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Npo Business Model Canvas Alexandros
Npo Business Model Canvas Alexandros
a rapid primer before you start All enterprises — whether for-profit or nonprofit —
need a viable business model to do more than just
survive, but to also thrive.
REMODELING THE CANVAS: THE NONPROFIT DIFFERENCE HOW YOU SHOULD APPROACH THE CANVAS KIT Soon, the ailing organization discovers that their
REFERENCES:
90% 42% 1. Current as of 2013. For a fuller
According to the Nonprofit Finance Fund’s State According to the Nonprofit Finance Fund’s State picture, visit the “quick facts”
of the Sector 2013 survey, that’s the percentage of of the Sector 2013 survey, that’s the percentage of section” at the National Center for
survey respondents who say financial conditions are survey respondents who say they lack the right mix Charitable Statistics (NCCS) [link]
“hard” or “harder”. 2 of financial resources to thrive and be effective in the
next 3 years. 2. For a fullter picture on nonprofit
finances, explore the rest of the
Nonprofit Finance Fund’s State of
the Sector 2013 survey. [link]
programs and services have slowly lost relevancy in adaptive and innovative, and to come up with
“
both the constituent’s and donor’s eyes. sustainable revenue strategies that go beyond
traditional fundraising. Most times, that plea is
THE STATE OF NONPROFIT FINANCES 2013 ignored, because while the intent is more volatile Why should investors or donors cut you
than ever, it’s not always understood what it takes to a check? Why should volunteers or the
The Nonprofit Finance Fund’s State of the Sector get to that state of adaptability. community co-create change with you?
Survey for 2013 says that low financial resources What social return can they expect?
continues to be a persistent paradigm in the nonprofit A DIFFERENT STARTING POINT:
sector. Here are some notable stats from the survey: Even nonprofits need a value proposition.
VISUALIZING YOUR NONPROFIT TO This is the compelling case for support
§§ 42% of survey respondents report that they do which differentiates your mission from the
not have the right mix of financial resources to INFORM FUTURE ACTION rest, the unique benefit or social impact
thrive and be effective in the next 3 years. that clients and donors can expect from
It all begins with a nonprofit’s business model. The their partnership with you. There’s no
§§ 1 in 4 nonprofits has 30 days or less cash-on- challenge, however, is understanding what it looks escaping the fact that nonprofits exist in a
hand. like now and designing a new way forward, but without crowded marketplace where they must still
waiting months or years for the perfect plan. work to attract revenue, acquire subsidies,
§§ Over the next twelve months, 39% plan to change retain support, and build advocacy.
the main ways they raise and spend money. The visual framework for generating this critical
missing self-knowledge — the business model The reality of your value proposition
§§ 23% will seek funding other than grants or canvas — is the key blueprint for deciphering what to will always be mirrored by how well you
contracts, such as loans or investments. change, add, or subtract in any organization. understand your clients and how well you
design your programs and services. The
Every year there’s a call for nonprofits to be more It’s a key blueprint for adaptability. canvas can serve as a reality check. [link]
3
introduction [cont]
“ The 9 main parts of your business model show how all your
resources flow and function together. When you propose any
change to the model, you can visualize the impact to everything
else in the organization.
So that’s the point of the canvas: To help ourselves §§ Dynamic stakeholders relationships. For
and everyone else see and imagine the implications. example, a donor might not just be a donor, but REFERENCES:
To facilitate a better strategic conversation about the also be a beneficiary of services.
future, and to understand what even the slightest
changes can do for us. §§ Diverse outcomes: You also need volunteers,
membership sign-ups, behavior change, creative commons and such:
mission-related outcomes etc.
REMODELING THE CANVAS: THE 1. Here is the license explaining what can and
§§ Multiple Social Propositions: one for can’t be done with the Canvas. [link]
NONPROFIT DIFFERENCE beneficiaries, one for donors.
Since the original canvas was released under the §§ Emerging trends that prompt nonprofits to revisit
Creative Commons Attribution-Share Alike 3.0 their canvas blueprint more often than usual:
Unported License, it meant that business model Marketplace trends, cross-sector collaborations,
advocates could remodel the canvas blocks to suit political developments, web and technology
other contexts. advances, etc.
