=389), 48% of the organizations report that they are currently operating an EIV and 52% report that they have never operated an EIV. Organizations that identify as entrepreneurial are the clear majority (75%) as compared to only 25% that indicated they are not entrepreneurial. As with the Rhode Island sample, Human services organizations make up the largest program area category (32%), and religious organizations comprise the smallest group at 4% of the sample. Also similar to the Rhode Island sample, organizations that are at least 20 years old account for the largest age category, 36% of the national sample, and organizations that are 6-10 years old comprise the smallest group in the national sample at only 17%. Organizations with budgets less than $250,000 are the most represented category of
budget size with 33%, and organizations with the largest budgets, over $5 million, only account for 20% of the sample.
Bivariate Cross-Tabulations and Chi-Square Tests

Before using logistic regression to control for the effects of independent variables, Cross-Tabulations and Chi-Square tests were used to examine the influence of the each question variable on the outcome variable, and test for statistical significance. The following descriptions are grouped by variable, and include explanations of the Rhode Island and national samples.
Entrepreneurial Organizations
Among the Rhode Island organizations in this sample, 75% of those that identify as entrepreneurial report currently operating an EIV compared to only 55% of those that are not entrepreneurial. Pearson chi2(1) = 10.7208 Pr = 0.001 indicates that this is a significant difference, greater than would be observed by chance alone. In the national sample, only 57% of those that identify as entrepreneurial report currently operating an EIV and only 20% of those that are not entrepreneurial. This is also a statistically significant difference as indicated by a Pearson chi2(1) = 42.4184 Pr = 0.000.
Program Area
In the Rhode Island sample, organizations with either program areas focused on Arts / Culture / Humanities and Public / Society Benefits are the most likely to be operating earned-income ventures with 78% of N=37, and 77% of N=26 respectively. Organizations with religious program areas are the least likely to be operating EIVs,
33% of N=6, and religious organizations are the only organizations with more that have never operated an EIV than those that they are currently operating an EIV. Pearson chi2(7) = 10.9145 Pr = 0.142 indicates that the difference of an organizations likelihood in operating an EIV across program areas is no greater than might be observed by chance alone. Nationally, there is also no statistically significant difference across program area as indicated by the Pearson chi2(7) = 12.9835 Pr = 0.073. However, arts / culture / humanities organizations are again the most likely to be operating EIVs with 75% of N=40, and religious organizations are the least likely with 75% of N=20.
Age of Organizations
From the Rhode Island sample, the age of an organization appears to be a significant factor in their likelihood in operating a venture. Even among the youngest organizations, those that are less than 5 years old, 41% (N=44) report that they are currently operating an EIV. Of the organizations which are over 20 years old, almost 75% (N=135) report that they are currently operating an EIV. Pearson chi2(3) = 21.2400 Pr = 0.000 indicates that this difference is significant. In the national sample, only 32% (N=146) of the organizations that are less than 5 years old, report currently operating an EIV. This is also a statistically significant difference as indicated by a Pearson chi2(3) = 13.9045 Pr = 0.003.
Budget
Among the Rhode Island organizations, those with medium-sized budgets ($250,000-$999,000 and $1-4.9 million) are the most likely to be operating EIVs, with 76% of N=78 and 68% of N=38). Organizations with the smallest budgets, of less than
$250,000 are the least likely to be operating EIVs with 58% of N=115. Pearson chi2(3) = 7.1203 Pr = 0.068 indicates that there is not a significant difference across budget categories. In the national sample, there appears to be a linear relationship between budget size and likelihood of operating an EIV. Organizations with the smallest budgets, of less than $250,000 are the least likely to be operating EIVs with 45% of N=170. Organizations with the largest budgets are the most likely to be operating EIVs, with 64% of N=94 currently operating EIVs. Pearson chi2(3) = 38.8190 Pr = 0.000 indicates that there is a significant difference across budget categories at the national level.
Logistic Regression
The advantage of logistic regression is the ability to control for certain factors to determine if other factors still have significant effects on an organizations likelihood of operating an earned-income venture. The following section discusses the results of the regression tests and run on the Rhode Island [Table 31] and national [Table 32] samples by variable categories. With only one exception, the findings at the national and Rhode Island levels were directionally identical.6 While the magnitude varied, once controlling for other variables, the factors associated with operating an EIV at the Rhode Island and national level appear to be similar. Once the results were pooled, and all variables were controlled for, Rhode Island organizations appear to be significantly more likely to be operating earned-income ventures than the national comparison group. As shown in
In the case of directional variance, the organizations with the largest budgets (over $5 million) in Rhode Island were actually the least likely of the budget categories, to be operating earned-income ventures. However, this finding was not statistically significant. [Table 32] and [Table 33]
[Table 33] national organizations were only .33 times as likely to be operating earnedincome ventures and this finding was statistically significant at the p<.01 level.
Entrepreneurial Organizations
In both the Rhode Island and the national samples, organizations that identified as entrepreneurial were more likely to be operating earned-income ventures, once we controlled for program area, age, and budget size. In Rhode Island, entrepreneurial organizations were 2.8 times more likely to be operating an EIV than nonentrepreneurial organizations. At the national level, organizations that self-identify as entrepreneurial were 5.6 times more likely. Both of these findings are statistically significant at the p<.01 level.
Program Area
As shown in [Table 17], compared to Arts / Culture / Humanities organizations all seven other program areas are less likely to be operating earned-income ventures at both the Rhode Island and National Level. This is only statistically significant for four out of the seven categories at the national level, and two out of seven at the local level, yet the consistency of the directional finding is noteworthy.
Table 17: Program Area - Odds of Operating an EIV at the National and Rhode Island Level (Reference Category = Arts / Culture / Humanities)
1.0 0.5 0.0 National Rhode Island
Education 0.2 0.4
Enviro 0.5 0.4
Health 0.4 0.3
Hum Serv Pub Ben 0.3 0.4 0.4 0.8
Religion 0.2 0.1
Other 0.4 0.2
Age of Organizations
In general, older organizations are more likely to be operating earned-income ventures as shown in [Table 18]. At the national level, none of the age categories are significantly different, but in the Rhode Island sample, there is a linear trend and the two oldest categories are significantly more likely to be operating EIVs than the youngest group (used as the reference category).
Table 18: Age - Odds of Operating an EIV at the National and Rhode Island Level (Reference Category = < 5 years)
5.0 4.0 3.0 2.0 1.0 0.0 National Rhode Island
6-10 years 1.0 1.2
11-20 years 1.6 3.0
>20 years 1.3 5.0
Budget
Similar to age, as budget size increases, organizations are more likely to be operating ventures, as shown in [Table 19]. This is particularly true at the national level where organizations with budgets of less than $250,000 are significantly less likely to be operating ventures. Organizations with budgets of $250-$500,000 are 2.5 times more likely to be operating EIVs and those with over $5 million budgets were 4.6 times more likely to be operating ventures than the organizations with the smallest budgets. At the Rhode Island state level, the relationship between budget and likelihood of operating an EIV were not statistically significant.
Table 19: Budget - Odds of Operating an EIV at the National and Rhode Island Level (Reference Category = < $250k)
5.0 4.0 3.0 2.0 1.0 0.0 National Rhode Island
$250-$999K 2.6 1.5
$1-$5M 2.5 1.1
> $5M 4.6 0.9
Limitations
This study has several limitations that should be considered when interpreting the results. The primary limitations are threats to internal validity concerning sample bias, and the reliability of the instrument. Caution should therefore be used when attempting to generalize these findings to the larger population of nonprofit organizations. Sample biases may have resulted from the use of the open-invitation method, rather than stratified or random sampling techniques. While a random sampling technique may have had some advantages, as discussed in the Methods section, the entire population of nonprofits in Rhode Island could only be estimated. Therefore, even a random sample of this population would have resulted in a biased population, specifically excluding those organizations that are not in any of three databases used for outreach. Stratification sampling of this population along relevant demographics, such as budget size and program area might have also been preferable, however, there is no known database that has accurate records of this information. The relatively short amount of time the survey was active may have also biased the sample. A previous national study on nonprofits suggested that older, larger, and
organizations more reliant on contributions take longer to return a survey (Hager, 2002, p. 9). Additionally, as [Table 20] shows, there was a small surge in responses during the last two days the survey was available online. This suggests that with more time there might have been more responses.
Table 20: When Respondents Completed the Web-Based Survey
30% 20% 10% 0% 3/2 3/3 3/4 9% 3/5 3% 3/6 1% 3/7 7% 3/8 3/9 3/10 3/11 3/12 3/13 3/14 3/15 3% 4% 1% 1% 6% 5%
% 26% 9%
18% 6%
As shown in [Table 21], 54% of respondents found out about the survey through email. This suggests that all participant recruitment efforts were not equally effective. Because email invitations were available for less than half of the total population, this could have significantly biased the results towards those organizations which received the email invitation. The web-based nature of the survey may have also biased the results towards organizations with greater access to technology.
Table 21: How Respondents Found Out About the Survey

60% 40%
20% 0% Email 56% Postcard 33% Website 3% Newspaper 1%
Friend/ Colleague 3%
Other 4%
Additionally, the reliability of the survey instrument has not been empirically tested. As discussed in the Methods section, the survey instrument for this study was based on an instrument used in the Massarsky & Beinhacker (2002) national study which to the knowledge of the researcher has not been tested. As [Table 22] shows, there was a high rate or respondents that started, yet did not fully complete the Web-Based Survey (43% of N=370). In this case complete meant that the respondent reached the end of the survey, as opposed to actually providing an answer to every question. Some the completes therefore included questions that were left blank at the respondents discretion. The incompletes are assumed to be unfinished as a result of the length of the survey rather than any meaningful difference between the organizations that completed the survey and those that did not complete the survey. For the descriptive statistics, the incompletes were included with the complete responses, which explain the varying sample size. For the statewide and national regression models, any cases with blank answers for the question variables were systematically excluded.
Table 22: Complete vs. Incomplete Responses to the RI Web-Based Survey

