Back to ideas

Making More Money

Part A: Booklet Text

Part B Stories | Part C Resources

Paul Bullen
July 1998

Contents

1. What do we know?
2. Funding
3. Tendering
4. Enterprises & Businesses
5. Sponsorship
6. Fundraising
8. Taxation
9. What are you ready for?

There are many different ways of making money. You need to choose ways appropriate for your Centre's vision and values. This booklet is a starting point for ideas, stories and further resources. Use Part C Resources for links to Internet resources.

1. What do we know?

Our Situation

In the last 10 years the philosophy underpinning the role of government has changed. Governments don't row, they steer. Governments are small, not big. Market forces and competition will bring quality and efficiency. The user pays (even if they can't afford it).

So the context in which community services operate has changed:

• There is increased competition amongst organisations
• Funding bodies prefer to deal with larger service providers
• There is pressure for services to be more efficient and more accountable
• Users make more payments from their own pockets
• Community organisations have increasingly become contractors for services designed and decided on by government.
• Community development and advocacy is not a government funding priority.

It is also true that:

• There are growing inequities in our society
• The gap between the rich and the poor is increasing
• The need for advocacy, especially for marginalised people and groups is increasing
• The need for community development is increasing.

Neighbourhood and Community Centres are facing a fundamental challenge to their existence and their role in the community:

Are Centres government sub-contractors providing services defined and purchased by government or are they community organisations responding to their community and its agenda.

There are many issues to be faced in this challenge. One is financial independence. This leaflet discusses making money, which is one step towards financial independence.

Mindsets

People working in Neighbourhood and Community Centres have many different mindsets. There are people with:

• Funding mindsets - Centres are funded by governments.
• Charity mindset - sponsors give us money because we are a good cause
• Partnership mindsets - sponsors pay us because we have something they need.
• Entrepreneurial mindsets - we run businesses. We meet people's needs and we make money.

What is your mindset? How is your mindset limiting or expanding your choices?

Making Money - The Possibilities

There are many ways Centres can make money. Some of the possibilities and their challenges are:

Funding - get grants from government or non-government sources. Do you know all the funding sources that are available? Do you know what they will actually fund?

Tendering - tender for services. Have you got the skills to put in competitive tenders? Do you know how to cost a business?

Non-profit enterprise - run non-profit businesses. Have you an entrepreneurial spirit and culture? Are you willing to take the risks? Do you have the capital to start?

Sponsorship - partnerships with the corporate sector. Have you moved from a charity mindset to a partnership mindset?

Fundraising - Fundraising is more than cake stalls. Centres hold fundraising events for more than one purpose? Are you clear on your purpose? Making money or building community?

Making Money

Some highlights about what we know about these ways of making money:

• Sports and arts organisations receive multi-million dollars in sponsorships
• Neighbourhood and Community Centres often joke about cake stalls. They currently receive little money through sponsorships.
• Many non-profit businesses are very successful in providing services needed by the community and making money.
• Making money is risky. Visions do not always become realities. Non-profit businesses can go broke. Fundraising campaigns can lose money. Sponsorship deals can go sour.
• Community organisations have competitive advantages when they come to start making money. You have resources, opportunities and possibilities that others don't have or can't match.
• There are ideological and philosophical debates that community organisations making money will work through. Is this a community organisation or is it a business? Will we compromise our values if we go into partnership with them? Is any money clean? How much profit is fair?
• Making money is hard work.
• Making money is about competing for limited resources.
• You need experience, skills and resources to make money.
• Plenty of good advice is available from people who have been there and tried it already.

2. Funding

Bread and Butter

Neighbourhood and Community Centres are very good at getting grants for services.

In 1996 in NSW the 286 Neighbourhood and Community Centres received $47.6 million from more than 18 government departments.

The Challenges

The big challenges for Centres are:

• Do you know all the sources of funding?
• Can you write a good funding submission?
• Do you create projects to fit the funding or find the funds to fit the project?

Sources of Funds

Government funds

Many Centres receive funding from only one or two government sources. Overall, Centres are funded from 18 Government Departments and funding programs.

Most Centres will be familiar with the contacts for the most common sources of funding for Neighbourhood and Community Centres, for example the Department of Community Services. Some Centres receive funding from:

• The Attorney General's Department
• The Board of Adult and Community Education
• Department for Women
• The Ethnic Affairs Commission
• The Department of Immigration and Multicultural Affairs and
• The Department of Primary Industries and Energy

Non-government funds

There are many sources of non-government funds. You need to know what sources of non-government funding there are and what they are prepared to fund and who is eligible.

Writing Good Submissions

To prepare good funding submissions you need skills in identifying people's needs, planning projects to meet people's needs, costing projects and selling ideas.