§§ For the nonprofit, the “customers” may be the §§ Multi-disciplinary input: Understanding that one
clients or the beneficiaries that receive services. person doesn’t know the answer to everything,
You also have to consider the fact that you have a and that a wide range of voices, experts, and
social value proposition in which donors expect a opinions are needed for breakthroughs for
“social return.” complex social problems.
5
introduction [cont]
§§ Involvement of the users and other stakeholders future revenue strategies. Programs and services
in the discovery, design, and development of This starts by rethinking the way we conduct research can go for months and years before results can
solutions to accurately generate the insight for a canvas. It be measured, and if any of them were based on
means going beyond the dependency of market preconceived notions, it could mean wasted funds,
§§ Reiterating on solutions. No solution is perfect. research, general demographics, and preconceived wasted time, and missed opportunities.
Plus, external variables like marketplace notions of the design of our programs, services, and
conditions and technological advances are always initiatives. This means accepting that our clients
in flux and can have hidden effects and influences and beneficiaries have hidden needs, wants, and THE CANVAS + VISUAL COLLABORATION:
on social challenges. problems which can affect how they ultimately relate
to your organization. UPGRADING THE STANDARD MEETING
Why is any of this important? HCD is a discipline of
great depth and breadth. It has everything to do with The Canvas Kit infuses the principles of human- Don’t think infographics, pie charts, or graphs.
preparing your organization’s business model to move centered design to help nonprofits question Think post-its, mindmaps, affinity diagrams, and the
the needle in your mission and achieve breakthroughs. their assumptions.2,3 The canvas is paired with business model canvas.
recommended ethnographic methods and other
Human-centered design considers the fact that the holistic research tools that accompany each block so Visual collaboration makes way for speedier
creation of our programs, services, and initiatives that the nonprofit can quickly clear up any unchecked sensemaking and better strategic conversations.4
must reflect the depth of people’s lives, their assumptions.
experiences, the complexity of the social challenge Like throwing a rock into a pond, your Post-it
itself, and the multidimensional milieu that This is the key to understanding your current Note will be the rock, simulating changes to your
stakeholders exist in.1 business model. It’s also essential in the design of organization so that you can imagine what that may
§§ Memoing on post-its allow you to instantly 4. This brief summary on Dan Roam’s “Back
manipulate and move data around on the canvas of the Napkin” describes the importance of
prototype [proh-tuh-tahyp] (Contrast that with electronically via email or app, communication and clarity when using visual
where too much time elapses for effective real- thinking. [link]
A prototype is a mock-up like a sketch, drawing, or time collaboration)
physical model that represents the future state of but what about groupthink? not so
something, all while prompting feedback from people §§ Insights through conversation fast:
and inspiring reiteration. That’s it. It doesn’t have to
be costly. §§ Flashes of insight (aha! moments, and greater 5. Ignore the cry from the pop-culture business
chance of potentially innovative ideas) blogs about the perils of groupthink. Here’s a
You can get an accurate, more meaningful strategic good argument that debunks this exaggerated
conversation than a 1 hour meeting of just verbal §§ Scan and engage the data better (capture fear. Good collaborative teamwork exists — if
discussion. patterns, hidden insights, hidden assumptions, executed correctly. [link]
discrepancies etc)
Jotting memos on Post-Its and sticking them on §§ Group collaboration avoids making insights and
the canvas promotes a shared understanding of conclusions one-sided and one-dimensional.
what the organization’s business model is like now,
and what the future possibilities might be. Working
7
introduction [cont]
CANVAS KIT
actionable takeaways
why a redesigned canvas? why hcd? why visual collaboration?