60% 40% 20% 0% 1 2
Complete 1. Yes 2. No N=369
% 57 43
The relatively low number of respondents that indicated they were not currently but had operated 1 more ventures in the past, (6% of total N=285) lends credibility to the assertion that failing organizations are less likely to volunteer [for this type of study] than successful ones -- and ventures that have already closed their doors never do [respond to surveys] (Foster & Bradach, 2005, p. 95). While information was collected on these organizations, it was not analyzed for this study. While some inferential statistics were used, the value of this study is largely in the descriptive power of the findings as a benchmark for future research. Recommendations for future studies concerning this topic include: systematically testing the reliability of the survey instrument, considering random or stratification sampling techniques, and identifying a way to empirically test complete vs. incomplete responses. Some of the results reported here appear to support and extend previous research findings. At the very least, the consistency of these findings suggests that earned-income ventures and entrepreneurial nonprofits merit further systematic exploration. However, because of the limitations outlined here, the findings in this report should be interpreted and generalized with due caution.
Ethical Considerations
The protocol for this study received approval through the Institutional Review Board (IRB) at Brown University on February 2, 2005. It was determined to be exempt (category two) from the regulations at 45CFR46 regarding the use of human subjects in research. According to the IRB, the other methods of data collection, including the Interviews with Supporting Organizations and the Web-Based Survey did not warrant review. However, in accordance with common ethical research guidelines, informed consent forms [attachment 4] were used to explain issues of confidentiality to all interviewees and survey participants. Detailed measures were taken to ensure the privacy and confidentiality of all subjects for the wed-based survey, including password encrypted files and secure storage. According to IRB ethical guidelines for internet research, online survey instruments must explain at the outset what options are available, if any, for retrieving and discarding responses, and must allow no response as an option for every question (Hicks, 2004). While the technology of skip-logic required a few specific questions to be mandatory, all other questions were optional. For the interviews, each participant was made aware that the purpose of the interviews was to collect profile information which could be specifically attributed to individuals and organizations, and therefore the interviews were not considered confidential. At the time of this publication, there are no known or anticipated risks to any of the research subjects or their organizations as a result of their association with this study.
Conclusions
A fundamental shift is occurring in the nonprofit sector. This examination of 329 Rhode Island nonprofits demonstrates that a wide variety of them are operating earnedincome ventures to support their programs, generate positive community relations, and help move their organizations towards self-sufficiency. It is also noteworthy that Rhode Island organizations are operating ventures at three times the rate of a comparable national sample. These organizations generally self-identify as entrepreneurial and are engaged in a variety of ventures as diverse as selling farm produce, operating a graphic design studio, running a restaurant and piano bar, managing a revolving loan fund, and leasing commercial and residential property. This study extends the work of previous research by focusing on one state, using statistical analysis to determine how organizational factors are related to an organizations likelihood of operating an earned-income venture, and then compares the statewide results to a national sample. Across 17 out of 18 categories, the Rhode Island and national samples indicate similar trends in characteristics such as the age, program area, and budget size of organizations operating ventures. For some nonprofits earned-income is nothing new, and like the rest of the nation, Rhode Island has a long history of nonprofits operating earned-income ventures. This study demonstrates the remarkable extent to which nonprofits are currently adopting this form of revenue creation, characterizes the breadth of the organizations now operating these ventures, and highlights support needed to continue to grow the social enterprise sector.
Many organizations that are not currently operating ventures are interested in doing so, yet are limited by access to resources. One survey respondent contacted the researcher to add: We all could use money, but in this day and age grants are hard to come by. Is there any way that non-profits could apply for low-interest loans to cover initial start-up expenses? If the income generating proposals are strong enough to be worthy of a reasonable loan, repayment of the loan is a given. This suggests that targeted funding in the form of loans and grants could help nonprofits interested in developing ventures. Survey respondents also indicated that they generally lack information regarding the potential implications of venturing on their legal and tax status. This suggests that educational literature, programs and workshops could be beneficial to organizations interested in venturing. An example of one local resource addressing both the education and funding issues is the Rhode Island Economic Development Corporation (EDC). Michael
McMahon, the Executive Director, indicates that the EDC has recently provided two ventures with seed capital, and he also notes that the EDC has a largely untapped talent pool to help write business plans, and a staff with a wealth of managements expertise who can help advise [nonprofits interested in venturing] (McMahon, 2005). This type of support and partnership has the potential to dramatically affect the way nonprofits operate. While it may be too soon to tell if the sea change towards earned-income is ultimately a good thing for the nonprofit sector - or society as a whole - this study demonstrates promising signs that this shift is being embraced by nonprofits. Staff members from the organizations operating these ventures indicate that they are having
overwhelmingly positive effects on their organizations. According to former nonprofit director and current Rhode Island Secretary of State, Matt Brown, it is a good thing that people are exploring [earned-income ventures]. The work that the nonprofit sector does is so important. as a society we have to figure out a sustainable way to fund it (M. Brown, 2005). While this research is exploratory, it provides the first comprehensive glimpse into the trend of social enterprise within a states nonprofit sector. What is occurring in Rhode Island appears to be sea change in the way nonprofits operate. Hopefully this data can help enhance our understanding of the development of this vital sector and serve as a guidepost for future research about nonprofits and earned income ventures.
Suggestions for Future Research

The value of this data will only grow as it can be compared to similar activities of nonprofits in other states. Thus, the primary suggestion for future researchers is to conduct similar surveys in other states and then compare across states. Other suggestions include: empirically test the reliability of the survey instrument used in this study; analyze mission drift vs. natural evolution of an organizations mission as a result of earned-income ventures; and continue to survey stakeholders other than nonprofit staff members about the perceived benefits of earned-income ventures.
Attachments
1. Interview Participants
Category Academic Academic Name Sandra Enos, Ph.D. Deborah Rosen, Ph.D. Title Associate Professor of Sociology Kingston MBA Director Director of Retail Lending and Community Relations President / CEO President/ Executive Director Executive Director Executive Director Executive Director Executive Director Director, Funds Development Director of Vocational Services President/CEO/ Webmaster Acting President & CEO; CFO Executive Director Project Leader Executive Director Board Member / CEO, Sr. Consultant Executive Director Advisory Board Member Secretary of State Housing Resources Coordinator Executive Director Organization Rhode Island College University of Rhode Island Business School Bank Rhode Island United Way of Rhode Island South Providence Development Corporation Housing Network of Rhode Island Arts & Business Council of Rhode Island Edward King House Wood Pawcatuck Watershed Association Butler Hospital Crossroads RI Creative Television of Rhode Island, Inc. WSBE-TV Cookie Place Inc. Scene Teens Opera Providence Jewelry District Association/ New Commons / Entrepreneurship Forum of New England Knowledge Exchange Center of Rhode Island The Nonprofit Institute State of Rhode Island State of Rhode Island Housing Resources Commission Rhode Island Economic Development Corporation
Funder Funder Nonprofit Nonprofit Nonprofit Nonprofit Nonprofit Nonprofit Nonprofit Nonprofit Nonprofit Nonprofit Nonprofit Nonprofit Support / Nonprofit Support / Nonprofit Support / Nonprofit State State
Peter Walsh Tony Maione Joe Newsome Brenda J. Clement Peter Bramante David Dean Lori Urso Michele R. Berard, CFRE Joseph Potenza Dennis K. Evans David Piccerelli William Monahan Daniel Vellucci Loriana De Crescenzo Robert Leaver
Milinda Butterworth Eileen M. Moser Matt Brown Ray Neirinckx
State
Michael McMahon
2. Interview Guide for Nonprofits

For nonprofit organizations currently operating (or planning to operate) 1 or more earned income venture(s). Note to all interviewees: The primary objective of this interview is to gather information on the story behind your organizations experiences operating (and/or planning) an earned-income venture in Rhode Island. The interview will last about 30 minutes and will focus on the following: 1. 2. 3. 4. 5. 6. 7. 8. 9. Primary motivations for starting an earned-income venture Alignment of venture with the mission of organization Impact (real or anticipated ) on the organization as a whole Unexpected outcomes (positive or negative) Measurement and Reporting of success of the venture Most challenging and rewarding experiences in planning/operating venture Resources (books, websites, workshops, conferences, supporting organizations, colleagues, etc.) that helped launch/sustain the venture Resources not currently available that would be helpful Advice for other nonprofits considering launching an earned- income venture
3. Interview Guide for Supporting Organization

For supporting organizations (local funders, consultants, and academics in the field). Note to all interviewees: The primary objective of this interview is to gather information on the entrepreneurial strategies and earned-income ventures undertaken by nonprofit organizations within Rhode Island. The interview will last about 30 minutes and will focus on the following: 1. Your experiences with nonprofits in Rhode Island, and specifically: a. any operating earned-income ventures b. any you consider to be entrepreneurial The impact earned-income ventures or social enterprises have on the organizations operating them Characteristics of the organizations which you feel are succeeding Characteristics of the organizations which you feel are struggling Any unexpected outcomes you might have observed for the organizations, their stakeholders or the community as a whole as a result of operating an earned-income venture Resources you know of (books, websites, workshops, conferences or supporting organizations) that have helped organizations launch or sustain earned-income ventures Resources not currently available which you think might be helpful Any advice you have for nonprofits that are considering launching an earned-income venture
2. 3. 4. 5. 6. 7. 8.
4. Informed Consent Form

