There are many ways in which YouthBuild programs can develop long-term funding strategies that allow for sustainability.  The challenge for many  YouthBuild programs is that external funding opportunities may be tied to program expansion (e.g. number of participants served), development of programming that targets a new population or issue, or requires an infrastructure (e.g. development department or large donor base) that many organizations do not have.  In addition, government and private funding ebbs and flows with increased competition for ever shrinking dollars. 

 

Considering these realities, YouthBuild programs (or their sponsoring organizations) should consider developing self-reliance models which allow for long-term sustainability and growth. New funding streams that are not reliant on external funders allow for a growth mindset, as opposed to a survival mindset.  They also provide flexible funds, whereas most government and philanthropic funding restricts how dollars can be spent.  Additionally, these strategies support diversification of funds in the organization’s portfolio.

 

YouthBuild sponsoring organizations have typically utilized one of three models to grow and sustain their funding: earned income business, social enterprise, and pay for success.

 

Also known as fee for service or income producing business, this model is the “easiest” to understand and build from. It is a payment model in which services are unbundled and paid for separately (e.g. handyman business) or the type of business that generates income for goods and/or services (e.g. museum store, hall rental).  

 

Questions organizations need to ask themselves when considering this model include


  • What services, products, etc. does your organization already produce or have in place?

  • Does your organization have a lot of community foot traffic?

  • Do you have access to a labor pool? 

  • Does your organization have any special expertise or skills that you can market/sell?

  • Does your organization have facilities/equipment you can rent out?

  • Can you spin off ideas from your organizations mission?

 

 

The Social Enterprise Alliance defines social enterprise as “organizations that address a basic unmet need or solve a social or environmental problem through a market-driven approach.” (Social Enterprise Alliance, What is Social Enterprise?, ”https://socialenterprise.us/about/social-enterprise/, viewed November 2019.) There are three models of social enterprise:

  1. Opportunity employment: organizations that employ people who have significant barriers to mainstream employment
  2. Transformative products or services: organizations that create social or environmental impact through innovative products and services

  3. Donate back: organizations that contribute a portion of their profits to nonprofits that address basic unmet needs

Most nonprofits will look at the first two models of social enterprise, with the third primarily a for-profit model.  

 

Questions organizations need to ask themselves when considering this model include:  

 

  • Do you have capacity to learn all aspects of social enterprise: asset identification, objective evaluation, market research and feasibility, customers and competition, costing and financing, sales planning, and business planning?

  • Is your organization ready to move to an entrepreneurial mindset?

 

 

According to the Urban Institute, Pay for Success or PFS, is an innovative financing mechanism that shifts risk from a traditional funder (usually a government) to a new funder (usually a private organization or nonprofit). Private investors or philanthropies provide up-front capital to implement or scale an evidence-based social program. If an independent evaluation shows that the program achieved the agreed-upon outcomes, then the traditional funder repays the new funder’s investment with interest.  This method can provide for an opportunity to scale or implement new programs that may fill gaps in currently available systems or programming.

 

Questions organizations need to ask themselves when considering this model  include


  • Have you established, or do you have the capacity to establish, partnerships with potential “investors?

  • Do you have the cash flow/credit line that is needed upfront for such an undertaking?

  • Do you have the infrastructure to support this as well as meet the outcomes attached to the program?

  • Are you willing to be part of a highly evaluated/structured model?

 

Ultimately, YouthBuild programs looking to implement one of the above funding models must do the following:

  1. Research the model structure you want to undertake. Understand all the potential challenges and pitfalls.  Do you have the support, infrastructure, and long-term business mindset for the undertaking?
  2. Talk with others who have undertaken/implemented the model.
  3. Be candid with board and staff about the model.
  4. Tap into expertise.

Be sure to check out our upcoming webinar, Sustaining and Growing Your YouthBuild Program: Developing Resources Beyond Government GrantsThis webinar will focus on how YouthBuild programs can sustain and grow by developing self-reliance through social enterprise, earned income business, and pay for success. An overview of these models will be presented, as well as examples of how some YouthBuild programs and their respective organizations are developing and/or implementing them. Joanna James, Executive Director of Project REBUILD, Brian McMahon, Deputy Director of Operation Fresh Start, and Jennifer Lawrence, Executive Director of the SEAT Center, will share working examples of sustainability models they utilize, and provide information on how to develop and implement these models in other YouthBuild programs.

 

Related Resources

Society for Nonprofits

Social Enterprise Alliance

Building the Employment and Economic Self-Sufficiency of the Disadvantaged: The Potential of SocialEnterprises

The Seven Pillars of Social Enterprise Success

Nonprofit Finance Fund: Pay for Success

Foundational Concepts and Terms of Pay for Success – How-To Guide