§§ Challenges unique to the nonprofit sector: §§ Multi-disciplinary input: Understanding §§ Build a shared understanding
mission creep, mission drift, misaligned social that one person doesn’t know the answer
value proposition, unfocused resources, lack of to everything, and that a wide range of §§ Shared investigation and exploration
overall strategy, underfunded, etc. voices, experts, and opinions are needed for
breakthroughs for complex social problems. §§ Shared sense of idea ownership
§§ For the nonprofit, the “customers” may be the
clients or the beneficiaries that receive services. §§ An explicit understanding of our §§ Memoing on post-its allow you to instantly
You also have to consider the fact that you have a constituents, their tasks, and environments manipulate and move data around on the
social value proposition in which donors expect a is critical. It may lead to hidden insights and canvas [Contrast that with electronically via
“social return.” thus hidden opportunities. email or app, where too much time elapses for
effective real-time collaboration]
§§ Diverse stakeholders: Volunteers, beneficiaries, §§ Involvement of the users and other
investors, philanthropists – all which can be stakeholders in the discovery, design, and §§ Insights through conversation
further segmented. development of solutions
§§ Flashes of insight [aha! moments, and greater
§§ Dynamic stakeholders relationships. For §§ Reiterating on solutions. No solution chance of potentially innovative ideas]
example, a donor might not just be a donor, but is perfect. Plus, external variables like
also be a beneficiary of services. marketplace conditions and technological §§ Scan and engage the data better [capture
advances are always in flux and can have patterns, hidden insights, hidden assumptions,
§§ Diverse outcomes: You also need volunteers, hidden effects and influences on social discrepancies etc]
membership sign-ups, behavior change, challenges.
mission-related outcomes etc. §§ Group collaboration avoids making insights
§§ Multiple Social Propositions: one for and conclusions one-sided and one-
beneficiaries, one for donors. dimensional.
accuracy actionability
+ precision + brevity
research methods
01 contextual interviews
Observing participants in a work-based context lets you quickly probe
and posit a new question which might’ve been unavailable from a PREP
traditional interview.
»» A list of questions
FOR BLOCKS: Social Value Proposition. Stakeholders »» tape recorder
»» camera
»» pen/pencil
»» paper
Use contextual interviews to Environmental & Experiential Triggers »» Other team members to record audio, draw visuals,
With traditional interviews, your verbal vocabulary is or jot notes while the main interviewer leads the
probe the existing design of the only cue, or trigger, for the participant to recall conversation.
their experiences. Social or physical environment of the »» Refer to Word Template
your programs and services interview is irrelevant.
Contextual interviews outshine traditional Q&A in two ways: In contextual interviews, the social and physical
environments matter because it also informs you of their
1. They allow you to observe and probe as someone uses influences related to the usage of a product or service.
your product or service within their social and physical
environment. Teacher and Student Roles
2. They reveal why they do certain things as they do it. The interviewer takes on an inquiring “student” role and
Sometimes we forget the small but insightful details of the participant takes on an active “teacher” role. As the PRECAUTIONS
our experiences, details which could be overlooked in participant performs and explains the work being done, the
traditional interviews. interviewer observes, takes notes, and probes further. »» Use informed consent forms, if necessary.
»» Preferably no more than 2 or 3 should be in your
Contextual interviews are also work-based. You watch interview group so that the participant doesn’t feel
and engage the participant as they perform the work. overwhelmed.
This triggers valuable details which can yield new insights
or validate other qualitative data collected elsewhere.
Observing participants in a work-based context lets you
quickly probe and posit a new question which might’ve been
unavailable from a traditional interview.
HOW TO DO IT TIPS
»» Active Observation: Heed non-verbal cues and body
“
Step 1: ESTABLISH THE RELATIONSHIP language; ask open-ended questions.
Make the participant comfortable. Clarify the focus and »» After a sizeable amount of interviews, do affinity maps
intent of the interview. Explain that the participant will to sum up and synthesize all of your interview data.
take on an active “teacher” role while you will take on a
“student” role. If you are recording audio or video, ensure »» Suspend any judgments and beliefs as a student. The
you get the participant’s permission. “teacher” knows more about the experience than you, so
expect that you’ll learn something new. if i asked my
Your list of questions is merely a starting point: It’ll help you
focus on the kinds of insight you’re seeking, but know that customers
the interview’s flow will take unexpected turns.
what they
Step 2: ENGAGE
wanted they
As the task is being executed, engage and inquire. Allow
the participant to guide you as they perform the work. would say a
Be ready to improvise or posit new questions on-the-fly.
