Hartford Business Journal

10 Hartford Business Journal • September 30, 2019 • www.HartfordBusiness.com FOCUS: Nonprofits By Joe Cooper jcooper@hartfordbusiness.com H artford nonprofit Harc Inc. is looking for an economic lifeline amid turbulent times for charitable giving. After all, the Asylum Avenue-based nonprof- it, which supports more than 400 people with intellectual disabilities, and other Connecticut charities understand that philanthropic giving in the state, and elsewhere, has declined or been f lat in recent years. So Harc has responded by launching its first for-profit enterprise: SockStarz LLC, which sells luxury and novelty socks out of a recently opened brick- and-mortar retail store in West Hartford Center, where it expects to generate $20,000 or more in annual revenue. "We don't expect this to generate hundreds of thousands of dollars, but the idea is to add to our bottom line and to create some revenue diversity," Harc CEO Andrea Barton Reeves said of the for-profit venture, which is com- monly referred to as a "social enter- prise" in the nonprofit sector. While SockStarz marks a historic shift in Harc's operating strategy, the idea isn't entirely unique. Harc is part of a growing number of Connecticut nonprofits dedicating staff and resources to for-profit ventures to create new and reliable revenue streams, according to industry experts. Nationally, organizations including Goodwill and the Girl Scouts of the USA have honed this strategy for years, col- lectively generating billions of dollars in annual revenue by selling second-hand retail items and cookies, respectively. The trend, which has gained momen- tum nationwide over the last decade, is important for nonprofits to consider as charitable giving in the state declined by almost 1 percent to $4.97 billion in 2016, the most recent year recorded by the Connecticut Council for Philanthropy. Increased competition for indi- vidual and corporate contributions and federal and state grants, as well as new federal tax laws that make fewer people eligible to claim a deduction for charitable giving, have impacted philanthropy, experts say. Industry experts agree that for- profit ventures or social enterprises — defined as organizations that use commercial strategies to improve their mission and financial well-being — offer promise to nonprofits pushing away from traditional funding models, which are far less reliable today com- pared to decades ago. But they also say nonprofits charter- ing revenue-generating businesses open themselves up to new challenges, such as annual audits and various tax liabilities. "It's an early trend, but it's worth it if the economic forces behind it make sense, if you have a real business plan and a real budget," said John Horak, director of Farmington-based TANGO Nonprofit Education and Consulting. "It's a positive trend to be encouraged, but it needs to be watched." Fostering a startup culture Harc for at least five years had been developing ideas for its first social enter- prise as a way to create new employment opportunities for the people it serves and establish a new revenue stream. But it wasn't able to build out its vi- sion until the Hartford Foundation for Public Giving debuted last October an accelerator program to help nonprofits spur their social-enterprise ambitions. Revenue Diversification CT nonprofits developing for-profit arms as charitable giving stalls Hartford nonprofit Harc Inc. this month began selling luxury and novelty socks at its new subsidiary for-profit retail store in West Hartford Center. The business is one of many for-profits sprouting across the state as nonprofits look for new revenue streams. PHOTO | CONTRIBUTED EXPERTS CORNER Nonprofits must demonstrate value and worth By Sondra Lintelmann Dellaripa "S trive not to be a success, but rather to be of value. " — Albert Einstein "Though the funny thing about never be- ing asked for anything is that after a while you start to feel like maybe you don't have anything worth giving." — Lev Grossman These two quotes from a brilliant scientist and a prolific author summa- rize the totality of the nonprofit/donor experience. Despite years of research by major think-tanks on the faces of donors and what makes donors tick, it truly only comes down to these two things: value and worth. Few nonprofits operate from a clear understand- ing of which donors find them valuable. And fewer possess a refined and articu- lated understanding of their worthiness that inspires donor loyalty and advocacy. The equation is essential for all nonprof- its and donors to understand and pursue, as we move into this rich season of giving. Value Value is ground zero for engaging any donor or volunteer to your organization. Without passing the value concern, the worth question becomes meaningless. Value is simply the determination by a person, organization or company that what you do is what they care about. Using this equation we real- ize that not everyone is a prospective partner in philanthropy, program or vocation to your organization. Only those who value our mission and impact are going to be moved to invest their time, treasure and talent to our work. For the nonprofit, this means that there are only very specific people, grants or sponsorships that will make them- selves available. And for the donor or vol- unteer, it means that not every nonprofit will meet your philanthropic interests. Discerning what alignment in value exists is a necessary consideration for both nonprofit and donor. If it doesn't fit, don't force it. Worth To be worthy and trustworthy is to have purpose, success and integrity. As a nonprofit we prove our worthiness to Sondra Lintelmann Dellaripa

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