We are currently experimenting with a hybrid model, well not officially...

Within our organization, all partners we send volunteers to, no matter how big or small, they are required to pay a portion of our costs of bringing our MBA volunteers to their work. If it's a large partner, it's usually not a problem and even if it's a small MFI in Kenya, by asking them to contribute even 10% of our 4 months costs ($15,000), it gets them asking...'wait a minute...if I'm paying, what's the value of this person to me.' That's the exact question we want our partners asking. We then raise remaining funds to make the project happen.

While this limits some of the partners we can work with, the demand has grown tremendously since our start and we couldn't be happier that we've stayed firm on this model.

By asking for some of our partners to pay our full costs, it's a similar set up to a consulting firm, but much cheaper. We leverage the income received from our bigger partners to help us pay for our partners that cannot afford the full cost of our volunteers. This also helps when we are short on raising funds for a particular project.

Some other initiatives we have taken which might work for some and might be too commercial for others are the following:

• we've signed up via google adsense which our volunteer web designer did a great job of subtly putting it into the bottom of each page on our site. This brings in about $150/month right now to MWB. You can see them here: www.mbaswithoutborders.org.
• we've begun promoting books via Amazon's affiliate program. We've only selected books that fit in with our mission and our member's interest. We receive 8% roughly per sale. So far $6.00 in sale. We've not promoted this too much and used it more as an internal marketing piece to give more value to our visitors. So far, I'm undecided on it's effectiveness to attract or distract. It's only been $6 after all. Example here: http://www.mbaswithoutborders.org/get-involved/mbas/
• we've begun working via Cafe Press, where we get a commission off of everything purchased on our site. This, like the Amazon program hasn't brought in much, but it's a great way to have access to clothing, etc with your logo without incurring the inventory costs. Ideally I would like to do this using Fair trade products (as that's more in line with our mission) but at the moment this is our best option and we're quite happy with it. Example: http://www.mbaswithoutborders.org/get-involved/buy-mwb-gear/
• We've recently partnered with One World Projects and their affiliate program to promote fair trade artisan products in countries were we send our MBA volutneers. Works like on commission-basis again. It's just up and at this point, we haven't enabled the purchase feature but it will give you a good idea. Example: http://www.mbaswithoutborders.org/get-involved/support-fairtrade-2/
• Since we have become the go to organization with businesses and NGOs looking for MBAs interested or with experience in international development we worked with Job Target to develop our own internal job board. This is great for us as it allows us a clean and simple way to post our own positions for free and charge a fee for others to post. With Job Target, for not for profits and associations they will set up the back end for free (otherwise $10-15k roughly) and then they split with you the revenue you bring in from any postings. I can't say specifics of the % split, but very much in favour of the organizations. Example: http://projects.mbaswithoutborders.org/home/index.cfm?site_id=704

We're also now working on an online consulting tool where MBAs can connect with entrepreneurs in developing countries. The platform will be ready in a few months if all goes well and the key here will be to provide a repository of information. Down the road we will look to license out the platform (for a small fee) to other orgs and will either do cost per click ads or static advertising.

To wrap up..in the end though we are not set up as a for profit in anyway legally, we do have many aspects that resemble it. We've decided to keep all our work under our NPO. I agree, that should we start bringing ooddles and oodles of income, we will have to look at other options because as mentioned earlier by another person, you can use your FP earned money whenever you want and aren't restricted like a NPO.

All this initiaves have helped us support our mission further of sending more MBA volunteers to business and not for profits in developing countries.

I hope some of this has been helpful and if you have any questions don't hesitate to ask.

Hello Everyone!

First, I would like to say that all comments and advice thus far have been insightful and useful to me. I began a non-profit organization called Indego Africa Project in November 2006 and we are in the process of applying for 501(c)(3) status.

For-Profit Component: Indego Africa plans to sell handicrafts designed and made by artisans who work with its partner organizations in Africa. Indego Africa partners will be existing community groups in African nations dedicated to teaching employable skills to their communities. Indego Africa handicrafts will be sold in their country of origin and in retail stores in the US (and eventually Europe). Initially Indego Africa will be acting as an importer and wholesaler, eventually moving into e-commerce retailing. A large portion of total revenue will be generated by sales. Artisans actually making the handicraft will be paid fairly and in accordance with fair trade principles.

Non-Profit Component: Indego Africa will be supporting economically disadvantaged artisans and encouraging them to start their own businesses (through payments for their handicrafts), donating all profits from fundraisings and sales of specific products back to the community organization that sponsors the artisan (which funds will be directed to specific charitable programmatic elements), and educating the public outside of Africa about African products and culture.

My question is whether this will present any major problems with the IRS. I expect that the flow of funds back to the partner organizations will be "substantially related" to the sale of products made by artisans in those same organizations. Will this be characterized as UBI? If this would present a problem, how can structure ourselves to take advantage of charitable deductions and the generally more positive image of non-profits? Although we are currently funded by donations from our founders, we would like to explore debt funding, at a minimum, and possibly equity financing in the future.

