Social enterprises use a variety of methods to generate commercial income to sustain operations. At any given time, a social enterprise may use one or a combination of methods, based on the type of enterprise and business strategy.
Method | Description | Examples |
Fee-for-service | Charging constituents or clients for social services in order to recover costs of service provision. | Museums charge entry fees; microfinance institutions sell financial services; rural clinics collect sliding scale fees for doctor visits. |
Products | Earned income through manufacturing and product sales, or through mark-up and resale of products. | Horticulture cooperative sells flowers wholesale to suppliers; a fair trade company imports cocoa beans and manufactures them into chocolate products to sell in western markets; a handicraft marketing company sells artisan products through a catalogue and takes a commission on sales; a café employing disabled people sells coffee and snacks to the public. |
Services | Commercialization of a skill or expertise to a market willing and able to pay. | Hunger relief organization sells catering services to schools and institutions; children's education organization provides daycare service for a fee; mental health organization sell psychotherapy and counseling services; a national microfinance institution sells management consulting services to other nonprofit organizations interested in starting credit programs. |
Membership Dues | Fees collected from members of a group, association, or organization in exchange for services such as a newsletter, discounts, conferences, insurance, etc. | Dairy subsector trade association provides market information and linkages to its paying members; organization of social enterprise practitioners receives newsletter, listserv, industry reports, job listings, and an annual conference in exchange for an annual fee. |
Tangible Assets | Generating income by renting or leasing a tangible asset such as office space, building, land, vehicles, or equipment. | Human services organization leases its idle office space to another nonprofit organization; a community development organization rents its trucks to a moving company on the weekends; an environmental conservation organization leases its land to an eco-touring organization. |
Intangible Assets | Generating income by leveraging an intangible asset such as proprietary content, methodology, brand, reputation, relationships, goodwill, etc. | International Children's organization licenses its logo and brand name to a clothing line; a university obtains research contracts for scientific study from technology companies; a membership organization sells its mailing list; a youth news agency sells its print content to an online educational service targeting young people. |
Investment Dividends | Passive income earned from investments. | Interest income and dividends from bonds, stocks, savings deposits, and other investments. |
Unrelated Business Activities | Revenues from a business unrelated to the organization's mission and created for the purpose of funding specific social activities or the organization at-large. | Museum shop or retail store of an environmental organization; Girl Scout cookies; a catalogue trinket business supporting a public radio station; nonprofit real estate holdings. |