Rhode Island Nonprofit Survey Informed Consent Statement for Interviews Last updated: 3/10/2005 This is a Brown University research study in collaboration with Social Venture Partners of Rhode Island and the Rhode Island Foundation. The purpose of this interview is to learn more about your organizations efforts operating and/or supporting social enterprises. Information you provide in this interview may be attributed to you and your organization in our final report which will be publicly distributed. If you do not wish to have your statements attributed to you or your organizations, please let the interviewer know. Participation in this research study is entirely voluntary, and you are under no obligation to participate. There are no known or anticipated risks to you from participating in this research. Refusing to participate or discontinuing the interview, will involve no penalty or loss of benefits to you which you are otherwise entitled and will not affect your relationship with any of the organizations conducting this research. You may discontinue the interview at any time, and you may choose not to answer any questions. Each interview participant will receive: 1. A link via email to download electronic copy of the report; 2. A chance to be profiled in the report. The full transcript, notes, and/or any recording of this interview will be kept confidential. All personally and organizationally identifiable information will be removed, coded, and stored separately from your responses. These data and codes will be stored in separate locked files accessible only to the principal investigator. If at any time you have questions about your rights related to this research, please contact: Susan Toppin or Dorinda Williams at the Office of Research Administration, Brown University, Box 1929, Providence RI, 02912. Phone: 401-863-2777. For any other questions about this research project, please contact the Principal Investigator, Seth Marbin of Brown University by email at Seth_Marbin@brown.edu. Do we have your permission to create an audio recording of this interview to assist in accurate note-taking? ( ) Yes ( ) No By signing below you indicate you are over 18 years old, and that you have read and understood this information. Print Name ___________________ Signature __________________ Date _______
5. Postcard
6. E-mail
From: Seth Marbin Sent: Tuesday, March 01, 2005 11:00 PM To: RI Nonprofit Leaders Subject: An invitation for RI Nonprofit Leaders RI Nonprofit Leaders: You are invited to participate in a statewide survey for all 501(c)(3) organizations. To join in, visit our website before March 15, 2005: http://www.rifoundation.org/svpri/survey.asp This research study is being conducted by Brown University in collaboration with Social Venture Partners of Rhode Island and The Rhode Island Foundation, and with assistance from The Yale School of Management The Goldman Sachs Foundation Partnership on Nonprofit Ventures. This survey is for you, if you have ever: > Thought about diversifying your funding base > Tried to generate revenue to support your social mission > Operated an earned-income venture or social enterprise The purpose of this research is to learn about the entrepreneurial and revenue-generating activities of nonprofits in our state. This study will be the first of its kind comparing one state's efforts to a national research study. If you want your organization to be represented and possibly highlighted in our final report, complete the brief online survey by March 15th at 5 pm. All respondents have a chance to win valuable prizes! For more information, visit our website: http://www.rifoundation.org/svpri/survey.asp If you know of a RI nonprofit leader who did not receive this invitation, please help spread the word by forwarding this email to your colleagues. For any questions about this research study, please contact the Principal Investigator, Seth Marbin via email at: smarbin@alumni.brown.edu or reply to this message.
This email is intended for leaders of nonprofit organizations operating within the state of Rhode Island who have an established relationship with one or more organizations named above. If you are no longer affiliated with a RI nonprofit or if you do not want to receive any more information about this study, please reply with "no thanks" in the subject line and your address will be cleared from our list.
7. Media Release 1
The Rhode Island Foundation One Union Station - Providence, RI 02903 401.274.4564 - www.rifoundation.org
MEDIA RELEASE: Monday, March 7, 2005 For more information: Rick Schwartz, 401-274-4564; 401-331-8085 (fax); jcohoon@rifoundation.org Wanted: a few good nonprofits that have started or are thinking of starting business enterprises Survey underway through March 15 seeks to compare statewide efforts to a national study A Rhode Island survey hopes to uncover a growing entrepreneurial spirit among the states nonprofit organizations. Were looking for nonprofits at all stages of entrepreneurial thinking and development: some are just exploring the idea of launching a social enterprise, and others already have successful business models. But we also want to know why some nonprofits are not participating in this growing national trend! says Brown University Senior Seth Marbin, who is leading the research. The Rhode Island Foundation and Social Venture Partners of Rhode Island (SVPRI) are also collaborating on this study. SVPRI is a group of philanthropists committed to investing time, expertise, and money in innovative nonprofits to strengthen their organizations and promote social enterprises. This study will be the first to focus on the revenue-generating activities of an entire state, explains Deborah Schimberg, Executive Director of SVPRI. And we will be comparing the data from Rhode Island to results from a national study, adds Kris Hermanns, Program Officer of The Rhode Island Foundation. The national data is being provided by The Yale School of Management The Goldman Sachs Foundation Partnership on Nonprofit Ventures, which runs the National Business Plan Competition for Nonprofits Organizations and is also providing assistance for this research. All tax-exempt organizations with 501(c)(3) status are eligible to take the survey currently available on the web at www.rifoundation.org/svpri/survey.asp and participants can even win prizes, promises Marbin. We sent out invitations to 4,000 nonprofit organizations across the state, but there are more out there we havent reached yet, explains Marbin. As an example of a local entrepreneurial nonprofit, Marbin points to Amos House, a Providence social services agency which recently launched a catering business that provides job training programs for clients and healthy meals for area schools and other customers. What distinguishes Amos House is their detailed strategy to use profits from the new catering business to support their established social programs, says Marbin. Amos House was recently selected as a finalist from over 450 entrants in the National Business Plan Competition for Nonprofit Organizations. The findings of this study could help support entrepreneurial nonprofits like Amos House throughout Rhode Island and nationwide, says Marbin. Marbin says he first learned about social entrepreneurship as an AmeriCorps member with City Year, a national nonprofit recently cited by Fast Company Magazine as one of the top 25 organizations using creativity, business smarts, and hard work to invent a brighter future.
I was surrounded by proactive leaders applying entrepreneurial skills and strategies to create positive social change, he remembers. After four years with City Year, Marbin came to Brown to study social change from an academic perspective, he says. The vision for this research study was developed through conversations between Marbin and his academic advisor Ann Dill, Director of the Public and Private Sector Organizations program and Associate Professor at Brown University. Our report will be valuable if it increases understanding and awareness of entrepreneurial nonprofits, says Marbin. They represent an alternative to what we have in America right now: businesses which are expected to focus almost completely on financial profits, and nonprofits asked to solve our toughest social issues relying on donations alone. Social enterprises could be the best of both worlds, creating both social and financial value. Nonprofit leaders are invited to fill out the survey before it closes at 5 pm on March 15 and the final report will be available in May on the SVPRI website at www.rifoundation.org/svpri/survey.asp. ### The Rhode Island Foundation was founded in 1916 and is one of the nations largest and oldest charitable organizations serving a specific geographic area.
8. Media Release 2
The News Service 38 Brown Street / Box R Providence RI 02912 401 863-2476 Fax 863-9595
A second Media Release was sent out through the Brown University News Service on March 7th. This release was identical to Media Release 1, with three exceptions: The main headline was replaced with Nonprofit Leaders Revealing Secretes of Business Enterprises; the references to the Rhode Island Foundation were replaced with references to Brown University; and the Foundations contact information was replaced with that of the principal investigator: Seth Marbin, (phone) 401-465-0411 (email) smarbin@alumni.brown.edu
9. Providence Journal Article
Sunday, March 13, 2005 Entrepreneurial nonprofits invited to take part in study The Rhode Island Foundation and Social Venture Partners of Rhode Island are collaborating on a study of nonprofit agencies in the state that have started or are thinking of starting business enterprises. All tax-exempt organizations with 501(c)(3) status are eligible to take the survey, available on the Web at www.rifoundation.org/svpri/survey.asp. However, nonprofit leaders have only until 5 p.m Tuesday to complete the survey. An example of an entrepreneurial nonprofit is Amos House, a Providence social services agency which recently launched a catering business that provides job training for clients and healthy meals for area schools and other customers. Brown University senior Seth Marbin is leading the research effort. He said that after four years as an AmeriCorps member with City Year, he came to Brown to study social change. He believes social enterprises, such as Amos House, can have social and financial value. Available in print version and published online at: http://www.projo.com/news/content/projo_20050313_nonprofit.2342ff7.html
10.
Social Venture Partners of Rhode Island Website

