Turning purpose to profit
Thousands of people in Melbourne have made their homes and businesses more comfortable and energy efficient with the help of one. Charities across Victoria receive 25,000 free, nutritious meals each week using surplus food thanks to another. These clever businesses make it look easy but turning a not-for-profit into a thriving business presents some unique challenges.
‘Three years ago we decided to set up a business providing practical advice and great deals on sustainable energy for households, businesses and organisations,’ says Paul Murfitt, CEO of Moreland Energy Foundation. ‘We’d been operating since 2000 as a not-for-profit to advocate for local action to reduce greenhouse gas emissions and we wanted to become less reliant on government funding.'
Positive Charge was created as a business unit within the Foundation explicitly for the purpose of generating income from fees and to reduce greenhouse gas emissions locally. It’s not a separate entity, which means all the income is invested back into the Foundation.
‘Starting a fee paying business in the midst of an advocacy group definitely presented challenges to staff culture. We had paying customers for the first time, and our staff had to think more like salespeople not just advocates. Now it’s become how we operate, there’s no tension between our purpose and our business,’ he says.
Positive Charge started with a loan from Social Traders business incubator scheme. ‘They said our business model was strong enough for a loan rather than a grant, which put the pressure on. But it worked out and we’re paying off the loan,’ says Murfitt. ‘The timing has been good because of the boom in solar panels. I’m not sure what we’ll do next to push the boundaries.’
FareShare is a different model. They rely on an army of volunteers, corporate partnerships, sponsorship, philanthropic donations and a network of food donors. Last year FareShare cooked one million meals for Victorian charities using surplus quality food from supermarkets, farmers and other businesses – rescuing a total of 560,000kg of food in one year.
FareShare set up its first dedicated kitchen in 2008 and in 2013 they moved to Australia’s largest charity kitchen. The kitchen is run by 750 regular volunteers, and 6,000 corporate and school volunteers a year. ‘People love coming to work in our kitchen. We had 155 school groups last year and the corporate shifts book out 2 to 3 months ahead of time,’ says FareShare CEO Marcus Godinho.
Funding comes from a mix of philanthropic foundations, businesses, schools and individuals. ‘Most of our income is from corporate philanthropy and sponsorship, individuals and philanthropic grants,’ says Godinho. ‘Our corporate partnerships generate other opportunities, leveraging the FareShare profile and new income. We have to actively manage those relationships, and think about how it might impact us. It’s a challenge I deal with every day,’ he says.
FareShare continues to grow with ambitions to expand further into rural and regional Victoria. ‘Unfortunately more and more people are turning to charities for food. We continue to research the sources of food insecurity with our partner charities as part of our planning,’ says Godinho.
Partnerships between not-for-profits and business are starting to produce innovative products for customers of mainstream businesses too. Trust for Nature entered a unique arrangement with Bank Australia to create a private conservation reserve in Victoria’s Wimmera. The bank promotes the reserve as offsetting impacts on the environment of new homes and cars that their customers purchase with their loans.
Not-for-profits creating clever new businesses is a trend that has a long way to run.
This article is based on a discussion at our not-for-profits CEO forum on 9 September 2015 in Melbourne. The forum meets six times a year, convened by Amanda Cornwall and associates. Photo of potato peelers courtesy of FareShare.