The most comprehensive reference on sources of non-government funding in Australia is the Australian Directory of Philanthropy. Call Philanthropy Australia on 03 9650 9255 Cost AU$45 (posted).

Another useful reference is the WESTIR Funding Calendar which lists all the Federal and NSW Government Funding Sources plus some trusts. 02 9622 3011 Cost AU$27 (posted)

3. Tendering

New Kid on the Block

Tendering is the new kid on the block. It means you offer in writing to supply specific services or goods at a fixed price. Tendering implies competition between suppliers as the purchaser can choose the 'best' offer. They often want the cheapest offer.

The Challenges

The challenges for Centres in tendering are:

• Do you have the skills, knowledge and experience to prepare a good tender document? Especially costings!
• Will you compromise your organisation's values by selling out in the tendering process?
• Will you destroy the cooperative fabric of community services and organisations by competing instead of collaborating.

Tips

Because tendering is different from getting grants those submitting tenders will need to build on their skills.

The Tendering Handbook (published by SA Council of Social Service) is a useful short guide. It is available from LCSA. The sections included are:

What is in a tender

Background, the Task, the Proposal, Time Frame
Organisational history and resources
Selection criteria, Budget & Special Conditions

Before you tender

Get the paperwork
Check directly with the purchasing Department
Explore pooling resources with other organisations

How to budget

Full wage costs and disbursements
Marginal overheads
Contribution to total overheads
Supervision costs
Allowing for problems
Profit
Catastrophes
Funding on a unit price basis
Cash Flow

Special Budgeting Issues for Community Organisations

The profit cushion, Wage structures
The impact of and on volunteers
Your organisation's contribution

Non-financial risks for community organisations

A useful guide to tendering for Neighbourhood and Community Centres is the Tendering Handbook (21 pages), published by the South Australian Council of social Service. It is available from LCSA at a cost of AU$12 + AU$4 postage and handling.

For hints on planning projects see We Just Grew Like Topsy published by LCSA 02 9211 3644 AU$15 + AU$4 postage

Check the major metropolitan newspapers on Saturday for funding advertisements. Most government funding bodies advertise there.

Competitive Tendering, How to Write a Competitive Tender by Jean Roberts. Roberts Management Publication, 1997. Available from Roberts Management Concepts 03 9827 7997

4. Enterprise and Business

Non-profit business

What do we call a non-profit business? There is no agreed language. People talk about 'community enterprises', 'non-profit businesses' and 'non-profit enterprises'.

Many community organisations run non-profit businesses. For example, WorkVentures runs a computer repair business and Anglicare runs clothing recycling and Op Shop businesses.

Many Neighborhood and Community Centres run non-profit businesses. For example, many Centres run markets. Cassia Neighbourhood Centre has paid advertising which partly funds their newsletter.

Practice Wisdom

We know a lot about non-profit businesses and how they are developed.

A useful resource book Non-Profits in Business includes 24 case studies of non-profit businesses in NSW and the ACT. One chapter distills practice wisdom of people running non-profit businesses.

Here is a brief summary of the 34 tips. They give a flavour of how to establish a non-profit business.

In Nonprofits in Business every tip has examples from real non-profit businesses. A few examples are included in the box on the left.

Beginnings

1. Have a dream
2. Share a dream
3. Make your core values explicit
4. Understand why you want an enterprise

Building foundations

5. Prepare the ground
6. Build commitment throughout the organisation
7. Talk to people who have done it
8. Change your attitudes from charity to partnerships
9. Appoint a team and provide leadership

Preliminary research

10. Do your background research
11. Read some relevant literature

Planning

12. Plan
13. Try lateral thinking - there is no one right way
14. Connect the enterprise to your social goals
15. Identify your capabilities and strengths
16. Understand markets and opportunities
17. Find your competitive advantage
18. Recognise the strings attached
19. Brainstorm possibilities

Feasibility study & consultants

20. Do a feasibility study
21. Use consultants wisely

Getting started in business

22. A little at a time
23. Find a customer

Along the way

24. Get the organisation organised and reorganise as necessary
25. Take some risks
26. Take opportunities, you never know where they may lead
27. Learn from mistakes
28. Know your competition
29. Keep on top of the finances
30. Get specialist advice when you need it
31. Treat it as a business not a hobby
32. Encourage organisation wide change
33. Deal with the problems, don't avoid them

Endings

34. Get out when you need to

Some Neighbourhood and Community Centres have run projects to help people start new businesses.