Hosted online at: http://www.rifoundation.org/svpri/survey.asp
11.
Transcript of WRNI Radio Announcement
Read by Mark Degon - March 15, 2005 Researchers are completing a survey of nonprofit organizations in Rhode Island today as part of an effort to find out how they raise funds. Brown University researcher Seth Marbin says there are a growing number of organizations that are supported by more than donations. "There is an assumption that nonprofits are only looking for donations but many are now expanding and looking for ways to sell products and generate the revenue they need." Researchers next plan to compare the results from Rhode Island to a national study.
12.
E-Newsletter - RI Foundation
From: The Rhode Island Foundation [jcohoon@rifoundation.org] Sent: Tuesday, March 08, 2005 11:33 AM Subject: E-News from The Rhode Island Foundation Wanted: business-minded nonprofits, to take an online survey by March 15 A Rhode Island survey underway through March 15 hopes to uncover a growing entrepreneurial spirit among the state's nonprofit organizations. "We're looking for nonprofits at all stages of entrepreneurial thinking and development. But we also want to know why some nonprofits are not participating in this growing national trend," says Brown University Senior Seth Marbin, who is leading the research. The Rhode Island Foundation and Social Venture Partners of Rhode Island (SVPRI) are collaborating on the study. All tax-exempt organizations with 501(c)(3) status are eligible to take the survey by clicking www.rifoundation.org/svpri/survey.asp and "participants can even win prizes," promises Marbin. "We sent out invitations to 4,000 nonprofit organizations across the state, but there are more out there we haven't reached yet," explains Marbin. As an example of a local entrepreneurial nonprofit, Marbin points to Amos House, a Providence social services agency which recently launched a catering business that provides job training programs for clients and healthy meals for area schools and other customers. Take the survey before it closes at 5 PM on March 15. Looking for additional resources? Check out the Foundation's Nonprofit Consultant Directory and our newest resource, the Directory of Rhode Island's Nonprofits . Want to learn more about the Foundation? Go to www.rifoundation.org. To unsubscribe to this newsletter, click the link below: http://enewsletter.embolden.com/users/unsub.php? Mem=48094&ConfirmCode=8123d3154a3a147e7070ac3cac56a30e
13.
E-Newsletter - Knowledge Exchange Center
From: Knowledge Exchange Center of Rhode Island [executivedirector@kec.necoxmail.com] Sent: Wednesday, March 09, 2005 2:49 PM Subject: E-Newsletter for RI Non Profit Agencies RI Nonprofit Leaders: You are invited to participate in a statewide survey for all 501(c)(3) organizations. This research study is being conducted by Brown University in collaboration with Social Venture Partners of Rhode Island and The Rhode Island Foundation, and with assistance from The Yale School of Management The Goldman Sachs Foundation Partnership on Nonprofit Ventures. This survey is for you, if you have ever: > Thought about diversifying your funding base > Tried to generate revenue to support your social mission > Operated an earned-income venture or social enterprise. The purpose of this research is to learn about the entrepreneurial and revenue generating activities of nonprofits in our state. This study will be the first of its kind comparing one state's efforts to a national research study. If you want your organization to be represented and possibly highlighted in our final report, please complete the brief online survey by March 15th at 5 pm. For any questions about this research study, please contact the Principal Investigator, Seth Marbin via email at: smarbin@alumni.brown.edu All respondents have a chance to win valuable prizes! To join in, visit our website before March 15, 2005: http://www.rifoundation.org/svpri/survey.asp
14.
E-Newsletter - Providence Dept of Art, Culture & Tourism
From: Lynne McCormack [lmccormack@providenceri.com] Sent: Thursday, March 10, 2005 9:33 AM Subject: This Week from the Dept. of Art, Culture & Tourism - March 10, 2005 Attention RI Nonprofits: You are invited to participate in a statewide survey for all 501(c)(3) organizations. This survey is for you, if you have ever: thought about diversifying your funding base; tried to generate revenue to support your social mission; or operated an earned-income venture or social enterprise. To participate in the survey, visit the website here before March 15. The purpose of this research is to learn about the entrepreneurial and revenue-generating activities of nonprofits in our state, and comparing them to a national study. For more information contact Seth Marbin at smarbin@alumni.brown.edu
15.
Survey
Informed Consent Statement Participation in this research study is entirely voluntary. There are no known or anticipated risks to you from participating. Refusal to participate or discontinuing participation will involve no penalty or loss of benefits to which you are otherwise entitled, and you may discontinue participation at any time. Each participant who fills out this web-based survey completely by March 15th, 2005 will be eligible to receive: > A link via email to download an electronic copy of the report; > A chance to be profiled in the report (if selected for a follow up interview); > A chance to win one of 5 certificates for $25-off the next "New Business Ventures for Nonprofits Workshop"; hosted by SVPRI and run by The Grantsmanship Center; > A chance to win one of 3 copies of "Generating and Sustaining Nonprofit Earned Income: A Guide to Successful Enterprise Strategies" Edited by S. Beinhacker, C. Massarsky, and S. Oster. (List Price: $45) Winners will be chosen at random from all eligible respondents and will receive their prizes by May 1, 2005. Any information you provide on this survey will be kept confidential. Responses will be password protected, separated from personally and organizationally identifiable information, and coded. These codes and passwords will be accessible only to the Principal Investigator. Your answers will only be reported collectively with other responses or quoted anonymously. This survey is hosted by Zoomerang.com which will not collect or record your IP address. A standard cookie may be placed on your computer for faster page loading. For a description of Zoomerang's privacy policy, please see: Privacy Policy If at any time you have questions about your rights related to this research, please contact: Susan Toppin or Dorinda Williams at the Office of Research Administration, Brown University, Box 1929, Providence RI, 02912. Phone: 401863-2777 or Toll-Free: 1-866-309-2095. For any other questions about this research project, please contact the Principal Investigator, Seth Marbin, of Brown University by email at smarbin@alumni.brown.edu
Question Have you read and understood this Informed Consent Statement?
Answer Choices Yes No
Sorry! In order to participate in this survey you must indicate that you have read and understood the Informed Consent Statement. Please use your browser's "back" button, or right click and choose "back" to return to question # 1. For any questions about this research project, please contact the Principal Investigator, Seth Marbin, of Brown University by email at smarbin@alumni.brown.edu Which of the following best describes your nonprofit organization's program area? (please check the one category that best applies.)
Arts/Culture/Humanities Education Environment/Animals - Environmental Quality, Protection & Beautification Environment/Animals - Animal Related Health General & Rehabilitative Services Health Mental Health, Crisis Intervention Health Multipurpose Associations/Services Associated with Specific Diseases/Disorders/ Medical Disciplines Health Medical Research Human Services - Public Protection: Crime & Delinquency Prevention, Legal Administration, Legal Services Human Services - Employment/Jobs Human Services - Food, Nutrition, Agriculture Human Services - Housing/Shelter Human Services - Public Safety, Disaster Preparedness & Relief Human Services - Recreation, Leisure, Sports, Athletics Human Services - Youth Development Human Services - Multipurpose & Other International Foreign Affairs Public/Society Benefit - Civil Rights, Social Action, Advocacy

Public/Society Benefit - Community Improvement/Economic Development/ Capacity Building Public/Society Benefit - Philanthropy/Grantmaking Foundations Public/Society Benefit - Volunteerism Public/Society Benefit - Science and Technology Research Institutes/Services Public/Society Benefit - Social Sciences, Research Institutes/Services Public/Society Benefit - Multipurpose & Other Religion Miscellaneous Mutual/Membership Benefit Organizations Other (please specify):
How many years has your organization been operating?
Less than 1 year 1-5 years 6-10 years 11-20 years More than 20 years
Please indicate the number of full time equivalent (FTE) staff in your organization.
0-10 11-20 21-30 31-40 41-50 51-99 More than 100
What is your organization's mission? (please describe below) Less Than $50,000 $50,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 - $2,499,999 $2,500,000 - $4,999,999 $5,000,000 - $11,999,999 $12,000,000 - $24,999,000 More than $25,000,000
What is the size of your organization's annual budget (from this fiscal year)?
Which best describes your organization?
An independent organization (with no chapters/affiliates) A chapter/affiliate of a statewide organization A chapter/affiliate of a regional organization A chapter/affiliate of a national organization A chapter/affiliate of an international organization The headquarters for an organization with chapters/affiliates Other (please specify):
What is the geographic scope of your organization?
Local Statewide Regional National International
Do you consider your organization to be entrepreneurial?
Yes No
10
In what ways is your nonprofit entrepreneurial? What entrepreneurial strategies are you using? (please describe using the space below)
Has your organization ever operated an earned-income venture? Earned-income includes service-related fees or tuition, product-related sales or manufacturing, government contracts, membership dues, cause-related marketing or licensing, renting or leasing property, and other income generating activities. Earned-income does not include sources such as corporate, foundation or government grants or subsidies, contributions from individuals, or in-kind donations of products or services.
11

Yes, currently operating 1 or more earned-income venture Not currently, but operated 1 or more in the past Never operated an earned-income venture
12
What was your organization's total revenue (from all sources) in the last fiscal year?
Less Than $50,000 $50,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 - $2,499,999 $2,500,000 - $4,999,999 $5,000,000 - $11,999,999 $ 12,000,000 - $24,999,000 More than $25,000,000
13
What percentage of that total revenue came from the following sources: (Please enter a number in each box below to add up to 100%) (For any source which does not apply, please enter a "0").
Foundation grants Government grants Corporate grants Donations from individuals Endowment income Investments Government contracts Membership dues Service-related revenue Product-related revenue Cause-related marketing or licensing Renting or leasing property Other
14
If you entered "Other" revenue please specify the source
15
How many earned-income ventures is your organization currently operating?
1 2 more than 2
16
Please indicate the type(s) of earnedincome venture(s) your organization is currently operating. (check all that apply)
Service-related (fees for service) Product-related sales/manufacturing Cause-related marketing/licensing Renting/leasing property (e.g., building rentals) Other, Please Specify
17
Please indicate the type of earnedincome venture which you are currently operating which provides the greatest social and financial benefits to your organization (check one only)

18
Please briefly describe this earnedincome venture.
19
What is the legal form of this venture?
In-house operation Separate nonprofit entity Separate for-profit entity Other (please specify)
20
How important are the following reasons for operating this earned-income venture? Please rate each reason on the scale from 1 to 3 below. 1= not important 2 = somewhat important 3 = very important
Generate income/surplus for programs Move organization towards self-sufficiency Provide employment/training/therapeutic opportunities to constituents Generate positive community relations Diversify revenue stream Help revitalize the neighborhood/community
21
If there are other reasons for operating your venture, please specify.
22
To what extent do the goals of your earned-income venture relate to the mission of your nonprofit organization? Please rate using the following scale where 1="not at all" and 5="to a great extent."

not at all a little bit somewhat a lot to a great extent
23
Who is responsible for managing your earned-income venture?

Executive Director Business Manager Other (Please specify):
24
Which of the following best describes this person's formal business training?
Masters in Business Administration (MBA) Bachelors degree in business (B.A. or B.S.) Associates degree in business (A.A. or A.S.) No formal business training Other (please specify):
25
For how long has your earned-income venture been operational?
less than 1 year 1-2 years 3-5 years 6-10 years more than 10 years
26
How was your venture initially funded? (Please check all that apply)
Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets Private venture capital
Other (Please Specify):
27
Are you currently seeking additional funding for your venture?

