January 9, 2019; WJRT (Flint, Michigan)
Recently, NPQ covered the topic of membership and associations in its business model webinar series. One such membership-based organization is Good360, which Forbes indicates is the 39rd-largest nonprofit in the United States in 2018. Good360 works with companies to reduce their waste by procuring and donating surplus products to nonprofit organizations—the “360” concept, of course speaking to the group’s vision of building a circular economy by reusing products.
Recently, Good360 reached out and partnered with a nonprofit based in Flint, Michigan to distribute surplus products to regional nonprofits. The concept is a membership-based warehouse similar to stores like Costco and Sam’s Club, yet is oriented to nonprofit organizations, who can access deeply discounted items as members. Good360 is partnering with Catholic Charities of Shiawassee and Genesee Counties on this project, which will be one of 30 Good360 warehouses across the country. Exploring the warehouse strategy is a way to understand how the membership business models work, and how member benefits drive the model itself.
Many nonprofit organizations seek in-kind donations to help with a variety of needs, whether it be office supplies, equipment, and other essential goods needed to deliver effective programs and services. Often, securing these donations takes time and resources, and, depending on the strategy, produces varying results. The unique thing about Good 360s model is that they act as an intermediary for surplus items, by partnering with major companies throughout the world. After procuring donations, the organization works with over 60,000 nonprofits on multiple continents to deliver donated products, increasing their capacity and saving them money. At the heart of their approach is partnering with businesses that would otherwise incur storage costs, sell the items at a loss through liquidation, or simply throw surplus items away. Given that many companies are looking to reduce or eliminate waste, taking advantage of tax deductions and limiting waste is a sound strategy, and is one that Good360 as a nonprofit organization can facilitate.
Of the 30 warehouse distribution centers for nonprofits throughout the United States, the Mid-Michigan ReSource Warehouse in Flint, hosted by Catholic Charities, is the first of its kind in the state of Michigan. This week the warehouse opened for business to nonprofits within 100 miles of Genesee County. Considering that there are over 2,700 nonprofit entities in Genesee County alone, the warehouse appears to be well located.
As other NPQ articles have noted, Flint has experienced a dramatic disinvestment over the course of the last 30 years. In 1980, Flint’s median income was higher than San Francisco’s, and Flint had the nation’s highest median wage for people under 35. The transition to a different reality today is dramatic: A report by the US Census named Flint as the nation’s poorest city. While it is outside the scope of this article to discuss the decline of Michigan’s auto industry and related causes of this shift, it is important to note that nonprofits in Flint today do play a critical role in alleviating the pressures caused by this historic economic disinvestment. A membership-based discount warehouse in the community can help increase nonprofit effectiveness, by enabling them to access discounted equipment and supplies.
While it is important to note the benefits to nonprofits, it is equally as important to call out why this model and strategy is important. As NPQ has discussed before, it is important for nonprofits to define and understand their value proposition. Through the warehouse membership model that Catholic Charities and Good360 utilize, purchasing power is the most obvious benefit for members, who pay an annual fee of $100 for their membership. In return for their membership fee, nonprofits have access to products and services at a premium rate, with most items being discounted up 80 percent, as Elisse Ramey observes in her coverage.
While purchasing power is by far the largest part of the value proposition for this membership organization, another not so obvious benefit and value proposition is the ability for this warehouse to serve as a platform for innovation and collaboration. Namely, by having access to products and supplies that nonprofits may otherwise not be able to afford, nonprofits may be able to offer improved efficiencies, new services, or expand services. Additionally, as a place for nonprofit employees to convene, the warehouse acts as a “bumping space” for conversations to occur that could lead to collaborations. In these ways, the Mid-Michigan ReSource Warehouse could even become a catalyst for innovation.
Good360 is not alone in adopting this approach. That’s also the philosophy of another membership-based warehouse for nonprofits, WIN Warehouse, based in St. Louis, MO, which similarly offers discontinued, returned, and surplus donated items to nonprofits throughout the country. As of its last filing, WIN Warehouse has assets of over $140 million. Good360, by comparison, procures and donates over $300 million of products annually to nonprofits throughout the world.
NPQ has written about the membership-based model before. Last year, NPQ explored the topic of what does it mean to transition a nonprofit to a membership model. NPQ has also looked at experiments in journalism, specifically if a successful membership model from the Netherlands can be replicated in the United States, and how it can be a driver to achieve a nonprofit’s mission.
The discount warehouse membership model serves multiple roles for nonprofits. Inherent in the model is its valuable role in building the capacity of nonprofit organizations, and offsetting costs to allow for more effective and expanded services. The Mid-Michigan ReSource Warehouse, we hope, will become a space for nonprofit organizations to mingle, obtain cost savings, and experience firsthand the benefits of common ownership.—Derrick Rhayn