2017-08: Monetization

Posted on 21 August 2017 by Marc

Location: Communitech Jelly Bean Room 1st Floor, 151 Charles Street West, Kitchener, ON (Look for the building with the Communitech, Google, and Desire To Learn logos, enter at the glass doors.)
Date: 21 August 2017
Time: 7:00-9:00PM

How can a Non-Profit organization raise money from their services? Can a Not-For-Profit organization make a profit? Why do some NonProfit organizations have separate corporate entities for fundraising and their core business? How do NonProfit SysAdmins manage crowdfunding? How does monetization affect NonProfit status? How does monetization affect legislation concerning mailing lists? What does the NonProfit SysAdmin need to know to enable monetization on the Internet? What software exists to enable monetization?

Join us to discuss these and other ideas for monetization.

–Marc Paré & Bob Jonkman

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Resources

Which Crowdfunding Platform Is Best for Your Nonprofit? | TechSoup Canada

Canada’s Law on Spam and Other Electronic Threats – Home – Canada’s Anti-Spam Legislation

Meeting Notes

What NonProfit Organizations sell stuff?

  • Publishing companies
  • Food co-ops
  • Musical societies (CDs, services)
  • Event admission for political groups, rallies

Two companies?

  • If activities don’t fit within the mission statement, then CRA may consider it a separate, for-profit company
  • Charitable companies are particularly vulnerable, hassled by CRA

Drawbacks to monetization

  • Need End-of-year reports, tax knowledge
  • Need an audit/auditor over a certain amount (maybe $100K?)
  • Tricky to justify certain kinds of income, esp if there is significant profit
    • Need a budget that justifies certain expenses eg. equipment
  • People don’t have enough knowledge of IT systems to use them properly
    • Using spreadsheets that don’t integrate with financial systems
      • But still better than a Word Document
    • Frustrating for SysAdmins, who need to provide support
    • No user knowledge of version control, journalling, &c.
  • The Treasurer position of a NonProfit has frequent turnover, no continuity
    • Treasurer may be volunteer, unskilled for the task
  • Some NonProfits deal with esoteric financials (book sales, royalties), may not have a system in packaged software
  • Need specific information that the grant agency (that provides funds) wants to see
  • Concerns with transparency, opening the books for the public
  • Who maintains privacy of finances?
    • Need a designated Privacy Officer

Methods of monetization

  • “Legacy Gifts”: Larger groups (orchestras?) are pitching bequeathing estates as donations, triggered by a will.
    • Important to performance groups, as their audience ages
    • In Europe, cities a fraction of the size of KW get government funding for the arts, so fundraising not necessary
    • In Canada there are people hired by NonProfit art and performance organizations to do nothing but acquire funding through donations
  • Integrate small NonProfit groups into the finances of a larger organization, eg. at a University
    • But the reporting needs may not be adequate.
  • Need to know about methods for funding proposals
    • Software? Forms? Documents?
  • http://career.publicoutreachgroup.com/ Facilitates fundraising for non-profits
  • Community Foundations will organize the funding for NonProfits, eg. Kitchener-Waterloo Community Foundation
    • Other arts groups set up their own foundations, eg. KW Symphony
    • Or set up your own foundation, then the KW Community Foundation will provide the administration for it

What does a SysAdmin do to enable monetization?

  • Not too interested in accounting
  • Shopping carts on websites
    • Not done internally, this gets contracted out
  • Point-of-sale systems?
    • Need to combine with sales data from other systems
  • Provide integration to other systems
  • Select and set up Crowdfunding platforms

Crowdfunding

  • Has Crowdfunding passed its peak? It was the big thing two or three years ago.
  • What criteria are used to select a Crowdfunding source?
  • Techsoup: https://www.techsoupcanada.ca/en/community/blog/which-crowdfunding-platform-is-best-for-your-nonprofit
  • Centre for Social Innovation in Toronto:
    • Bring your own audience, your own following, before starting the campaign
    • Pretty much everyone involved already needs to be in place
    • Crowdfunding sites don’t necessarily increase your reach, or attract more contributors
    • Crowdfunding is good for devices, eg. Pebble Watch
  • If you haven’t reached your funding level in three months, it’s not likely to fly
  • There are “Crowdfunding Brokers”
    • providing Consultancy, advocacy,
    • Centre for Social Innovation trying to get social advocacy agencies involved (two or three years ago)
  • City of Waterloo had a program to crowdfund Civic Improvements
    • Had their own website
    • People proposed their own projects, advocated for them, got the funding. Then the City would implement them.
      • Thorough failure… People did not want to give money for things they had already paid for through taxes
  • Education: Raising money for supplies, program was halted by the Ministry of Education: “We already provide funding for that.”

Financial Software

Needs dedicated staff to manage privacy issues, but if your NonProfit Org has enough staff to maintain it, it’s very effective

  • Purchasing financial software also purchases the skills and expertise of building such a system (Lawyers, accountants)
    • A way of recording transactions without requiring the expertise of accountants
    • Avoid bitrot (spreadsheets may not be the same from one year to the next)
  • QuickBooks?
    • Has a non-profit module
    • QuickBooks is common, but doesn’t provide the detail for non-profits
      • eg. selling worldwide through Amazon, QuickBooks doesn’t provide geographic customer data
    • Dedicated software provides more granularity in recording transactions.
    • with QuickBooks you still need other tools to record other data
  • Spreadsheets are prone to user error, eg. changing or deleting a formula
  • Orgs hold fundraisers to pay for events
    • Events themselves may raise funds through admission fees
  • There exists fundraising software
    • Similar to contact management software, eg. CiviCRM, Sales Force Automation, Symantec ACT!
    • CiviCRM provides metrics, eg. number and amount of donations
      • Metrics are really important for donations and ticket sales
    • Good for larger NonProfit orgs, too complicated for small ones
    • And with a list of donors, privacy becomes a concern
    • Some integrates well with financial/accounting software
    • Detects patterns of donations, sends out requests only at the correct intervals, or when donors are ready
    • Coordinates with maturity of investments held by donors, when NonProfits can get a pledge.
    • Good software can snipe other NonProfits looking for donations
  • “Grant Station” (subscription software, available through TechSoup)
    • TechSoup subscription is more flexible (cheaper) than purchasing directly from Grant Station
    • Provides a list of Canadian and American grant agencies
    • helps prepare online pitches for donations
    • Hones your skills in preparing grant applications
  • “Canada Donates” is also useful for NonProfits

Accounting software:

http://www.techsoupcanada.ca/en/taxonomy/term/287

  • Newviews
  • QuickBooks
  • MYOB (Mind Your Own Business) (defunct? Only in Australia?)
  • Microsoft Money
  • GNUcash (Free Software)
  • Scrooge (chequebook model, not really for NonProfits) (FS, KDE)
  • FrontAccounting (ERP)

Tax Software

“If you’re looking to monetize your NonProfit group, joining TechSoup is very beneficial.” (spontaneous endorsement from KWNPSA attendee)

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