Yes No
28
What sources of additional funding are you considering for your venture? (please check all that apply)
Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets Private venture capital Other (Please Specify):
29
For the last fiscal year, what was your venture's financial net gain or loss?
Loss of $1 - $5,000 Loss of $5,001 - $10,000 Loss of $10,001 - $15,000 Loss of $15,001 - $20,000 Loss of $20,001 - $25,001 Loss of $25,001 or greater $0 (Broke Even) Gain of $1 - $5,000 Gain of $5,001 - $10,000 Gain of $10,001 - $15,000 Gain of $15,001 - $20,000 Gain of $20,001 - $25,001 Gain of $25,001 or greater Don't know
30
If it ever operated at a net loss, which of following sources were used to subsidize your earned-income venture (check all that apply)
Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets Private venture capital N/A - venture never operated at a net loss Other (Please Specify):
31
Please briefly describe how you measure the financial impact of your earned-income venture
32
How do you measure the social impact of your venture?
33
How often do you calculate the financial Return on Investment (ROI)?
Monthly Quarterly Yearly Never Other (please specify):
34
Do you formally calculate the Social Return on Investment (SROI)?
Yes No
35
If YES, please briefly describe how you calculate SROI:
36
To what extent has your earned-income venture had an impact on the following aspects of your nonprofit organization? Please rate each aspect using the scale from 1 to 7 below. 1= very negative 2 = negative 3 = somewhat negative 4 = neutral/no impact 5 = somewhat positive 6 = positive 7 = very positive

Ability to attract and retain donors Ability to attract and retain staff Ability to attract and retain volunteers Board leadership Entrepreneurial culture Mission of organization Reputation of organization Service/program delivery Self-sufficiency of organization
37
How valuable would you find the following types of support and assistance to help implement and sustain your earned-income venture? Please rate each option from 1 to 3 on the scale below. 1= not valuable 2 = somewhat valuable 3 = very valuable

Business planning assistance Access to capital/financial resources Market research Mentoring Peer support Technical assistance (hands-on consulting) Workshops/seminars on earned-income venturing
38
Please describe any other type of support or assistance that you would find valuable to help implement and sustain your earned-income venture
39
In your last complete fiscal year, what was your organization's total revenue (from all sources)?
Less Than $50,000 $50,000 - $149,999 $150,000 - $249,999 $250,000 - $499,999 $500,000 - $999,999 $1,000,000 - $2,499,999 $2,500,000 - $4,999,999 $5,000,000 - $11,999,999 $ 12,000,000 - $24,999,000 More than $25,000,000
40
What percentage of your total revenue came from the following sources: (Please enter a number in each box below to add up to 100%)
Foundation grants Government grants Corporate grants Donations from individuals Endowment income Investments Government contracts Membership dues Service-related revenue Product-related revenue Cause-related marketing or licensing Renting or leasing property Other
41
If you entered "Other" revenue please specify the source
42
How many earned-income ventures has your organization operated?

1 2 more than 2
43
Please indicate the type of earnedincome venture(s) your organization has operated. (check all that apply)
The following questions will ask you to comment on the 1 earned-income venture your organization operated which provided the greatest social and financial benefits to your organization.
44
Please indicate the type of earnedincome venture which you operated which provided the greatest social and financial benefits to your organization (choose one only)

45
Please briefly describe this earnedincome venture
46
What is the legal form of this venture?
In-house operation Separate nonprofit entity Separate for-profit entity Other (please specify):
47
How important were the following reasons for starting this earned-income venture? Please rate each reason on the scale from 1 to 3 below. 1 = not important 2 = somewhat important 3 = very important

Generate income/surplus for programs Move organization towards self-sufficiency Provide employment/training/therapeutic opportunities to constituents Generate positive community relations Diversify revenue stream Help revitalize the neighborhood/community
48
If you had any other reasons for operating your earned-income venture, please briefly describe them
49
To what extent did the goals of your earned-income venture relate to the mission of your nonprofit organization? Please rate using the following scale where 1="not at all" and 5="to a great extent."

not at all a little bit somewhat a lot to a great extent
50
Who was responsible for managing your earned-income venture?

Executive Director Business Manager Other (Please specify):
51
Which of the following best describes this person's formal business training?
Masters in Business Administration (MBA) Bachelors degree in business (B.A. or B.S.) Associates degree in business (A.A. or A.S.) No formal business training
Other (please specify):
52
How long ago did you stop operating your earned-income venture?

less than 1 year ago 1-2 years ago 3-5 years ago 6-10 years ago more than 10 years ago
53
For how long was the venture operational?
less than 1 year 1-2 years 3-5 years 6-10 years more than 10 years
54
Please indicate the reasons your organization is no longer operating any earned-income ventures. (Check all that apply.)
Lacked personnel resources to develop and manage the venture Lacked financial resources to operate Lacked board interest/support Decided venturing not part of our mission Concerned about exemption status and/or tax issues Concerned about operational/financial risks Restricted by funding Never considered idea Other reasons (please specify):
55
How was the venture initially funded? (Please check all that apply)
Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets Private venture capital Other (Please Specify):
56
For the last fiscal year it operated, what was the venture's net gain or loss?
Loss of $1 - $5,000 Loss of $5,001 - $10,000 Loss of $10,001 - $15,000 Loss of $15,001 - $20,000 Loss of $20,001 - $25,001 Loss of $25,001 or greater $0 (Broke Even) Gain of $1 - $5,000 Gain of $5,001 - $10,000 Gain of $10,001 - $15,000 Gain of $15,001 - $20,000 Gain of $20,001 - $25,001 Gain of $25,001 or greater Don't know
57
If it ever needed subsidy, which of the following sources were used to subsidize the venture (check all that apply)
Surplus from nonprofit's operating budget Grant(s) from foundation(s) Program-Related Investment(s) (PRI) Board support (loan(s)/grant(s)) Government grant(s) Government loan(s) Bank loan(s) Corporate funding Sale of property/assets

Private venture capital N/A - venture never operated at a net loss Other (Please Specify):
58
Please briefly describe how you measured the financial impact of your earned-income venture
59
How did you measure the social impact of your venture?
60
How often did you calculate the financial Return on Investment (ROI)?
Monthly Quarterly Yearly Never Other (please specify):
61
Did you formally calculate the Social Return on Investment (SROI)?
Yes No
62
If YES, please briefly describe how you calculated SROI
63
To what extent has your earned-income venture had an impact on the following aspects of your nonprofit organization? Please rate each aspect using the scale from 1 to 7 below. 1= very negative 2 = negative 3 = somewhat negative 4 = neutral/no impact 5 = somewhat positive 6 = positive 7 = very positive

Ability to attract and retain donors Ability to attract and retain staff Ability to attract and retain volunteers Board leadership Entrepreneurial culture Mission of organization Reputation of organization Service/program delivery Self-sufficiency of organization
64
How valuable would you have found the following types of support and assistance to help implement and sustain your earned-income venture? Please rate each option from 1 to 3 on the scale below. 1 = not valuable 2 = somewhat valuable 3 = very valuable

65
What types of support or assistance not listed above would have also been valuable?
66
Did you write a Business Plan before you launched your earned-income venture?

Yes No
67
How long did it take your organization to develop the Business Plan?

Less than 3 months 3-6 months 7-12 months More than 1 year
68
In developing your Business Plan, who did you receive advice or feedback from? (check all that apply)

Organizational consultant(s) Funder(s) Lawyer(s) Accountant(s) Volunteer(s) from the corporate sector Other nonprofit organization(s) College/university faculty or student(s) Current or potential clients/customers Other (please specify):
69
Are you planning to launch any additional earned-income ventures within the next year?

Yes No
70
Please indicate the type of earnedincome venture(s) you plan to launch (Check all that apply.)

Service-related (fees for service) Product-related sales/manufacturing Cause-related marketing/licensing Renting/leasing property (e.g., building rentals) Other (please specify):
71
Please indicate the reasons your organization has never operated an earned-income venture (Check all that apply.)
Lack personnel resources to develop and manage the venture Lack financial resources to launch Lack board interest/support Venturing not part of our mission Concerned about exemption status and/or tax issues Concerned about operational/financial risks Restricted by funding Never considered idea Other (please specify):
72
Are you planning to launch any earnedincome ventures within the next year?
Yes No
73
Please indicate the type of earnedincome venture(s) you plan to launch (Check all that apply.)
Service-related (fees for service) Product-related sales/manufacturing Cause-related marketing/licensing Renting/leasing property (e.g., building rentals) Other (please specify):
74
Are you interested in starting an earnedincome venture?
Yes No Not Sure
How valuable would you find the following types of support and assistance to help implement and sustain your earned-income venture? 75 Please rate each option from 1 to 3 on the scale below. 1= not valuable 2 = somewhat valuable 3 = very valuable 76

Please briefly describe any other ideas for support or assistance that would be valuable?
77
How did you learn about this survey? (Please check all that apply)
Email Postcard Website Newspaper From a friend/colleague Other (please specify):
78
So that we may verify we have received only one response per organization and tabulate results by geographic location, please provide the following:
Organization Name Address City State Zip
79
We plan to follow up with a limited number of organizations for brief interviews. Organizations selected for an interview may be highlighted in our final report. If you are NOT interested in being considered for an interview, please check below:
Do NOT consider my organization for an interview!
80
Social Venture Partners of Rhode Island is compiling a directory of nonprofits operating earned-income ventures. If your organization would NOT like to be considered, please check below:
Do NOT consider my organization for the directory!
In order to be eligible for a free copy of the report, a chance to be interviewed and possibly highlighted in the report, a chance to win the gift certificates and books, we need to know how to reach you. 81 This contact information will NOT be reported anywhere and will be removed from your survey responses. Please provide the following contact information:

