Funding Non-Profits In a Down Economy
Nate Gartrell, EDN
Tucked away in unincorporated Glenwood, Oregon, lies a small business called StoveTec that’s dedicated to two things. The first is selling, to the citizens of Lane County, super-efficient barbecue stoves, outdoor cookers, and emergency water pasteurizers.
The other is to provide the same stoves to organizations looking to distribute them in bulk to impoverished people worldwide, as a form of humanitarian aid.
StoveTec, run by a man named Todd Albi who created it in 2008, is a not-just-for-profit company, which combines the philanthropy of humanitarian aid with the more hard-nosed aspects of running a business.
Here’s how it works: StoveTec is owned by Aprovecho Research Center, a regular non-profit based in Cottage Grove. Aprovecho heads a research and distribution center which developed the technology used in StoveTec’s rocket stoves, designed to heat faster and stay hot longer per unit of fuel. Aprovecho also distributes rocket stoves as part of their humanitarian aid work.
Meanwhile, StoveTec, with its own warehouse, sells its stoves just like any business, but uses its profits to help fund Aprovecho’s mission. Despite that connection, though, Albi is quick to point out that the two entities are run separately–Aprovecho does their thing, and Albi does his.
So far, Albi said, it has been a winning formula–StoveTec’s business has been steadily increasing, and local sales are playing a substantial part in that.
“We’ve made our rent here every month just on walk-in traffic,” Albi said. “[At first], we weren’t sure we could accomplish that, because most of our sales are on the internet, internationally.”
The high rate of international sales is no surprise to Albi, due to the acclaim the super-efficient “rocket” stoves have received. Designed by Dr. Larry Winiarski, the stoves reduce toxic emissions, maximize heat output, and require relatively little wood to operate.
“These stoves were designed for the 50 percent of the world that cooks on open fire every night, and has to boil every sip of water they drink,” Albi said. “But they’re fun to cook with, and they’re very efficient. This is green cooking.”
Since then, Aprovecho’s stoves won the Prince Charles International Ashden Energy Award (in 2009), and the group has worked with the United Nations. A picture of Prince Charles presenting the award to Aprovecho’s Executive Director Dean Still is on display inside StoveTec, and the stove’s reputation has helped business, Albi said.
The fact that StoveTec’s products can be used for emergency situations, for instance, has boosted local sales, even in the down economy, Albi said.
“As the economy has gone down, the sales of these things have been going up,” Albi said, meaning StoveTec could play a crucial role to Aprovecho’s funding, should economic turmoil ever affect the non-profit’s other means to acquire funds.
It’s a little-known fact that non-profits are allowed to own private companies as a means of supplemental fundraising, and it may seem ironic to some. But, according to legal and economic experts, not-just-for-profit companies can often strengthen, rather than dilute, the charitable aspect of their non-profit entity’s missions.
“Charitable non-profits in general are looking for more creative ways to make revenue,” University of Oregon law professor Susan Gary, Ph.D, said.
The business involved, meanwhile, typically benefits from an improved reputation, Gary said.
“Sometimes people talk about the ‘halo’ effect of being a charitable business,” Gary said. “I think in StoveTec’s case, that’s what’s going on.”
Renee Irvin, Ph.D., a University of Oregon associate professor in the Department of Planning, Public Policy & Management, said that about 20 years ago, non-profits began forming private companies as a means of supplemental fundraising. The private companies which had a “natural tie” to their non-profit’s mission, like StoveTec, tended to flourish, while ones without such a tie-in tended to fail, Irvin said.
According to studies taken by the National Center for Charitable Statistics, non-profit business primarily acquired revenue through fees for the services they provide, and through private contributions. Those methods alone made up more than half of all non-profit revenue in 2005 and 2008.
That doesn’t mean that some have expressed concern, or even fear, over non-profits owning private companies to help fundraise. But the past 20 years have shown such concerns aren’t valid, Irvin said.
“If you look at traditional academics talk about it, a lot of them were like, ‘Oh my goodness! It’s gonna lead to mission drift, they’re going to lose their way. They’re going to turn into greedy capitalists and we’re all the worse for it,'” Irvin said. “And I’m looking at the numbers and saying, ‘…No, it hasn’t taken over.’ Non-profits haven’t changed their mission, and they aren’t turning evil.”