If you are looking for inspiration read: Filthy Rich and Other Non-profit Fantasies by Richard Steckel. It is available from Australian Institute of Management Bookshop 02 9956 3999 AU$24.95 + AU$6.50 postage

Another useful resource is Non-Profits in Business , published by WorkVentures, which includes 24 cases studies of non-profit businesses.
It is available from Paul Bullen 02 9665 7737 Cost AU $35 + postage

5. Sponsorship

The challenge for many people working in Neighbourhood and Community Centres is to move from a charity mindset to a partnership mindset. Corporate sponsorship is not about corporations giving you money because you are a good cause. Corporate sponsorship is about partnerships. You have something they want. They have something you want. So you form a partnership.

Preliminary Questions

Some of the key preliminary questions for you to consider in corporate sponsorship are:

• What is the purpose of your organisation?
• What are you trying to achieve as an organisation?
• What are your core values?
• Why are you considering sponsorship? What are you trying to achieve?
• Who would you consider forming partnerships with?
• Who would you not want to form partnerships with?
• What have you got to offer a sponsor? Why do they need you?
• What do you need from a sponsor? What would they want to contribute to you?
• Who is going to make it all happen?

The research

Sponsorship requires research. You need to know what a corporation might wish to contribute to you and what you have to offer them before you approach them.

Research potential sponsors. Know more about them than they know about themselves. When you meet them you can make a strong case to them why it is in their best interests to form a partnership with you.

Examples

The NRMA sponsoring community safety projects. Local businesses sponsoring the Bellambi Neighbourhood Centre's community Garden. Strepsils sponsored St Vincent de Paul's Campaign Against the Cold.

Useful resources on sponsorship are:

The Sponsorship Manual written by Edward Geldard and Laurel Sinclair gives and introduction to sponsorship and includes practical hands on information to assist organisations and individuals seeking sponsorship. Available from the sponsorship Unit Pty Ltd 03 9729 6733 for AU$75 (posted).

Dancing as Fast As We Can Keeping in Step with Sponsorship available from Artsinfo. It has been written for arts organisations. It is also relevant for Neighbourhood Centres. It provides an easy read introduction to sponsorship. It can be download from the Internet.

The Australian National Audit Office has a Best Practice Guide for the Management of Corporate sponsorship (April 1997). While this guide has been prepared for Commonwealth agencies many of the issues raised are also relevant for Neighbourhood and Community Centres. It can be down loaded from the Internet.

6. Fundraising

Many Activities

Many community organisations are involved in a wide range of fundraising activities:

• Appeals for donations
• Raffles
• Fetes
• Charity dinners
• Bequests.

Chapter 9 of the Industry Commission Inquiry into Charitable Organisations In Australia provides an overview of who is doing what fundraising and how. The 50 largest community organisation in Australia raised $277 million in fundraising (18% of their total budgets).

Neighbourhood and Community Centres undertake many of these activities and there is considerable experience in Neighbourhood Centres for fundraising on a small scale.

Fundraising and Community Building?

Neighbourhood Centres hold fundraising events for more than one purpose. The festival or dinner may not make much money, but it may reduce isolation, build a better sense of community, reward volunteers, inform people about local services and be good fun. This sort of fundraising has to be a group activity with personal and social rewards too, eg, trivia nights and talent nights.

Be clear about your purpose: is your fundraising primarily for making money or for building community or some mix of the two.

Whose Role is it to Fundraise?

Some people see the primary responsibility for ensuring the financial viability of a Centre rests with the Management Committee. They think that it is not staff's role to do fundraising to pay themselves. Others think that the Centre Coordinator's role is central to fundraising. It can be a specific group drawn from local businesses, VOPs, Council, etc.

Whatever approach you take in your Centre, staff and management need to agree on their roles.

Key Questions

Some key fundraising questions are:

• Is there a need in the community?
• Can people see it?
• Is there a project to meet the need?
• Are there people who will give to the project?
• Do you have people to work on the fundraising?
• Can your Centre handle the project and its finances.

Some of the ten commandments for major gifts or capital fundraising from Di Clark, Fellow of the Fundraising Institute Australia are:

• 'Who asks' means more than 'what for'
• In any community, financial influence flows down hill (Your leaders must be financial leaders.)
• In a 'perfect' campaign one person gives the lot. Limit your campaign to the smallest number likely to give the required amount. The starting point is not how many people live in this town, but is there one person who could give the lot?
• Promotion is a 'must' but never raises money (It tills the field but never reaps the crop). Asking raises money. Promotion without asking is wasteful and unproductive.

The full list of the ten fundraising commandments are on the Internet.

TAX TIP: Fund raising campaigns will be much more successful if you can offer tax deductibility on donations.

Bequests

A bequest is a gift that you give when you leave your personal estate to a person or organisation through your will.

Some organisations are good at getting bequests, for example private schools and church organisations.

Bequests can provide a substantial form of income. We are not aware of any Neighborhood of Community Centres that have a bequests program - planned giving. So the challenge is for Centres to decided whether to put bequests on their agenda.