Your Name Title Email Address Phone
Appendix
Table 23: Demographics of the Full Sample of RI Nonprofit Organizations Demographic Factor 1. Program Area Arts/Culture/Humanities Education Environment/Animals Health Human Services International Foreign Affairs Misc. Mutual/Membership Benefit Orgs Public/Society Benefit Religion Other (please specify): N=329 2. Years in Operation Less than 5 years 6-10 years 11-20 years More than 20 years N=295 3. Total Budget Less than $250,000 $250,000 - $999,999 $1,000,000 - $4,999,999 More than $5,000,000 N=287 4. Self-Identification as Entrepreneurial Yes No N=298 5. Operating an Earned-Income Venture Yes, currently operating 1 or more EIV Never operated an earned-income venture Not currently, but operated 1 or more in the past N=285 Count 46 48 16 40 70 2 5 32 9 61 329 % 14 15 5 12 21 1 2 10 3 19 102*
Total
Total
49 39 55 152 295
17 13 19 52 101*
Total
126 84 42 35 287
44 29 15 12 100
Total
158 140 298
53 47 100
Total
176 92 17 285
62 32 6 100
Note: * Does not equal 100% due to rounding
Table 24: Perceived Impact of Operating an EIV by Organizations Currently Operating 1 or More Attract Donors Very negative Negative Somewhat negative Neutral/no impact Somewhat positive Positive Very positive N= 1 1 0 33 25 33 22 115 Attract Staff 0 0 0 50 21 25 18 114 Attract Volunteers 2 0 2 46 19 29 18 116 Board Leadership 0 0 2 40 29 29 15 115 Entrepreneurial Culture 1 0 1 38 30 22 22 114
Perceived Impact (Continued) Mission of organization Very Negative Negative Somewhat Negative Neutral/No Impact Somewhat Positive Positive Very Positive N= 0 0 2 10 14 35 56 117 Reputation of organization 0 0 1 9 11 27 68 116 Service and Program 0 0 1 11 19 38 46 115 SelfSufficiency 2 0 5 20 28 31 30 116
Table 25: Rhode Island Sample Descriptive Statistics Variable Entrep Program Years Budget Eiv Obs 260 260 260 260 260 Mean .5269231 4.553846 3.053846 1.938462 .6576923 Std. Dev. .5002375 2.384187 1.134312 1.022933 .4753971 Min 0 1 1 1 0 Count 56 36 36 32 26 15 5 54 260 Max 1 8 4 4 1 % 22 14 14 12 10 6 2 21 101*
Demographic Factor 1. Program Area Human Services Education Arts/Culture/Humanities Health Public/Society Benefit Environment/Animals Religion Other** N=260 2. Years in Operation Less than 5 years 6-10 years 11-20 years More than 20 years N=260 3. Total Budget Less than $250,000 $250,000 - $999,999 $1,000,000 - $4,999,999 More than $5,000,000 N=260 4. Self-Identification as Entrepreneurial Yes No N=260 5. Operating an Earned-Income Venture*** Yes, currently operating 1 or more EIV Never operated an earned-income venture N=260
Total
Total
42 34 52 132 260
16 13 20 51 100
Total
114 78 38 30 260
44 30 15 12 101*
Total
137 123 260
53 47 100
Total
171 89 260
66 34 100
Notes: * Does not equal 100% due to rounding error ** "Other" includes the categories: "Misc. Mutual/Membership Benefit Orgs" and "International Foreign Affairs" *** The category "Not currently, but operated 1 or more in the past" was not included for the logistic regression
Table 26: Rhode Island Sample Bivariate Cross-Tabulations and Chi-Square Tests
| entrep eiv | no yes | Total -----------+----------------------+---------no | 57 35 | 92 | 44.19 25.18 | 34.33 -----------+----------------------+---------yes | 72 104 | 176 | 55.81 74.82 | 65.67 -----------+----------------------+---------Total | 129 139 | 268 | 100.00 100.00 | 100.00 Pearson chi2(1) = 10.7208 Pr = 0.001
| program eiv | arts educ enviro health hservice | Total -----------+-------------------------------------------------------+---------no | 8 12 4 12 20 | 91 | 21.62 32.43 26.67 37.50 35.71 | 34.60 -----------+-------------------------------------------------------+---------yes | 29 25 11 20 36 | 172 | 78.38 67.57 73.33 62.50 64.29 | 65.40 -----------+-------------------------------------------------------+---------Total | 37 37 15 32 56 | 263 | 100.00 100.00 100.00 100.00 100.00 | 100.00
| program eiv | public relig other | Total -----------+---------------------------------+---------no | 6 4 25 | 91 | 23.08 66.67 46.30 | 34.60 -----------+---------------------------------+---------yes | 20 2 29 | 172 | 76.92 33.33 53.70 | 65.40 -----------+---------------------------------+---------Total | 26 6 54 | 263 | 100.00 100.00 100.00 | 100.00 Pearson chi2(7) = 10.9145 Pr = 0.142
| years eiv | <5yrs 6-10 11-20 >20 | Total -----------+--------------------------------------------+---------no | 26 17 15 34 | 92 | 59.09 50.00 28.85 25.19 | 34.72 -----------+--------------------------------------------+---------yes | 18 17 37 101 | 173 | 40.91 50.00 71.15 74.81 | 65.28 -----------+--------------------------------------------+---------Total | 44 34 52 135 | 265 | 100.00 100.00 100.00 100.00 | 100.00 Pearson chi2(3) = 21.2400 Pr = 0.000
| budget eiv | <$250K 250-999 1-4.9 <5mil | Total -----------+--------------------------------------------+---------no | 49 19 12 10 | 90 | 42.61 24.36 31.58 32.26 | 34.35 -----------+--------------------------------------------+---------yes | 66 59 26 21 | 172 | 57.39 75.64 68.42 67.74 | 65.65 -----------+--------------------------------------------+---------Total | 115 78 38 31 | 262 | 100.00 100.00 100.00 100.00 | 100.00 Pearson chi2(3) = 7.1203 Pr = 0.068
Table 27: National Descriptive Statistics Variable Entrep Program Years Budget Eiv Obs 389 389 389 389 389 Mean 0.745501 4.722365 2.619537 2.298201 0.48072 Std. Dev. 0.43614 2.063437 1.239067 1.127684 0.500272 Min 0 1 1 1 0 Count 125 54 31 34 58 18 17 52 389 Max 1 8 4 4 1 % 32 14 8 9 15 5 4 13 100
Demographic Factor 1. Program Area Human Services Education Arts/Culture/Humanities Health Public/Society Benefit Environment/Animals Religion Other** N=389 2. Years in Operation Less than 5 years 6-10 years 11-20 years More than 20 years N=389 3. Total Budget Less than $250,000 $250,000 - $999,999 $1,000,000 - $4,999,999 More than $5,000,000 N=389 4. Self-Identification as Entrepreneurial Yes No N=389 5. Operating an Earned-Income Venture*** Yes, currently operating 1 or more EIV Never operated an earned-income venture N=389
Total
Total
111 67 70 141 389
29 17 18 36 100
Total
127 98 85 79 389
33 25 22 20 100
Total
290 99 389
75 25 100
Total
187 202 389
48 52 100
Notes: * "Other" includes the categories: "Misc. Mutual/Membership Benefit Orgs" and "International Foreign Affairs" *** The category "Not currently, but operated 1 or more in the past" was not included for the logistic regression
Table 28: National Bivariate Cross-Tabulations and Chi-Square Tests

| entrep eiv | no yes | Total -----------+----------------------+---------no | 81 125 | 206 | 80.20 42.66 | 52.28 -----------+----------------------+---------yes | 20 168 | 188 | 19.80 57.34 | 47.72 -----------+----------------------+---------Total | 101 293 | 394 | 100.00 100.00 | 100.00 Pearson chi2(1) = 42.4184 Pr = 0.000
| program eiv | arts educ enviro health hservice | Total -----------+-------------------------------------------------------+---------no | 14 43 13 24 79 | 269 | 35.00 64.18 54.17 51.06 54.11 | 55.35 -----------+-------------------------------------------------------+---------yes | 26 24 11 23 67 | 217 | 65.00 35.82 45.83 48.94 45.89 | 44.65 -----------+-------------------------------------------------------+---------Total | 40 67 24 47 146 | 486 | 100.00 100.00 100.00 100.00 100.00 | 100.00
| program eiv | public relig other | Total -----------+---------------------------------+---------no | 42 15 39 | 269 | 54.55 75.00 60.00 | 55.35 -----------+---------------------------------+---------yes | 35 5 26 | 217 | 45.45 25.00 40.00 | 44.65 -----------+---------------------------------+---------Total | 77 20 65 | 486 | 100.00 100.00 100.00 | 100.00 Pearson chi2(7) = 12.9835 Pr = 0.073
| years eiv | <5yrs 6-10 11-20 >20 | Total -----------+--------------------------------------------+---------no | 99 45 41 89 | 274 | 67.81 57.69 47.67 49.44 | 55.92 -----------+--------------------------------------------+---------yes | 47 33 45 91 | 216 | 32.19 42.31 52.33 50.56 | 44.08 -----------+--------------------------------------------+---------Total | 146 78 86 180 | 490 | 100.00 100.00 100.00 100.00 | 100.00 Pearson chi2(3) = 13.9045 Pr = 0.003
| budget eiv | <$250K 250-999 1-4.9 <5mil | Total -----------+--------------------------------------------+---------no | 125 62 53 34 | 274 | 73.53 51.24 50.00 36.17 | 55.80 -----------+--------------------------------------------+---------yes | 45 59 53 60 | 217 | 26.47 48.76 50.00 63.83 | 44.20 -----------+--------------------------------------------+---------Total | 170 121 106 94 | 491 | 100.00 100.00 100.00 100.00 | 100.00 Pearson chi2(3) = 38.8190 Pr = 0.000
Table 29: Pooled Descriptive Statistics Variable Program (art = ref category) Educ Enviro Health Hservice Public Relig Other Years (< 5 = ref category) 6 10 11 20 > 20 Budget (< $250k = ref category) $250 k 999 k $1 mil 4.9 mil > $5 mil Entrep EIV Sample Obs 649 649 649 649 649 649 649 649 649 649 649 649 649 649 649 649 649 649 649 Mean 4.654854 0.138675 0.050848 0.101695 0.278891 0.12943 0.033898 0.163328 2.793529 0.155624 0.187982 0.420647 2.154083 0.271186 0.189522 0.167951 0.657935 0.551618 0.599384 Std. Dev. 2.197321 0.345874 0.219856 0.30248 0.4488 0.335934 0.181107 0.36995 1.216104 0.362778 0.390999 0.494044 1.100359 0.444915 0.392225 0.374111 0.474767 0.497712 0.490401 Min 1 0 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 0 Max 8 1 1 1 1 1 1 1 4 1 1 1 4 1 1 1 1 1 1
Demographic Factor 1. Program Area Arts/Culture/Humanities Education Environment/Animals Health Human Services Public/Society Benefit Religion Other ** N=649 2. Years in Operation Less than 5 years 6-10 years 11-20 years More than 20 years N=649 3. Total Budget Less than $250,000 $250,000 - $999,999 $1,000,000 - $4,999,999 More than $5,000,000
Count 67 90 33 66 181 84 22 106 649
% 10 14 5 10 28 13 3 16 99*
Total
Total
153 101 122 273 649
24 16 19 42 101*
241 176 123 109
37 27 19 17
N=649 4. Self-Identification as Entrepreneurial Yes No N=649 5. Operating an Earned-Income Venture*** Yes, currently operating 1 or more EIV Never operated an earned-income venture N=649
Total
649
100
Total
427 222 649
66 34 100
Total
358 291 649
55 45 100
Notes: * Does not equal 100% due to rounding error * "Other" includes the categories: "Misc. Mutual/Membership Benefit Orgs" and "International Foreign Affairs" ** The category "Not currently, but operated 1 or more in the past" was not included for the logistic regression
Table 30: Pooled Bivariate Cross-Tabulation and Chi-Square Test

