5 key drivers to make non-profits sustainable.

Sustainability ranks high when it comes to non-profits as they are serving low-resource, high-need communities. As a non-profit organisation’s primary purpose is to engage in social interest activities and commercial profit is not its main priority, there is always a struggle to raise funds. This is mainly because few community members have the means to contribute financial support to non-profits, and the dependency on public grant risks being cut due to economic or “strategic-fit” reasons. 

This sustainability issue is also present in the organisation we work for - Action Community for Entrepreneurship (ACE). Privatised in 2014, ACE is a non-profit organisation committed to startup community building and ecosystem connecting. Following in Sep 2017, ACE International Centre was officially launched to drive expansion beyond Singapore and market access. There was an urgent need to create value for our regional ecosystem but also be sustainable, as high value and high visibility initiatives require more resources than we are allocated with. In slightly more than 2 years, ACE International Centre is now on track to become sustainable, with partners in more than 16 cities, access to more than 25,000 startups, 2 overseas International Centre and cost-recovery/ revenue-generating programmes and events.

It was not easy spending about three years to drive startup and entrepreneurship in Singapore (usually associated with glitz and glamour), that’s why we would like to share 5 key drivers of sustainability in building our international arm of our organisation. 

1. Creating continuous revenue streams

For non-profits, we generally face the challenge of improving self-sustainability to reduce reliance on donors and government grants for our operations. Through our journey in building ACE International Centre, we learned that focusing on value creation that addresses our startups’ internationalisation needs allows us to develop market access initiatives that startups are willing to pay. This has enabled us to breakeven in our programmes and ensure sustained participation and revenue streams. This is apart from space rental revenue that scores lower in terms of innovation value.

Having said that, there is a fine line between working towards self-sustainability and chasing after revenue. Non-profits that fall into the trap of chasing after revenue often find themselves drifting away from the mission of the organisation as they attempt to take on big projects that are not aligned to the organisation’s direction. This results in an inefficient use of the organisation resources (as non-profits compete with other competitors in the commercial space) and does not address the needs of the areas that it’s set out to do. Typically, non-profits who lost their way will find themselves in a very undesirable position of not receiving the support they need from donors/ stakeholders and not being able to compete with private players.

2. Understand your resource constraints 

When your organisation operates on a lean model, it is essential to know what your resource constraints are (i.e. manpower, expertise) and ensure that these resources are allocated to projects that are most strategic in advancing the mission of the organisation. This means having leaders who can say no to opportunities that come along the way. 

When we first started to build ACE International Centre, there were a lot of requests for market access partnerships from various cities around the world. However, we decided to focus on Southeast Asia, China and Japan for our outbound programmes for Singapore startups after assessing the demand and suitability of the markets. This has enabled us to concentrate on developing more in-depth market access expertise in these countries to ensure quality in our programmes. 

3. Define what and where you stand. Rally your community.

Rarely are you the only organisation championing the cause, meaning that you are just one of the many and there is a need to differentiate and find your place in the ecosystem. Having a standard and brief website or social media pages for your non-profit does not cut it anymore. There is a need to build meaningful messages/ experiences to connect with your various stakeholders - partners, team and beneficiaries. This can only be done with a (1) clearly defined positioning statement (differentiated through factors such as founding history, founders, beneficiaries, services/ activities and others) and (2) consistent message/ experience across different touchpoints.

After clear definitions, you are now a jigsaw piece that is able to find parts with complementary edges to come together for the bigger picture. This is what ACE did to rally the regional startup community to establish the Connected Ecosystem network in 16 cities with access to more than 25,000 startups. ACE International Centre in Singapore is a one-stop centre for startup internationalisation, set apart by our national mandate to build and sustain the Singapore startup ecosystem, strong regional partner network and two overseas centres in China and Thailand. Any organisations with the common goal to drive international market access and regional innovation will now be able to form meaningful partnerships and collaborations with ACE, allowing us to grow and scale sustainably through joint projects and pooling together of resources.

4. Staying relevant in the ever-changing environment

For non-profits to make an impact, they have to be aware of the external trends that’s happening in the areas that they are serving, and continually assess the relevance of their initiatives in the face of such changes. An organisation that tends to stick to what works best for them will face challenges when they realise that the same model is unable to create much value in the face of changing dynamics. It can be due to changes in the needs of the area that you are serving, or that more companies are coming in to tackle similar issues.

It is hence vital for non-profits to gather feedback from the ground and build organisational capabilities that allow for rapid adaptation based on that feedback. This is done by instilling an organisation culture that promotes rapid experimentation (Build-Measure-Learn framework) with initiatives, business models and processes. When ACE developed it’s first Singapore Immersion Programme in 2017, the programme was more focused on information on Singapore and Southeast Asia and insights on setting up the company. After the first two runs, we collected feedback and uncovered that the majority of startups prefer to establish/ strengthen business networks through business meetings and networking sessions. With these feedback, we tied in our programme period to the two biggest innovation conferences in Singapore (SG Week of Innovation &TeCHnology [SWITCH] and Innovfest Unbound). We shifted the focus to 1-1 meetings, company visits to corporate innovation labs and ACE Demo Day. This saw a total of 6 successful runs and a total of 41 startups from 9 countries participating in this flagship programme of ACE International Centre.

5. Think like a business, Work like a non-profit.

Focus on value creation, while keeping cost low is key. This boosts the top line (revenue) and gives a healthier bottom line. When resources are limited, the immediate response is to ration it. However, cutting costs may sometimes mean cutting corners - wasting (albeit little) resources, but also not achieving results. If there is anything my stint in the startup ecosystem has taught me, it is that there is an excess of capital and everyone is hungry for a piece of innovation. Then the questions would be: “What do they value?” and “How would that fit into my cause/ mandate?” Through creating value for these stakeholders, you now have more resources to serve the startups and champion your cause.

As a Forbes article correctly summarises, “While it's an obvious truth, we tend to forget that the best way to increase the bottom line is to make the top line larger. That will only happen if you invest in building the muscle that enables growth.” 

In all, building a sustainable non-profit is similar to that of a for-profit company, but with the added responsibility of efficient use of limited resources and not losing focus on the initial cause. We hope this article gave some ground-up insights on how non-profit may be sustainable. Drop us a note in the messenger if you are interested in grabbing a coffee and having a chat!

-Michelle Ng, Senior Manager, Partnership & Startup Growth at ACE, [email protected]

-Yanlin Ang, Senior Manager, Partnership & Startup Growth at ACE, [email protected]