Thanks for any comments.

-Matt

Please visit us at www.indegoafrica.org

I am interested in knowing if a start up organization wants to have a hybrid structure at what point and what tools are needed to develop a hybrid from the start up phase?

Meaning do you make one business plan outlining the structure/models and smaller business plans for each entity/venture?

Any insight would be helpful!!

Thanks,

Mae

Greetings. My suggestion is go for a totally different model based on volitional trait. If your organization is built on the this trait, the kind of model you will design will be based on voluntary efforts combined with passion and environmental orientation.

Greetings. My suggestion is go for a totally different model based on volitional trait. If your organization is built on the this trait, the kind of model you will design will be based on voluntary efforts combined with passion and environmental orientation.

We must really abandon the form based language of for profits, non-profits, and hybrids. We should instead define ourselves in terms of the result we want to accomplish. As we all want the result of a better world, we are world betterers or simply betterers.

Form follows function, function follows intended result. It doesn't makes sense to define ourselves at a higher causal level. This only confines the options available to accomplish our intended result.

If we thought of ourselves as "World Betterers", then the specific intended results would dictate the functions necessary, which in turn would dictate the forms that would best support the functions.

After reviewing the criteria for a hybrid organization I have concluded that this structure will extend the mission, enhance the brand and provide those we serve with additional opportunities for success. We are convinced that this will extend Polder's mission to assist in the development of communities by enhancing education. Polder addresses urgent educational challenges facing communities today, by focusing upon learning in the classroom and using audiovisual technology in transitional environments. http://www.ompt.org/ The hybrid model can help reduce the pressure to raise money. We can generate profits selling consumer electronics gear. We don't want an expensive infrastructure and we don't want this model to undermine Polder.

We are working out the operational details. The FP will transfer resources to the Polder through cash payments. Initially our staff will divide their time in one office. We will have overlapping boards. We have not completed the by laws or the articles of incorporation.

We are in the midst of our due diligence. We are looking for a law firm in Northern California that understands both NPO law and the licensing and tax laws of for-profit enterprises.

Does anyone have a lead for us to follow on securing the right law firm?

After reviewing the criteria for a hybrid organization I have concluded that this structure will extend the mission, enhance the brand and provide those we serve with additional opportunities for success. We are convinced that this will extend Polder's mission to assist in the development of communities by enhancing education. Polder addresses urgent educational challenges facing communities today, by focusing upon learning in the classroom and using audiovisual technology in transitional environments. http://www.ompt.org/ The hybrid model can help reduce the pressure to raise money. We can generate profits selling consumer electronics gear. We don't want an expensive infrastructure and we don't want this model to undermine Polder.

We are working out the operational details. The FP will transfer resources to the Polder through cash payments. Initially our staff will divide their time in one office. We will have overlapping boards. We have not completed the by laws or the articles of incorporation.

We are in the midst of our due diligence. We are looking for a law firm in Northern California that understands both NPO law and the licensing and tax laws of for-profit enterprises.

Does anyone have a lead for us to follow on securing the right law firm?

Last year I founded a rather unique "hybrd" social venture (Impact Makers) based in Richmond, Virginia. I think our model is fairly unique in that it is nonprofit structure based on the corporation's mission to maximize profits in order to maximize "community stakeholder value" rather than the traditional "shareholder value" - but the corporation competes in the free market.

Specifically, Impact Makers is a “competitive social venture” operating in the management consulting space, and I believe is truly unique in that it:

• Provides professional services (currently focused in healthcare) at market prices - Competes with other firms to win business - Pays market salaries to its professionals - Is a nonprofit structure with books open to the public - Contributes all profits to community organizations (and consulting time)

For a brief overview of our organization, you can visit our website at: http://www.impactmakers.org

Aside from local print press, we are also being covered on CNN Headline News in the local Richmond market – you can see the 5-minute video at: http://www.youtube.com/watch?v=6dWEckHnxW4

The model is unique in that we are based on the following premise: 1) we partner with a separate, 501c3 charitable organization chosen by our volunteer board (secular, apolitical, and "helping people help themselves"). Our first partner organization is a domestic violence program and shelter called Safe Harbor.

2) We provide our partner(s) with strategic / process improvement support and also up to 30% of their budget as unrestricted funds that we closely monitor - so that they can focus their management / board attention on their "core competency" and on higher quality & lower cost service delivery, and less on fundraising.

3) At the same time, we raise funds not through traditional fundraising, but through free-market competition in the for-profit IT / management consulting space.

In our first full year of operations as of Oct 1, we were able to generate over $500k of revenue and provide our partner with $40k of donations and over 200 hours of consulting servcies and support, making us their largest corporate donor and one of the largest in the Richmond area to any single nonprofit.

Has anyone out there seen a similar model, and any thoughts / advice on such a "hybrid" structure?

I look forward to any and all feedback. - Michael