| sample eiv | 0 1 | Total -----------+----------------------+---------no | 89 202 | 291 | 34.23 51.93 | 44.84 -----------+----------------------+---------yes | 171 187 | 358 | 65.77 48.07 | 55.16 -----------+----------------------+---------Total | 260 389 | 649 | 100.00 100.00 | 100.00 Pearson chi2(1) = 19.7335 Pr = 0.000
Table 31: RI Logistic Regression Predicting Organizations Currently Operating 1 or More EIVs (Reference Category = Never) Predictor Odds Ratio Budget (Reference category = < $250K) $250-$999K 1.48 $1-$5M 1.14 > $5M 0.88 Age (Reference category = < 5 years) 6-10 years 1.23 11-20 years 3.02* >20 years 4.96** "Entrepreneurial" (Reference category = No) Yes 2.85** Program Area (Reference category = Arts/Culture/Humanities) Education 0.41 Environment 0.39 Health 0.28 Hum Service 0.38 Public Benefit 0.82 Religion 0.09* Other 0.21** *p < .05 **p < .01 N = 260 Std. Err. 0.56 0.54 0.48 0.65 1.52 2.29 0.86 0.24 0.29 0.18 0.21 0.55 0.10 0.11
Table 32: National Logistic Regression Predicting Organizations Currently Operating 1 or More EIVs (Reference Category = Never) Predictor Odds Ratio Budget (Reference category = < $250K) $250-$999K 2.58** $1-$5M 2.48** > $5M 4.61*** Age (Reference category = < 5 years) 6-10 years 1.04 11-20 years 1.62 >20 years 1.33 "Entrepreneurial" (Reference category = No) Yes 5.59*** Program Area (Reference category = Arts/Culture/Humanities) Education 0.22** Environment 0.46 Health 0.37 Hum Service 0.30* Public Benefit 0.43* Religion 0.17* Other 0.35 *p < .05 **p < .01 ***p < .001 N = 389 Std. Err. 0.81 0.87 1.77 0.37 0.60 0.45 1.70 0.12 0.30 0.21 0.14 0.22 0.13 0.18
Table 33: Pooled Logistic Regression Predicting Organizations Currently Operating 1 or More EIVs (Reference Category = Never) controlling for Budget, Age, Entrepreneurial, and Program Area Predictor Odds Ratio Budget (Reference category = < $250K) $250-$999K 2.05** $1-$5M 1.69 > $5M 2.47** Age (Reference category = < 5 years) 6-10 years 1.17 11-20 years 1.94* >20 years 2.15** "Entrepreneurial" (Reference category = No) Yes 3.91*** Program Area (Reference category = Arts/Culture/Humanities) Education 0.29** Environment 0.44 Health 0.31** Hum Service 0.33** Public Benefit 0.50 Religion 0.15** Other 0.26*** Sample (Reference category = Rhode Island) National 0.33*** *p < .05 **p < .01 ***p < .001 N = 649 Std. Err. 0.47 0.46 0.74 0.33 0.56 0.56 0.80 0.11 0.21 0.13 0.12 0.19 0.09 0.10 0.07
Works Cited
Alter, K. (2004). Social enterprise typology. Retrieved April, 10, 2005, from http://www.virtueventures.com/setypology.pdf Amos House. (2005). Retrieved May 5, 2005, from http://www.amoshouse.com/home.htm Beauchemin, J., & Gallo, R. (2003). Rhode Islands non-profit sector: More than charity. Retrieved April 1, 2005, from http://www.rifoundation.org/matriarch/d.asp?PageID=155&PageName2=PDFss& p=&PageName=Non%5FProfit%5FReport%281%29%2Epdf Boschee, J. (2001). The social enterprise sourcebook: Profiles of social purpose businesses operated by nonprofit organizations. Minneapolis, MN: Northland Institute. Boschee, J., & McClurg, J. (2003). Toward a better understanding of social entrepreneurship: Some important distinctions. Retrieved Jan 12, 2005, from http://www.se-alliance.org/better_understanding.pdf Bradley, B. (2004). Forward. In S. M. Oster, C. W. Massarsky & S. L. Beinhacker (Eds.), Generating and sustaining nonprofit earned income: A guide to successful enterprise strategies (1st ed., pp. xiii-xvii). San Francisco, CA: Jossey-Bass. Brown, E., & Slivinski, A. (2003). Nonprofit organizations and the market. Retrieved April 25, 2005, from http://www.ssc.uwo.ca/economics/faculty/Slivinski/workingpapers/tdcdraft3.pdf Brown, M. (2005). Personal interview: Seth Marbin. Burns, M. J. (2003). Self-sufficiency: How important is it? In Powering social change: Lessons on community wealth generation for nonprofit sustainability (pp. 30-33). Washington, DC: Community Wealth Ventures. Community Wealth Ventures. (2003). Powering social change: Lessons on community wealth generation for nonprofit sustainability. Retrieved November 9, 2004, from www.communitywealth.org/Powering%20Social%20Change.pdf Costello, K. (1996). We review [a review of the book: A revolution of the heart: A new strategy for creating wealth and meaningful change]. Retrieved April 1, 2005, from http://www.nonprofits.org/misc/rev.html Crimmins, J. C., & Keil, M. (1983). Enterprise in the nonprofit sector. Washington, DC: Partners for Livable Places.
Crossroads Rhode Island receives $50,000 grant from Bank of America Foundation. (2005). Retrieved May 1, 2005, from http://crossroadsri.org/News/jan_05_bank_america.htm Dart, R. (2004a). Being business-like in a nonprofit organization: A grounded and inductive typology. Nonprofit and Voluntary Sector Quarterly, 33(2), 290-310. Dart, R. (2004b). The legitimacy of social enterprise. Nonprofit Management and Leadership, 14(4), 411-424. Dees, J. G. (1998). Enterprising nonprofits. Harvard Business Review, 76(1), 54-67. Dees, J. G. (2001). The meaning of social entrepreneurship. Retrieved October 7, 2004, from http://www.fuqua.duke.edu/centers/case/documents/dees_SE.pdf Dees, J. G. (2004). Putting nonprofit business ventures in perspective. In S. M. Oster, C. W. Massarsky & S. L. Beinhacker (Eds.), Generating and sustaining nonprofit earned income: A guide to successful enterprise strategies (pp. 3-18). San Francisco, CA: Jossey-Bass. Dill, A. (1994). Institutional environments and organizational response to AIDS. Journal of Health and Social Behavior, 35(December), 349-369. DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48, 147-161. Drucker, P. F. (1993). Innovation and entrepreneurship: Practice and principles (1st HarperBusiness ed.). New York: Harper & Row, Publishers, Inc. Emerson, J., & Twersky, F. (1996). New social entrepreneurs: The success, challenge and lessons of non-profit enterprise creation. Retrieved April 1, 2005, from http://www.redf.org/publications-nse.htm Foster, W., & Bradach, J. (2005). Should nonprofits seek profits? Harvard Business Review, 83(2), 92-100. Froelich, K. A. (1999). Diversification of revenue strategies: Evolving resource dependence in nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 28(3), 246-268. Frumkin, P. (2002). On being nonprofit: A conceptual and policy primer. Cambridge, MA: Harvard University Press. Garland, J. E. (1963). To meet these wants; the story of the Rhode Island Hospital, 18631963. Providence, RI: Rhode Island Hospital.
Girl Scouts. (2004). Girl Scout cookie history: Early years. Retrieved April 1, 2005, from http://www.girlscouts.org/program/gs_cookies/cookie_history/early_years.asp Goodwill. (2005). 100 years of history. Retrieved April 1, 2005, from http://www.goodwill.org/index_gii.cfm/1636/ Hager, M. A. (2002). An introduction to the overhead costs study: Method and data. Annual Conference of the Association for Research on Nonprofit Organizations and Voluntary Action Retrieved April 18, 2005, from http://nccsdataweb.urban.org/kbfiles/522/survey%20methods%20paper.pdf Handel, M. J. (2003). Organizations as open systems: Organizations and their environments. In M. J. Handel (Ed.), The sociology of organizations (pp. 225231). Thousand Oaks, CA: Sage Publications. Handy, F., & Ranade, S. (2000). Entrepreneurs in the nonprofit sector: A study of women entrepreneurs of NGOs in India. Retrieved April 10, 2005, from http://www.jhu.edu/~istr/conferences/dublin/workingpapers/handy.pdf Hansmann, H. B. (1980). The role of nonprofit enterprise. Yale Law Journal, 89(5), 835901. Haycock, N. E. (1988). Stepping out into the marketplace: The pitfalls of earned income for the small nonprofit. In E. Skloot (Ed.), The nonprofit entrepreneur: Creating ventures to earn income (pp. 147-161). New York, NY: Foundation Center. Herman, R. D., & Rendina, D. (2001). Donor reactions to commercial activities of nonprofit organizations: An American case study. Voluntas, 12(2), 157-169. Hicks, L. (2004). Collaborative IRB training initiative (CITI): Internet research. Retrieved March 15, 2005, from https://www.citiprogram.org/ Hines, J. R., Jr. (1998). Nonprofit business activity and the unrelated business income tax. NBER Working Paper Series Retrieved March 7, 2005, from http://www.nber.org/papers/w6820 Hochberg, E. (2002). Business ventures go beyond the bottom line. Chronicle of Philanthropy, 14, 35-37. Internal Revenue Service. (2002). Appendix of types of exempt organizations: IRC section, description of organization, and general nature of activities. Excel ver. 4. Retrieved April 1, 2005, from http://www.irs.gov/pub/irs-soi/eoappdix.xls Internal Revenue Service. (2005a). Publication 557: Tax-exempt status for your organization. Retrieved April 1, 2005, from http://www.irs.gov/pub/irspdf/p557.pdf
Kaplan, M. J. (2005). TSNE letter of intent to plan capacity building fund (pp. 4): Rhode Island Social Entrepreneurship Learning Group. King, C. (2003). The need for a new paradigm: Social entrepreneurship. In Powering social change: Lessons on community wealth generation for nonprofit sustainability (pp. 20-23). Washington, DC: Community Wealth Ventures. Lifespan. (2003). Lifespan annual report. Retrieved April 1, 2005, from http://lifespan.org/about/Reports/Annual/2003/LS_AR_03.pdf Mair, J., & Marti, I. (2004). Social entrepreneurship: What are we talking about? A framework for future research. Retrieved April 1, 2005, from http://www.iese.edu/research/pdfs/DI-0546-E.pdf Mankiw, N. G. (2004). Principles of economics (3rd ed.). Mason, Ohio: Thomson/SouthWestern. Massarsky, C. W., & Beinhacker, S. L. (2002). Enterprising nonprofits: Revenue generation in the nonprofit sector. Retrieved November 11, 2004, from http://www.ventures.yale.edu/docs/Enterprising_Nonprofits.pdf McCoy, B. (2004). Laser monks, real monks. Real savings. Supporting real people. Retrieved April 1, 2005, from http://www.lasermonks.com/index.php?main_page=lasermonks_story&zenid=6ab 082da48fddf760875fb9a149f368a McMahon, M. (2005). Personal interview: Seth Marbin. Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. The American Journal of Sociology, 83(2), 340-363. National Geographic. (2003). Fact sheet. Retrieved May 6, 2005, from http://press.nationalgeographic.com/pressroom/index.jsp?pageID=factSheets_deta il&siteID=1&cid=1052839802576 Robbins, L. (1932). An essay on the nature & significance of economic science. London: Macmillan & Company. Salamon, L. M. (1996). The crisis of the nonprofit sector and the challenge of renewal. National Civic Review, 85(4), 3-17. Salamon, L. M., & Anheier, H. K. (1997). The challenge of definition: Thirteen realities in search of a concept. In L. M. Salamon & H. K. Anheier (Eds.), Defining the nonprofit sector: A cross-national analysis (pp. 11-28). New York: Manchester University Press.
Scott, W. R. (1992). Organizations: Rational, natural, and open systems (Third ed.). Englewood Cliffs, NJ: Prentice-Hall, Inc. Shore, B. (1995). Revolution of the heart: A new strategy for creating wealth and meaningful change. New York, NY: Riverhead Books. Shore, W. (2003). Powering social change. In Powering social change: Lessons on community wealth generation for nonprofit sustainability (pp. 7-11). Washington, DC: Community Wealth Ventures. Shuman, M. H., & Fuller, M. (2005). Profits for justice. The Nation, 280(3), 13-20. Skloot, E. (Ed.). (1988). The nonprofit entrepreneur: Creating ventures to earn income. New York, NY: The Foundation Center. Smith, A. (1776, 9/18/04). The wealth of nations. Retrieved April 20, 2005, from http://wikisource.org/wiki/Chapter1:Of_the_Principle_of_the_commercial%2C_o r_mercantile_System Social Enterprise Alliance. (2005). Social enterprise lexicon. Retrieved April 1, 2005, from http://www.se-alliance.org/resources_lexicon.cfm Strickland, W. E., Jr. (2003). Entrepreneurship and the nonprofit world. Powering social change: Lessons on community wealth generation for nonprofit sustainability, from www.communitywealth.org/Powering%20Social%20Change.pdf Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571610. Tucker, D. J., & Baum, J. A. C. S., Jitendra V. (1992). The institutional ecology of human service organizations. In Y. Hasenfeld (Ed.), Human services as complex organizations (pp. 47-72). Newbury Park, CA: Sage Publications. U.S. Census Bureau. (2005). 1988-2002 county business patterns. Retrieved April 18, 2005, from http://www.census.gov/csd/susb/Totals88-02.xls Venture Line. (n.d.). Accounting terms - accounting dictionary - accounting glossary. Retrieved April 25, 2005, from http://www.ventureline.com/glossary_A.asp Walls, J., Jr. (2003). A successful social enterprise responds to the market. In Powering social change: Lessons on community wealth generation for nonprofit sustainability (pp. 26-29). Washington, DC: Community Wealth Ventures. Weisbrod, B. A. (1998). Conclusions and public-policy issues: Commercialism and the road ahead. In B. A. Weisbrod (Ed.), To profit or not to profit: The commercial transformation of the nonprofit sector (pp. 287-305). New York: Cambridge University Press.
Weisbrod, B. A. (2004). The pitfalls of profits. Stanford Social Innovation Review, Winter 2004, 40-47. Weisbrod, B. A. (Ed.). (1998a). To profit or not to profit: The commercial transformation of the nonprofit sector. New York: Cambridge University Press. Young, D. R. (2001). Social enterprise in the United States: Alternate identities and forms. EMES Conference: The Social Enterprise: A Comparative Perspective Retrieved 2005, April 1, from http://www.nationalcne.org/papers/italypap.htm Young, D. R. (2003). Entrepreneurs, managers and nonprofit enterprise. In H. K. Anheier & A. Ben-Ner (Eds.), The study of the nonprofit enterprise: Theories and approaches (pp. 161-168). New York: Kluwer Academic/Plenum Publishers. Young, D. R., & Salamon, L. M. (2002). Commercialization, social ventures, and forprofit competition. In L. M. Salamon (Ed.), The state of nonprofit America (pp. 423-446). Washington, DC: Brookings Institution Press.

