By Tracey Drury
Business First of Buffalo
Updated: 7:00 p.m. ET Feb. 6, 2005

When a local business needed help translating its packaging materials into a foreign language for international sale, the phone started ringing at the International Institute of Buffalo. A nonprofit organization, the International Institute also counts area banks, law firms and courts among the clients it
serves through its translating and interpreting department, a program that brings in gross revenues of about $400,000 every year, or a third of its
total revenues. Ian Tichel, director of the department, said the agency uses more than 1,000 local individuals on a contract basis to provide services in more than 60 languages. "We work with the banks, most of the major corporations, a lot of law offices that use us and advertising companies that use us to do packaging for marketing in other countries," he said. "We also get a lot of walk-up business for people who need their documents translated to English for Social Security cards, diplomas and we provide a certified translation." Earning income The International Institute is among a growing number of nonprofits that are implementing forprofit business ventures not only to bring in much-needed revenues, but also to provide training and opportunities for their clients and further their missions. Some revenue-producing services have become so ubiquitous that the public might not even realize they're run by a nonprofit: The YMCA and YWCA have offered health-club memberships for years and thrift shops run by Goodwill, AmVets and the Salvation Army bring loads of cost-conscious shoppers. Others include human service agencies like Heritage Centers and Southeast Works, which offer janitorial services and light manufacturing at sheltered workshops in services performed by developmentally disabled consumers who earn a paycheck on the job. Opportunities Unlimited in Niagara County runs a floral center and greenhouse, providing training for consumers and products
through its retail site to the public. The Buffalo City Mission opened a used car lot in November. Mission Motors sells donated cars at no more than $1,500 each with no-interest payment plans. Tom McLaughlin, executive director of the City Mission, said the venture began as a way to make money and partly in response to changes in the tax law that diminish the tax advantage for donors to donate cars for auction. "Primarily it was to make money with gifts-in-kind in a market where it's getting harder and harder to get donations," he said. "At the same time, we had been looking at expanding our program to make cars available to low-income individuals and to have the ability to train people coming through the mission with a marketable skill, higher-end than some of the entry-level positions." So far, the venture is netting about $10,000 per month. If that pace continues, the venture will surpass the $30,000 to $40,000 the Mission received in the past from donated cars sold at auction. "To be successful, we have to be able to process increased numbers of gifts-in-kind," McLaughlin said. "Cash donations and government support are waning. Any organization that is not doing something with gifts-in-kind is going to have problems."

Expanding its audience

Elmwood Franklin School, a private, nonprofit school, will open a tutoring and enrichment center
later this spring. Achieve, The Elmwood Franklin Center for Enrichment, will open in the Transitown
Plaza in Clarence offering individualized tutoring as well as enrichment classes like foreign
language, science, creative writing and chess.
Keith Frome, school headmaster, said the center will compete head-to-head with for-profit
tutoring entities like Sylvan Learning Center and Huntington Learning Center while its enrichment
programs will offer something completely new to the market for children from any background or
geographic location.
"We want to see our center as a center of growth and a center that celebrates learning," he said.
"The universities have been doing this a very long time. We're not doing anything new except we're
doing it at the elementary and public school level, which is very new. The concept of a not-forprofit
using part of its product, or bottling it in different bottles is not new, but the fact a K-8
would do it is the innovative part."
The venture was one of several ideas the school came up with after brainstorming with its board
and with a think tank of MBA executives from M&T Bank. Other ideas included online education
products and home schooling support.
"All the revenue that we do generate goes back to the mission," he said. "We have no
shareholders, no bottom line. We're not trying to maximize any other profit. We're trying to create
a structure of academic excellence and support our mission."

Mission-related is best

Keeping a for-profit venture in line with a nonprofit's mission is paramount to its success, said
Virginia Purcell, principal of VC Purcell & Associates and nonprofit consultant. Social enterprise, she
said, must be seen as sort of a "for-profit marriage with not-for-profit mission."
"Programs of social enterprise need to be woven into the fabric of the not-for-profit and not seen
as the exclusive source of dollars," she said. "It has to make some social sense."
The other thing nonprofits need to remember is that balancing the bottom line is just as important
-- more so -- at a for-profit business. Many nonprofit executives go into a venture with lots of
good ideas and high hopes but without taking into account that even experienced business owners
often struggle to make a profit.
"The upside of it is you really need to have good business savvy to pull that off so there are
enough dollars generated," she said. "People ought not go into it lightly. They need some good
mentoring, otherwise the business will fail."
The majority of organizations tie their ventures into the mission of the parent nonprofit, according
to a study by the Yale School of Management's Goldman Sachs Foundation Partnership on Nonprofit
Ventures. Of the 519 nonprofits that participated in the study, 42 percent currently operate an
earned-income venture and another 23 percent expressed interest in doing so. Of those currently
operating a venture, 87 percent say the goals of the venture relate to the mission of the
organization.
Service-related ventures were the dominant type of venture among 74 percent of the respondents,
while 47 percent operate product-related enterprises, 26 percent rent or lease property and 15
parent run cause-related marketing projects.
John Oehler, a partner with Lumsden & McCormick CPAs, said he's worked with many nonprofits
that have tried to incorporate income-producing programs to supplement revenues. The most
successful, he agreed, are those that stick close to the agency's mission.
"I have seen some of that, where they give it a try but it's soon apparent to them that the
revenues they had hoped to generate don't materialize. Typical of a business venture, revenues are
projected to be higher than they are and expenses are projected to be lower than they are," he
said. "There have been some real disappointments and people have to be aware of that in advance
and have to limit their investment in a way and know when to pull the plug."

Knowing when it's over

The YWCA of WNY was faced with that dilemma last year when it decided to close a cafe it opened
three years prior in the Broadway-Fillmore district. The cafe served a dual purpose: It provided a
retail and food service training program for women in its self -sufficiency program, and eventually
offered those program graduates a full-time job with benefits and healthcare.
Tanya Perrin-Johnson, executive director of the agency, said continued funding cuts made
subsidizing the program impossible.
"We really just wanted to be able to turn it into a profit-making center, but we really focused
initially on the training aspect to really prepare the individuals for training," she said. "But trying to
have competitive wages, benefits and insurance and those types of things, and trying to build a
clientele who would frequent the cafe, that was a bit of a challenge."
But that doesn't mean the agency has given up on future ventures. The board is in the process of
identifying various activities that are mission-centered and mission-based, like its existing schoolaged
child care programs and health and wellness programming.
"It helps to keep the agency focused, it really does, it helps keep the agency grounded in its
purpose and its delivery," Perrin Johnson said.
© 2005 Buffalo Business First