May 27, 2020; Boston Business Journal
A 15-year-old nonprofit with a noble mission had, until COVID-19 entered the scene, been happily humming along. It was successfully mixing a traditional fundraising program with a profitable used-book business to support its youth services program. Suddenly, like most non-essential small businesses, it had to shut down. Boston’s More Than Words was left with almost half of its budget unfunded while the need for its work grew more intense, in that it had to adapt. Reconfiguring its service system was the more immediate challenge; deciding on a model with a good chance of being viable and robust in a still unfolding post-pandemic environment is one that looms larger, and one upon which the organization’s long-term survival depends.
Founded in 2004, More Than Words set out to make life better for at-risk youth, those who are caught up in “the foster care system, court-involved, homeless, or out of school.” To break a vicious systemic cycle that traps young people in poverty and the penal system, MTW developed a service model and embedded it in the operation of an ongoing, revenue-producing business that’s is run by the youth it serves. MTW’s bookstores provide real world opportunities to acquire the job and personal skills needed to succeed in the larger job market while getting the support needed to navigate a way through the legal and youth services bureaucracies.
And the business really can support the organization. By the end of its last fiscal year, MTW has grown to serve more than 300 youth through an enterprise that sold more than $3 million worth of used books. These revenues, which comprised 47 percent of the organization’s annual budget, had been growing year by year until COVID-19 forced them to close. Their revenue stream was broken, but the need for their services was not.
Like many similar nonprofits, the leadership of MTW quickly reconfigured their services to meet the immediate impact of Massachusetts’s stay-at-home orders. According to a recent profile in the Boston Business Journal:
When the pandemic slammed into Massachusetts in March…staff quickly drew up lists of young people, noting who had housing issues, who needed computer access, and who needed food. Staff bought food from Costco, dropped off “care kits” and provided laptops…they turned to working remotely.
Workshops continue, with some classes on cooking, nutrition and studying for a driver’s permit. The nonprofit, which has approximately 100 youth on the payroll, is still providing $100,000 a month in youth stipends, tied to meeting and workshop engagement.
As hard as that pivot may have been, a much harder challenge awaits MTW and every other nonprofit that depends on a similar hybrid business model. Will that model be viable in the uncertain future that will emerge after the weeks of crisis pass? What modifications or bridge funding will be needed to keep it viable, or even make it soar?
For organizations like MTW, these are difficult questions to answer. MTW CEO Jodi Rosenbaum, who founded the organization in 2004, believes that the mixed-revenue model gives them a leg up in these uncertain times: “I’d like to believe long haul, big picture, our hybrid model is going to be what makes us thrive and weather through this, and stand up strong, but there’s a lot of really small nonprofits that don’t have runway in the bank, and literally had immediate decisions to make about their solvency and whether they could keep their doors open.”
Despite the lack of a good road map, organizations can’t wait for the smoke to clear to begin deciding how they’ll emerge. Rosenbaum says her organization is deep into that effort. “We’re already thinking about scenarios, about a smaller storefront where people could come in, and really repurpose our storefront space for more online retail. Everything in the Boston store is right now listed online. Until we are sure we can drive the revenue in that store in retail sales, it behooves us to keep it online.”
MTW’s current business model doesn’t just depend on financial donors. They also need a continuous stream of donated books to provide inventory. Rosenbaum feels that uncertainty, too. “A lot of people’s personal wealth has been affected. A lot of corporations have been hit hard, so we just don’t know if we can drive that. So we, like other nonprofits, are reducing what we believe is potential for next year, to be conservative.”
Even as the current service system is shored up by reducing costs and keeping budgets balanced, it becomes essential to start building the future from the bottom up. More Than Words will need to be as creative and innovative today as they were when they began in 2004. Converting to more of an online operation isn’t just a matter of a new means to bring sales and revenue; MTW will need to be ensure the new business model gives the youth it serves opportunities to grow and learn.
The strength of a hybrid like MTW is in their merger of revenue and service models. It has allowed them to serve and earn with a single effort. To survive, they’ll keep that duality as a key element. We look forward to learning with them over the coming months.—Martin Levine