Cashflow, clarity cited as key challenges for hybrid business

The greatest challenge of combining non-profit and for-profit aspects into your business is cashflow management, says the co-founder of Victorian “hybrid” business Living Fundraisers.

Living Fundraisers, founded by Rachel Taylor and Rebeka Jageurs, was born out of concern about the prevalence of unhealthy foods in school fundraisers.

The founders came up with the concept of kits for growing herbs and vegetables, offering schools and other fundraising groups a healthier alternative to sugar-packed products.

The business was launched in 2009 and has grown to six product lines, helping more than 700 schools and organisations across Australia raise almost $1 million to support their communities.

In the 2010-11 financial year, Living Fundraisers turned over more than $400,000. In the 2011-12 financial year, revenue could be in excess of $500,000, according to Taylor.

However, the business has maintained a non-profit aspect.

“We designed the business to maximise its social impact through everything we do,” Taylor says.

“Our manufacturing and warehousing is done in partnership with Paramount Workforce, a community organisation that supports people with disabilities.”

“We also… provide a percentage of revenue to support the work of the Stephanie Alexander Kitchen Garden Foundation, the Happy School in Cambodia and Greening Australia.”

According to Taylor, the most challenging aspect of combining non-profit and for-profit aspects is managing cashflow.

“The business is about helping schools to fundraise, which means we always have negative payment terms,” she says.

“The schools get the product, sell the product and then we get the invoice. They need the product in order to pay us.”

Taylor’s comments come on the back of new research from Harvard Business School and Echoing Green, a non-profit that aims to support early stage social entrepreneurs.

A research team reviewed more than 3,500 recent Echoing Green Fellowship applications to better understand hybrid business models, which combine non-profit and for-profit aspects.