Observe closely. Write quickly. Contextual interviews have AVOID faster horse.
a certain flow: The next question may not arise until the
participant does something new or interesting. When »» Hypothetical questions: “What would you do if...”, Or any
something unclear comes across, or something new or other questions that participants can’t clearly answer.
insightful prompts your attention, ASK the participant to — henry ford
elaborate. »» Asking what participants want or would want. Focus
groups do that, but they’re only good for incremental
Step 3: REVIEW and WRAP-UP improvements, not breakthrough innovation. If great ideas
don’t exist yet, how would they even know unless they’ve
Ensure that future meetings and follow-ups can occur in actually experienced it?
the future. Review the audio, film, and other notes you’ve
captured together with teammates and gather the key
takeaways.
SCENARIO 01:
state
foundation blogging enviro news work direct
tourism internships attractions college family
x dev letters shops action
agency students vacationers
public
interaction
regional
corporation
attractions
association x key resources channels
staff website
IT in-person
infras.
research
facilities
house
file research
equipment phone
dolphin outreach
enviro
field
blogging
internships research direct & college family
state dev
research & action marcom students vacationers
care
foundation tourism
x agency
ORGANIZATION PERSONA DRO has long depended on traditional outsourced Before they begin, perhaps the people in the group
IT: Website hosting, file storage and backup, email, have questions they’d like to focus on before they
Dolphin Research Organization (DRO) is a Hawaiian break-fix issues, etc. Their house file is tracked on an begin prototyping.
nonprofit dedicated to the study, rescue, and research Excel spreadsheet.
of Spinner dolphins. DRO’s daily activities are So, a strategic group conversation about migrating
manifold: Educational outreach with schools, on- DRO still operates a legacy IT infrastructure. into a hybrid cloud IT infrastructure might sound like
site workshops and classes, marine research, and Email and website hosting is outsourced, too. The this:
environmental project development. Their lean in- organization is growing fast which implicates other
house staff is also active with blogging, writing print areas in the 9 blocks. Memberships and donations §§ What are the real benefits? The real
newsletters, and donor management. are growing, and scalability is becoming a nightmare. consequences? What or who needs priority?
Throughout the years, DRO improved their value The rapidly expanding house file is managed on §§ Who needs it most? What are our real problems
propositions and thus expanded their different an Excel spreadsheet, but it’s hard to keep up and and the reasons we’re really seeking this kind of
financial outcome streams: Aside from memberships, track. Staff is also growing, scattered throughout transition? What would the true costs be in the
private foundation grants, a gift shop, and generous different offices, and they’re looking for better ways long-term? What data should we migrate? Any
corporate donations, they’ve also built small on- to collaborate on marketing projects like blogging staffing or training issues?
site attractions and interactive programs that and newsletters.
engage the public. These surged into a successful §§ How might moving into the cloud affect overhead
financial outcome stream to draw upon since DRO’s In canvas-speak, the current IT infrastructure costs? Administrative costs? What are the costs
facilities exist both in a natural setting and within a is a Key Resource. It helps staff carry out staff’s of switching? How does it affect our staff and
high tourist area. Research and teaching is always Key Activities like donor management, blogging, their Key Activities? Or even our relations with
an important part of their work, and they’ve also newsletters, and other marketing. Stakeholders?
expanded the educational aspect of their mission
by implementing internship programs and college Key Partners are strategic partnerships with people §§ Techsoup could be a viable Key Partner from
accredited courses. and institutions. They provide Key Resources or do whom you can obtain free subscriptions and
those Key Activities in which you can’t do in-house. licenses for some cloud services. How might
However, as their member base, business processes, Here, it’s the local print shop and the outsourced adding them help?
and public attention flourish, this also means that IT company who handles their email and website
their IT backbone needs to be reconsidered, or hosting. §§ If you gradually segue into a cloud application
redesigned to accommodate their growth. portfolio, is it possible that we may still depend
Cost Structure deals with the stuff that has on the local IT company to provide technical
STAGE 1 + 2 substantial costs in maintaining your operations. services when something breaks. Maybe we can
In this case, salaries, office leases, and the fees just stick with email and website hosting, easing
As part of the Canvas Kit, the organization plotted associated with that local IT services company. up on the Cost Structure.
