Updated: Jun 26
You usually hear the term "side hustle" in relation to people having a second job to create additional income. Why can't non-profits do the same?
Let's face it. Money makes the world go round. Money gets our organizations from point A to Point Z. All non-profit organizations have to have a continuous flow of income to sustain and grow their programs and services.
Many people (like myself) these days start "side hustles" for numerous reasons. According to this 2019 Fortune.com article, almost half of working Americans under 35 have some type of side hustle!
What is a "Side Hustle"?
To put it simply, "Side Hustles" are a way to bring in extra cash for your organization; It's an opportunity for your organization to sell products or services to create an additional income maybe for that facility your organization is planning to purchase or perhaps increasing staff wages or even staff count. Side hustles are about using the organization's internal skills and talents to financially grow the organization.
Let's look at the 4 reasons why your organization should start a side hustle.
1) Diversify Your Organizations Income
All nonprofit professionals highly advocate against organizations relying solely on one or two streams of revenue. Doing this could lead to budget shortfalls and limited overhead to financially plan for the future ( or in the present day, a global pandemic). Side note: most nonprofit professionals suggest keeping at least six months of operating capital in savings at all times.
Mark Hager and ChiaKo Hung suggest in their article "Is Diversification of Revenue Good for Nonprofit Financial Health?" diversifying your organization's income, it not only allows flexibility in the budget but the additional income can be used for what your organization truly sees fit.
Diversifying your income could also legitimize your organization's financial status, which could potentially make your organization a prominent grant competitor if your organization relies on private funding.
Please be aware that starting a side hustle is not an easy nor quick money fix. There are some serious considerations your organization should discuss before you jump in. Please read the "Before Your Organization Starts a Side Hustle" section below.
2) Empower Your Organization Organically
My values and business are guided by the community development approach SEED-SCALE, taught by Future Generations University. In short, this approach is more of a holistic approach to community development compared to the traditional approach; It focuses on internal development rather than external outsourcing.
So what does "empower your organization organically" mean? Rather than asking your paid staff or volunteers to do all the work associated with starting and maintaining a side hustle, it should provide an opportunity for your organization's board, staff, volunteers, and beneficiaries to come together and forge relationships naturally.
Forming those relationships will allow your organization's side hustle to develop from a meaningful and supportive bond that will be the foundation for a successful start to your organization's side hustle. Without those relationships, it could cause an unbalanced relationship dynamic and create a forced project that no one from your organization emotionally bought into.
3) "Free" Marketing For Your Organization
Yes, I purposely placed quotation marks around the work free. Free is never really free, right?
When your organization is selling products or services, that commodity is now attached to your organization. When someone purchases your product, you want your customers to recognize your organization's brand.
How recognizable is your organization in the community? Do community members (and businesses) see your organization as authentic and meaningful? I'm going to throw another slang term in here. You want to increase your organization's "street credibility". Being able to establish (or even re-establish) the organization's street cred creates another marketing stream for your organization.
4) Potential to Provide for Local Needs
This is a great opportunity for your organization to get creative and put those internal talents and skills to good use! Your organization's "side hustle" should be a reflection of the organization itself and also provide a meaningful service or product to the community in which it's located.
In 2018, the organization partnered with the U.S Department of Agriculture and Kentucky State University to transform the ICofKY's less than half an acre lot, into a community garden for the organization's clients. Using the farming expertise of its clients, the organization was able to manage, produce, and sell its products to the local community. The profits made from selling the produce went back to the farmers and their families. Click here to view the local article about the farm.
Fast forward to 2019. Just after a year of creating the garden, the farmers were selling their produce to local restaurants!
It's amazing what hidden talents lie within your organization! This example not only proves how your organization can provide additional services to the local community but it also proves how important it is for your side hustle to start from within your organization (see reason number 2).
Before Your Organization Starts A Side Hustle
The idea of a "side hustle" sounds great, right? But before your organization starts to even consider the most minimal side hustle, there are a few things your organization needs to consider:
The 5 W's: Before your organization starts any venture, it's critical to keep "the 5 W's" in mind. "Why are we doing this?" "What will this additional income go towards (and what are we going to produce?" "Who will be in charge (and who is our target market)?" "When will this venture start (creating a timeline)?" "Where will this take place (on or off-site)?"
Answering these basic 5 questions will give your organization an idea if your organization has the capacity to take on a "side hustle". I would suggest giving as many answers as you can to each question.
Risk: Depending on what your organization is interested in producing and selling, the level of risk involved will follow. You should know, all business-related activities involve some type of risk. Consider Sreekanth Ravi's article on Entrepreneur.com, "When Launching Your Startup, Consider These 5 Risks". He mentions to be alert when it comes to product risk, market risk, financial risk, team risk, and execution risk.
Time Commitment: This goes back to the 5 W's. Who is going to be leading the project? How much time should your organization spend working on this project (per day, week, month, year)? Developing a timeline, in the beginning, will determine if your organization has the time to start this venture. It's better to determine this up front rather than realizing the venture is a time-consuming, wasteland six months in.
Associated Start-Up Costs: Again, start-up costs depend on what product(s) your organization is interested in producing. Do you have the equipment you need to create your product? Are you planning to sell your products at the organization's location or somewhere else? Will your organization pay employees or will you ask volunteers to produce the products? Use this free Startup Costs Guide from the U.S Small Business Administration to help determine the potential start-up costs.
Legality: The good news is non-profit organizations can sell products to generate income. However, depending on what product your organization is selling, it could be subject to unrelated business income tax if the activity is unrelated to the nonprofit’s exempt purposes and it is regularly carried on. Your organization is definitely going to want to take advantage of tax-exempt products or services. In any case, your organization should consult with the organization's legal team before any products are sold.