Many Australian non-profit organisations raise significant funds from bequests. For example, over 50% of the fundraising income of the Guide Dog Association of NSW comes from bequests.

Some questions to consider about bequests are:

• Do we have a long term vision for our future - will we be around when the bequest matures?
• Could a group of Centres work cooperatively together on establishing a Bequests Program in their local area?

The Fundraising Institute - Australia is a professional association of fundraisers. They have more than 1000 members. If you want to talk with a professional fundraising consultant they can put you in touch with their members.

There are many Internet sites dealing with fundraising. Start at www.mapl.com.au with the Internet version of this booklet (See Ideas and articles No 8)

Fundraising for Non-Profit Groups: How to get money from corporations, foundations, and government by Joyce Young and Ken Wyman. Self-Counsel Press, Vancouver, Canada 1995.

Do-It-Yourself Guide to Publicity, Special Events and Fundraising, by Candy Tymson. Millennium Books, Sydney 1993.

Community Funds, When and how to set one up, by Margaret Hunter, published by SACOSS 08 8226 4111 . A community fund is an independent community based organisation established to raise funds to support other local charities and community groups.

7. Taxation

Taxation for Neighbourhood Centres can be very confusing. Some Neighbourhood Centres are Public Benevolent Institutions (PBI). Some are not and have been refused PBI status by the Australian Taxation Office. There is considerable discretion at the Regional level within the Tax Office and this has led to anomalies (eg. two identical organisations where one is given PBI status and one refused).

Knowing your tax status is important. Your taxation status doesn't prevent you from making money. But having the 'right' classification can make a big difference to the best way community organisations make money.

Some community organisations are Public Benevolent Institutions which provide direct assistance to those in need ('direct relief' of poverty, destitution, homelessness, etc) and receive the most generous taxation arrangements including tax deductibility of donations. This helps with fundraising, getting money from trusts, not paying sales tax or fringe benefits tax.

Many community organisations receive exemption from income tax because they are non-profit and are established for an exempt purpose (eg, community services) but still do not receive tax deductibility for donations because they do not provide direct relief to those in need. Counselling, information, education and advocacy are not counted as 'direct relief'.

Some of the key questions the tax office uses in determining your taxation status are:

• Does your organisation have a written constitution?
• Does the constitution contain appropriate non-profit and dissolution clauses?
• Is the main purpose of the organisation an exempt purpose?

There are other questions to consider in relation to sales tax exemption.

When it comes to making money you need to know how you are classified for these tax issues. Find out whether you are eligible to get a deduction or exemption that you don't already have.

There are also other legal issues to consider, for example, permits and licences for some lotteries and raffles and Art Unions, guidelines for street collections, etc.

For more information on legal and taxation issues see: Legalities NSW, Guidelines for running a community organisation published by New South Wales Council of Social Service (NCOSS) 02 9211 2599 AU$13.50 for members AU$15.00 for non-members (posted)

A useful guide from the Tax Office is The Club Pack: A Taxation Guide for Clubs, Societies and Associations. It is available free of charge from all Tax Offices. It takes you step by step through the process of determining your taxation status. Tel: 132866

8. What are you ready for?

1. Are you clear on your organisation's purpose?

2. Do you have a written statement of your core values?

3. What mindset are you in: Funding? Charity? Partnership? Entrepreneurial?

4. How is your mindset limiting or expanding your choices about making more money?

5. Do you know all the sources of government funding?

6. Do you know all the sources of non-government funding and what they are prepared to give money for?

7. Do you have the skills for writing good submissions?

8. Are you up to date on skills and tips for writing competitive tenders?

9. Are you running a non-profit business? Would you consider running a non-profit business?

10. Have you considered sponsorships? What have you to offer a sponsor? Why do they need you? Are you thinking partnership or handout?

11. What fundraising activities do you do? Are they primarily fundraising or primarily community building activities?

12. Have you considered working with other Centres on fundraising programs?

13. Have you considered bequests?

14. Do you know the details of your tax status? Can you get your status changed so you can gain taxation exemptions or benefits for which you are eligible?

Acknowledgements

Written by Paul Bullen
Management Alternatives Pty Ltd ACN 050 334 435
02 9665 7737

Printed booklet published simultaneously by
Local Community Services Association (LCSA)
66 Albion St Surry Hills NSW 2010
Telephone 02 9211 3644 NSW freecall 1800 645 545 Email lcsa@pnc.com.au
Fax 02 9281 0386 © Copyright 1998

This publication may be freely copied by Neighbourhood and Community Centres in NSW for their use. All others wishing to copy any part should seek permission from LCSA.

Many thanks to the Centres who have contributed to the stories and information in the booklet and all those who have been quoted.