A Sea Change in The Social Sector - Examining Earned-Income Ventures and Entrepreneurial Nonprofits in Rhode Island - Seth Marbin - PPSO Senior Honors Thesis - Brown University - May 2005

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

A Sea Change in The Social Sector - Examining Earned-Income Ventures and Entrepreneurial Nonprofits in Rhode Island - Seth Marbin - PPSO Senior Honors Thesis - Brown University - May 2005

Uploaded by

Copyright:

Available Formats

APPENDIX...................................................................................................................... 89 WORKS CITED.............................................................................................................. 99

By Massarsky& Beinhacker (2002)

Why Rhode Island?

Description of the Trend: From the 1980s to Today

Previous Research Findings

Why the Sea Change is Occurring

The Web-Based Survey

Overview of Web-Survey Questions

Data Analysis Process

Rhode Island Findings

Table 1: Self-Identification as Entrepreneurial (of Full RI Nonprofit Sample)

Entrepreneurial 1. Yes 2. No N=298

40% 20% 0% Yes No

Table 2: Operation of Earned-Income Ventures (of Full RI Nonprofit Sample)

60% 40% 20% 0% Currently Never In Past

Characteristics of the RI Earned-Income Ventures

Number of EIVs 1. One 2. Two 3. More than Two N=142

40% 20% 0% One Two > Two

102 49 11 40 Total 18 220*

46% 22% 5% 18% 8% 100%

56% 15% 3% 15% 11% 100%

Description of the RI Earned-Income Ventures

Table 6: Sample Descriptions of Property, Marketing/Licensing-Related, and Other EIVs Property

Profiles of Three RI Earned-Income Ventures

Table 7: Funding Streams of the Edward King House

Crossroads Rhode Island, Providence About to Launch an EIV

Relation of Ventures Goals to Organizations Mission

Reasons for Launching (and Not Launching) an EIV

Perceived Impact of Operating an EIV

Impact Negative Neutral/No Impact Positive Average N=115

60% 40% 20% 0% Negative Neutral Positive

Table 12: Perceived Impact of Operating an EIV on Nonprofit Organizations

How Nonprofits Define Entrepreneurial

Table 13: The Relationship between "Entrepreneurial" and Operating an EIV

Useful Support and Assistance

80% 60% 40% 20% 0%

Capital/ financial resources 2% 13% 86%

Market research 5% 37% 58%

Mentoring 11% 38% 52%

Peer support 13% 41% 47%

Workshop/ seminars 9% 44% 47%

not somewhat very

80% 60% 40% 20% 0%

Capital/ financial resources 15% 21% 65%

Market research 15% 31% 54%

Workshop/ seminars 18% 45% 37%

Mentoring 29% 36% 35%

Peer support 23% 45% 32%

not somewhat very

Recent Rhode Island Developments

Rhode Island Compared to the National Sample

total budget size for the organization

total number of years organization has been in operation

Rhode Island Descriptive Statistics

National Descriptive Statistics

Bivariate Cross-Tabulations and Chi-Square Tests

Education 0.2 0.4

Enviro 0.5 0.4

Health 0.4 0.3

Hum Serv Pub Ben 0.3 0.4 0.4 0.8

Religion 0.2 0.1

Other 0.4 0.2