a canvas of what they thought their canvas looks
like. After testing their assumptions and gathering §§ Is hiring an in-house IT person a likely
thorough insight, they believe this is the closest STAGE 3: RAPID PROTOTYPING possibility?
depiction of DRO’s real business model. [fig 1]
With an accurate canvas, the organization proceeds
with Stage 3 – rapid prototyping.
LEGEND
NEW ADDITION
UNCHANGED IMPROVE
§§ Could we shift into email newsletters, rather than Yellow Post-it: Unchanged Improved: IT services company, local print shop
doing print newsletters all the time? Green Post-it: Improvement (cost reduction, better New: TechSoup
performance, etc)
§§ There needs to be a better way to manage Blue Post-it: New Addition Techsoup becomes an important partner in providing
donors, volunteers, and constituents aside most donated software and discounted cloud
from an excel spreadsheet. If we choose a Remember the still pond analogy: The ripples come subscriptions.
cloud vendor, what is the impact throughout the from blue and green stickies.
organization? Dependence on local IT services people is decreased.
We’re going to roleplay with the canvas to see how They come in only when hardware “breaks.” They no
Other questions and concerns can emerge. Think far the ripples in our pond could go. Refer to fig. 2 to longer provide email and website services. Instead,
deeply about your context and what your organization understand the rationale behind the new prototype. DRO may begin developing a migration strategy into
is going through right now. As you go through each either Google Apps or Office 365. A professional firm
block, keep those prompter questions in mind. that specializes in website design for nonprofits
KEY PARTNERS might be brought in. Why would that be important?
So here’s what one iteration of DRO’s business Because many constituent relationship management
model looks like. It’s where we could go with a cloud Unchanged: Foundation “x,” state tourism agency, systems (CRM) integrate nicely with websites and
application portfolio regional attractions association, corporation “x” internal business processes. For example, Blackbaud
and Salesforce takes much of that into consideration.
Also, it’s possible that they could start using But the transition is not as easy as it sounds. What How do physical offices improve here? Maybe there’s
newsletter services like MailChimp to deliver email are the direct and indirect costs of migrating data, a concern with unnecessary paper supplies. A long
newsletters. This depends on your audience’s purchasing add-ons, etc? What if you have large time ago during my IT heyday, I walked into a board
preferences. You can merely supplement your print amounts of information stored in-house? member’s office to work on a PC repair. Flicking on
communications rather than switching everything the light switch, I discovered that most of the carpet
over to online. Some of your audiences might still KEY RESOURCES was swamped with piles of paper. I could barely see
prefer print. any carpet. That’s how bad it was.
Unchanged: Research equipment, research facilities
Improved: House File If archiving and storing important documents is an
KEY ACTIVITIES New: Hybrid IT issue, then could Evernote and a Fuji Scansnap help
at all?
Unchanged: Environment development projects, field Key resources can mean human, physical, financial,
research, facility maintenance, animal care & training or intellectual. They help execute key activities. Here
Improved: Blogging, donor management, newsletters, we see both human and physical resources improved. VALUE PROPOSITIONS
administrative, public teaching A hybrid IT infrastructure may alleviate some painful
New: TechSoup productivity issues that staff previously had. Possible Unchanged: internships, dolphin research & care,
cloud solutions that would make up part of this new public interactions
Cloud applications always seem to improve infrastructure include project management, file Improved: workshops
productivity with your key activities. storage, or document management. Also, with a New: college accredited courses
cloud CRM, your house file can be better organized.
