March 16, 2009, San Francisco Chronicle — At a time when CEOs of nonprofits are bracing for severe funding cuts, Anita Friedman, executive director of the Jewish Family and Children's Services, managed to collect $600,000 in private donations at an annual fundraiser last weekend.
"We've been preparing for this moment for 30 years," Friedman said inside her San Francisco office before the event. "A social services agency in the 21st century needs to be more entrepreneurial. It needs to operate in a more business-like way, and it needs to generate earned income, in order to support its social goals and to survive."
Friedman, who celebrates her 30th year overseeing one of the Bay Area's largest family service organizations, was one of the first executives in the nation to steer her nonprofit from what she called the "tin-cup model" to a "social enterprise model" - a revenue-generating enterprise that relies on a diversified mix of government aide, private donations and profit-earning programs - designed to withstand harsh economic times.
A "diversified revenue stream" may sound sensible in today's market-savvy culture, but in 1979, when Friedman took over the struggling nonprofit on Post Street, such organizations were still largely dependent on government funding.
Friedman recalled that her charity, founded in 1849 and the city's oldest, was understaffed, suffered from sinking morale and was housed in antiquated facilities.
Opportunity in crises
"But crisis creates urgency," Friedman said, noting that the incoming Reagan Administration would further cut funding. "The best time to make changes is when there's urgency."
Jim Schorr, a lecturer at the UC Berkeley Haas School of Business who has taught classes on the social enterprise movement, said when Friedman's organization adopted the model in the early 1980s, the concept was still controversial. Adopting a business approach could distract from an institution's social mission, critics feared. And turning to the private sector for funding could lead to tangled agendas and potential conflicts of interest.
"Social enterprises are designed to be more insulated from the ups and downs of philanthropy and economic cycles," Schorr said. "But of course, these times are so unusual, it's hard to say if anything can withstand them entirely."
Schorr estimated only about 10 percent of the nonprofit sector has assumed a social enterprise model since the late '80s, but she said that not all nonprofits make good candidates for revenue-generating organizations. Still, the social enterprise movement is growing, especially in the Bay Area, Schorr said, and the concept is widespread among social service programs in the United Kingdom.
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