Business Acumen: Entrepreneurial Mindset
April 23, 2020
Let’s face it. If this crisis moment has shed light on anything for the civil society field, it is that as civil society organizations, we must be open to new ways of operating and fundraising. The “old” ways of doing things – reliance on certain streams of funding with familiar donors – is no longer a viable option if we are to both withstand the impacts of the current situation AND come out stronger.
We must adopt an entrepreneurial mindset. We must capitalize on new opportunities, create value, and innovate. We need to more effectively network to access diversified funding, form strategic alliances, find innovative ways to deliver services, and recover swiftly from external shocks.
Get a quick explanation of Business Acumen for civil society from PartnersGlobal President & CEO Julia Roig. Business Acumen is one of seven critical factors to organizational resiliency in PartnersGlobal’sResiliency+ Framework.
But where do we begin? Below are the three main elements of Business Acumen and key resources for each.
1. Experimentation and Innovation
Experimentation and innovation refer to the ability of an organization to test new ideas and take risks so they will be better prepared to respond to crisis and change. By experimenting and innovating, an organization is better able to respond to emergent needs.
“Innovation is hard in the for-profit context; it’s even harder for a nonprofit,” writes Atta Tarki in this self-reflective piece titled, How Failure Changed How I Think about Nonprofit Work,
Tarki shares personal lessons on how to experiment and innovate in a strategic way: be focused, be patient, and don’t be afraid to innovate. Tarki writes: “With that attitude, you will avoid the half-measures and compromises that so often hamstring innovation efforts. And unlike my failed efforts, do it right, or not at all.”
Where have organizations applied this attitude successfully? In this report, the International Civil Society Centre highlights a selection of case studies from civil society organizations that are employing three different forms of innovation: core innovation, adjacent innovation, and transformational innovation.
2. Diversified Revenue Streams
The process of generating income from multiple funding sources increases an organization’s financial stability and reduces financial and operational risk in times of uncertainty.
Bridgespan offers a solid primer in the different types of funding models that non-profits adhere to in this piece. It asks the question: Why do we in the non-profit sector use the term funding model rather than business model to describe our financial framework? It answers:
“[w]hen a for-profit business finds a way to create value for a customer, it has generally found its source of revenue; the customer pays for the value…When a nonprofit finds a way to create value for a beneficiary, it has not identified its economic engine…A business model incorporates choices about the cost structure and value proposition to the beneficiary. A funding model, however, focuses only on the funding, not on the programs and services offered to the beneficiary.”
One way to begin diversifying funding is through a business canvas.
What is a business canvas and how is an NGO business model canvas structured?
Have you ever thought about creating a new revenue stream by offering consulting services?
Jen Hughes, Renée Martin & Will von Geldern offer several strategies to consider when pursuing this path in Scaling Nonprofit Impact Through Consulting.
They note: “As much as possible, organizations should consult based on one or more of their core strengths, focusing on the proven methods and tools that make them uniquely effective in accomplishing their mission, rather than on pilot programs.”
3. Financial Preparedness
Organizational resiliency hinges on an organization’s ability to anticipate possible future events and develop financial strategies that can be implemented immediately to support ongoing operations in times of crisis.
In Sustainability to Survivability: 5 Nonprofit Finance Must-Do’s in the Time of COVID, Steve Zimmerman lays out five simple steps that organizations can take to maintain financial viability through this moment and come out of this crisis successfully. Those steps are:
- Understand your cash position
- Assess damage to revenue streams
- Look at the dual bottom line
- Include everyone in the discussion
- Communicate consistently