Say that you do hire a professional firm to redo your DRO’s value proposition is embedded in their
website and make it a part of your greater marketing How does staff manage their work documents now, mission: “the study, rescue, and research of Spinner
strategy. Your staff’s blogging and editorial workflow and does staff prefer document management through dolphins.”
may improve. And with a new website, you’ll ponder the cloud rather than email? What are their work
e-newsletters, and make it a part of your website habits like? But what makes them different from the other
where your co-creators and various audiences can research organizations? They’re the only organization
easily stay up-to-date and connected. COST STRUCTURE in their locale that offers internships, college
accredited courses, workshops, and public
With a possible CRM looming, much of your donor Unchanged: Salaries, facility upkeep interactions with dolphins. So they’re not just
management processes can be placed on auto-pilot. Improved: Offices, IT labor & maintenance any research organization. They proactively invite
DRO does all their tracking on an spreadsheet. But New: Cloud licenses & subs the public to be a part of the organization’s daily
with a CRM, it may be easier to change, update, activities. And they’ve been doing this well for many
and organize information. It also may be easier to If DRO decides to migrate to Google Apps or years.
segment your user base according to how much they Office365, then IT services like email and website
pledge, donate or communicate with you. hosting may be cut. Instead, that same IT services Remember that DRO performs plenty of educational
company may just provide break-fix services. outreach. Is it possible that their website and cloud
If Techsoup happens to be a Key Partner, you application portfolio can assist in better organizing
may qualify for discounted cloud licenses and and communicating to the public about their value
subscriptions. propositions?
DRO also offers college accredited courses. What What channels do your co-creators want to be WRAPPING UP
are their current teaching processes like? One reached? You know them best. Remember that many
interesting possibility here is employing an Learning CRMs and cloud solutions can integrate with your As you can see, when we started evaluating and
Management System (LMS) like Instructure’s Canvas website and the rest of your business processes. Your prototyping its ripple effects throughout the entire
to make teaching more accessible and enjoyable for website is more than a presence online, but also a organization, it makes us question other ways to
both instructors and students. central communication hub. become a more flexible, effective, and innovative
organization.
RELATIONS CO-CREATORS
Changing technology infrastructure is a business
Unchanged: Direct action, attractions, programs Unchanged: Direct action, attractions, programs decision. It also provokes us to ask what the real
Improved: Direct public participation, outreach & Improved: Direct public participation, outreach & costs of change may be, unearthing underlying issues
marcom, community marcom, community which may not have been questioned yet. Not only
New: None New: None should the business model canvas provide the space
to co-creatively ponder solutions and drawbacks, but
Relations delve into the ways we develop bonds and Broad audiences are bad especially in marketing. ponder possible mistakes in our implementation, too.
relationships with our co-creators. Fortunately for DRO, they’ve already drilled down into
the main categories of people who typically visit their Stage 1: The 1st canvas = what we think we look like
DRO has various attractions, programs, and facilities: College students, public school students, Stage 2: The 2nd canvas = an accurate representation
workshops that engage co-creators. This leads teachers, and family vacationers. of what we actually look like now
the way to pleasant experiences but memorable Stage 3: The 3rd canvas onward = where we might go
relationships with your community. With cloud As mentioned before, the predicted improvements in
computing and a website redesign, there’s a good the previous blocks could allow staff to communicate
possibility that communications and reach around and interact more better with their co-creators.
these areas might be improved.
OUTCOME STREAMS
Which Key Resources are we acquiring propositions require? What activities are What are we trying to solve? What value do want from us? What bonds do we establish we creating value? Who helps us create
from partners? Which Key Activities do needed to sustain operations? Examples: will we deliver to co-creators? What’s in it and maintain with them? Examples: Outcomes or our Value Propositions?
3. mobile
Resources and Activities are the most expensive? What does it cost to run and maintain the Operations Level? Mission related milestones?
Examples: 1. FINANCIAL OUTCOMES: donations, grants, sales proceeds, x revenue, membership sign-ups, one-time
2. fixed costs, variable costs, economies of scale / scope. 2. NON-FINANCIAL OUTCOMES: behavior change, x social impact, mission-related milestones and outcomes,
membership sign-ups
The Canvas Kit for Nonprofits. Copyright © 2013 Bryann Alexandros & Skylance (skylance.org). The Canvas is adapted from businessmodelgeneration.com and is licensed under
the Creative Commons Attribution-Share Alike 3.0 Unported License.