Hartford Business Journal

26 HARTFORDBUSINESS.COM | DECEMBER 5, 2022 FOCUS: PHILANTHROPY Healthy produce displayed and ready for purchase at the North End Senior Center in Hartford from Gotta's Farm, one of several Hartford Food System farms participating in the Hartford Harvest Farm Share. PHOTO | JOSEPH ABAD Diversification Play As traditional fundraising model weakens, nonprofits pursue for-profit ventures to diversify revenues By Linda Keslar Hartford Business Journal Contributor L ike many Connecticut nonprofits, Channel 3 Kids Camp has long relied on dona- tions from individuals and a wide array of community organizations to fulfill its mission of providing recre- ational opportunities for kids in need. Fundraising for most nonprofits has always been an uphill battle, but this past year the Andover-based camp faced particular difficulties and recently announced the need to seek buyers or new partners to remain open, citing the unsustainability of its traditional fundraising model. The charity isn't alone in facing a financial cliff. The ongoing pandemic, massive inflation and a looming recession have combined to form a perfect storm that seriously threatens the economic health of nonprofits around the country. "There's a lot going on out there that's making fundraising even more challenging," said Meher Shulman, associate director of the nonprofit support program at the Hart- ford Foundation for Public Giving. Total charitable giving, for example, remained flat in 2021, at $485 billion, with two-thirds of the total coming from individuals, followed by foun- dations, bequests and corporations, according to Giving USA. While there are signs that giving remains strong this year, it may not keep pace with inflation, according to a report by Fundraising Effectiveness. Charities around the state are feeling the pinch. Almost one in five (17%) of the state's nonprofits is struggling financially, according to a 2022 report by the CT Nonprofit Alliance. As a result, nonprofits are pursuing an array of strategies to sustain their vitality and counter funding woes, said Edward Spinella, a partner at Hartford-based Murtha Cullina, who chairs the law firm's tax-exempt organizations group. That includes embracing entre- preneurial gusto and forming new revenue-generating ventures to sell goods and services, often aligned with their missions and to deepen their impact. "At the end of the day, there's only so many philanthropic dollars out there, so many tax-exempt organiza- tions are looking at what things they can do to supplement their reve- nues," Spinella said. 'Business-minded practices' It's not a new tactic. The Girl Scouts have been selling cookies for over 100 years. Unlike their for-profit peers, traditional 501(c) (3) nonprofit organizations have different regulations and rules to tread when it comes to making money, which has kept many from pursuing for-profit ventures or revenue-generating opportunities. But the law does allow room to create earned income streams, Spinella said. "None of this is taboo but orga- nizations need to know how to responsibly embrace new reve- nue-generating activities and busi- ness-minded practices," he said. Hartford Food System Inc., for example, has just completed a pilot of the Hartford Harvest Farm Share as a new revenue-generating venture. Hartford Food launched the initiative as one of six local nonprofits selected to participate in the Hartford Foundation's second Social Enter- prise Accelerator Program, which helps organizations develop alter- native revenue streams away from grants and donors to deliver stable and reliable income. "We've learned to think not as a nonprofit but more like a business," said Billie Scruse, executive director of the Hart- ford Food System. The Hartford Harvest Farm Share has made healthy, fresh produce affordable and acces- sible to residents by forming a collective with local farmers of color who run small- to mid-sized farms. Hartford Food acted as the middleman by forming agreements with the growers and selling shares for $30 a week for either nine- or 18-week periods ending late October. Over 50 families signed up and picked up bags of fresh fruits and vegetables weekly at two prear- ranged distribution points. Multiple payment methods were made available, including SNAP, and the share price was built around the cost of the produce, Hartford Food's staffing and overhead expenses and a profit margin that helps support the nonprofit's other programs. So far, the venture has been a "win-win," Scruse said for the 45-year-old nonprofit, which reported $580,889 in revenue in 2020, and aligns with its mission to fight hunger and identify long-term solutions to food insecurity. "We're tweaking the model as we go," said Scruse. A pitch for good and growth In 2019, the Social Enterprise Accelerator Program was launched with the first round of participants, 10 local nonprofits, in a 30-month curriculum that included intensive workshops around developing and implementing a business plan, a fast-pitch event modeled after ABC's "Shark Tank" TV show to attract startup capital, and coaching and support from national consulting firm No Margin, No Mission. To date, the social enterprise proj- ects formed by the original 10 orga- nizations have generated more than $2.5 million in revenue, according to the Hartford Foundation. Billie Scruse Ed Spinella Meher Shulman

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