Exploring Earned Revenue Models with College Forward
Nearly 40 members of the nonprofit community gathered at Meet At Relay this morning for a discussion about how organizations can generate earned revenue.
Dan Graham led the conversation, joined by Austin Buchan and Leigh Ridge of College Forward, a nonprofit whose intensive mentoring programs propel students from underserved backgrounds to collegiate success and rewarding careers. They collaborate with respected practitioners to distill best practices into program models, supported by a technology platform that drives student outcomes and yields critical data for longitudinal research. Read more about College Forward’s impact at scale after 2018’s Philanthropitch Austin.
An imperative element on the road to becoming scalable is defining what revenue means for your organization. Examples of earned revenue models include fee for service, consulting, content licensing, product sales, and B2B contracts. Keep in mind that just because you operate a nonprofit organization doesn’t necessarily mean that you can’t generate revenue and scale your growth.
The panelists and audience discussed maximizing impact, multiple options for business models and how-tos for promoting year-over-year growth, all using College Forward as a core case study. Here are a few of our favorite takeaways from the morning!
1. Shifting the Culture
When exploring a new earned revenue model for your nonprofit, it is important to align your vision and your culture for a successful outcome.
Austin and Leigh shared with us that when College Forward introduced the idea of earned revenue, the team’s cultural shift included a few bumps. It can be difficult for traditional nonprofit industry professionals to think in terms of earned revenue approaches, and getting your team to adopt a new mindset can be a difficult shift at first.
“It’s important to communicate with your team early on. You should spend time explaining why you’re taking on this new earned revenue path and how it aligns with your mission to get your team bought in and onboard.” - Leigh Ridge
2. Maximizing the Mission’s Impact
Arguably the most important piece of how you structure your earned revenue model is strategically aligning it with how your organization makes an impact. College Forward’s channels of impact form a pyramid with students creating the base, university practitioners in the middle, and education policy leaders at the top. They determined that if they could influence all of those channels, then they would have a greater impact with college students. “Tracking the success of students as part of our program has been a part of College Forward’s DNA since the beginning,” - Austin Buchan.
So, they set out to find a database and tracking software to serve as a core element of their earned revenue strategy. They turned to Salesforce.com to develop a database and spent 2 years streamlining a processes that had previously been tedious and time-consuming. This was the inception of Co-Pilot, the customizable student information database and technology platform created in-house and licensed out to college success organizations serving students across the country.
College Forward now benefits financially from licensing and fees generated from Co-Pilot.
"We set out with the intention that everything we designed from a revenue standpoint would be entirely mission-oriented. It had to have powerful student impact, scalability, and self sustainability." -Austin Buchan
3. Find Partners that Fulfill Your Needs
College Forward hired consultants to help them consider technology platforms for their college advancement tracking database, and partnered with Salesforce.com in order to develop Co-Pilot.
From there, the Salesforce.com App Store helped drive downloads of Co-Pilot, which benefits the organization through licensing fees. This allowed College Forward to advance without a software sales team at first. The team relied on their Board of Directors to help with business model innovation, technical expertise, and revenue generation.
Lastly, they also explored the benefits of Program-Related Investments (PRIs), essentially a low-interest loan for nonprofits. With the help of Notley and Austin Community Foundation they were able to research, obtain, and ultimately benefit from these investments.
Because College Forward had a strong and sustainable business model with Co-Pilot, they’ve found a lot of success in using PRIs, gaining faster turnaround than traditional grants from foundations.
“It all comes back to the strength of your earned revenue model. If you have a good margin and can repay the loan, then you should consider a PRI.” - Austin Buchan