Fundraising isn't enough: Nonprofit organizations are increasingly using for-profit models to fund their causes.

• Author: Penrod, Emma

UTAH, SHERI GIBB SAYS, seems like it should be the perfect place for a creative reuse center: a sort of thrift store/art studio hybrid that encourages members of the community to reuse and repair, rather than throw away household items.

Gibb and her cofounder wanted to do more than reduce the amount of waste that ends up in Utah landfills. They wanted to use education to bring together seemingly disparate subjects, such as art and engineering, to foster creativity. And even more, they hoped to bring the community together around the idea of innovation and art.

When a national organization didn't return their calls about the need for a creative reuse franchise in Salt Lake City, Gibb took matters into her own hands, and the nonprofit Clever Octopus was born. Thus began Gibb's quest to master a new art--fundraising.

What many of her would-be beneficiaries did not realize, Gibbs says, is that her startup nonprofit needed money to survive--and lots of it. "That is one of the misconceptions about a nonprofit--that you don't make money," she says. "That you do it all for free."

The founders of nonprofits aren't in it for the money--indeed, unlike for-profit ventures, the founders cannot own, or derive equity, from the entity they form. Yet many are surprised to discover that running a nonprofit is very much like running a business, except in many ways, it's much harder.

Nonprofits still need money to operate. But with real estate, labor, and most every other cost on the rise in Utah, local nonprofits are finding that a dollar doesn't go as far as it used to. Yet, at the same time, the fundraising landscape in Utah is increasingly competitive: new nonprofit startups form every year, but the wealth of local foundations remains more or less finite.

Consumers, at the same time, have become more stingy with their own money in the face of criticism about the wealth and spending habits of some large nonprofits, including Utah's flagship Church of Jesus Christ of Latter-day Saints.

These constraints have forced many local nonprofits to get more creative about fundraising. But their innovations, coincidently, are making nonprofits more business-like in a time when many businesses are also looking to become more mission-driven and socially conscious.

"In today's world, which is an amazing place to be, especially in Utah, people really love to invest in their community and be involved. And that is an amazingly rewarding experience," Gibb says. "But, understanding what it takes, financially, for a nonprofit to be successful--I think there is a lot of misunderstanding here."

DO WE REALLY NEED ANOTHER NONPROFIT?

In Utah, a state renowned for its emphasis on community, it should come as no surprise that starting a nonprofit is a popular exercise. As of last September, more than 10,000 nonprofits called Utah home, and a full third of those organizations formed in the last five years, according to a recent report to the governor by the Utah Nonprofits Association. "And that is an upward trend," says Kate Rubalcava, CEO of the Utah Nonprofits Association. "It's not something that's slowing down."

But the thing...