The Not For Profit/ Profit Hybrid Model

Here at DGM, we consider ourselves not-for-profit marketing specialists. Over the years we have worked with a variety of not-for-profit organizations from Melbourne CityMission, Salvos Stores and Leukemia Foundation.

I recently attended a not-for-profit breakfast talking about how to engage people using social media. When talking to staff at not-for-profit organizations, they expressed they can’t undertake new projects or strategies due to the lack of funding and resources.

This challenge has been dealt with by the emergence of the not-for-profit/profit hybrid model. This occurs when a charity forms a separate organisation to raise funds for them. In some cases, one is subsidized by the other, or some are bound by contracts.

“It is virtually impossible to grow a social enterprise in any significant way relying wholly on donated money, earned revenue and debt financing, which are the only sources of financing available to non-profits,” said Allen Bromberger, a lawyer with extensive experience in non-profit financing. “These hybrid structures allow social enterprises to tap conventional investors interested in making profits while continuing to pursue their social missions.”

A perfect example of the hybrid model is our client Salvos Stores. The Salvation Army created Salvos Stores to raise funds for its community programs. Salvos Stores is run independently to The Salvation Army. Salvos Stores has its own head office and team of staff and sets its own budgets and sales strategies. However, it must meet benchmarks set by The Salvation Army in order to continue running its programs. The Salvos Stores brand must reflect the Christian values of The Salvation Army.

It is difficult to build a successful hybrid model. On occasion, the need to generate returns for investors overwhelms the social mission. In other cases, the business falters altogether and cannot support the non‐profit.

However, when the hybrid model works, it really works. Did you know Girl Scout Cookies turns over $760M annually? Could be a good indication of why America is experiencing an obesity crisis! Salvos Stores Southern Territory operates 215 stores, employs 2000 people and has 3000 volunteers. They give approximately $16M to The Salvation Army every year.

As an advertising agency, we love hybrid model organisations. They generally set their own budgets and have sufficient resources to cover the essentials. The for-profit’s main goal is to generate funds for the non-profit, which allows us to create specific and creative campaigns.

-Posted by Bridget


About dgmadvertising

DGM Advertising are a full service, marketing, creative and advertising agency based in Melbourne. With 11 years in the business, DGM Advertising are a boutique agency who specailise in digital content, social media and online marketing.
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