The Perkins School for the Blind is set to disclose today that it is acquiring a business that sells equipment for the visually impaired, a stake in the for-profit world the Watertown school hopes will both enhance its charitable efforts and help balance its books.
The move makes Perkins the latest local nonprofit to launch money-making activities that not only advance their missions but also bolster revenues without relying as heavily on donations and shrinking government funding. From a Chelsea job-training program that has a catering firm on the side, to a Waltham youth empowerment group that runs a bookstore staffed by at-risk teens, to the Visiting Nurse Association of Boston, which operates a for-profit private-pay service, the movement is spreading.
"The primary purpose of this is to help people who are blind or deaf-blind be more independent, but our hope is that it will also more than cover its costs," said Perkins president Steven M. Rothstein. "And the net impact of that is it's one less dollar we have to raise."
Some charitable organizations have long depended on commercial activities for revenue, including schools and colleges that charge tuition and hospitals that collect fees for medical care. Others operate side businesses to increase their income, such as university presses and church-run child care.
But as the number of nonprofits nationwide grows dramatically, and as fund-raising becomes increasingly fierce, more of them are turning to a corporate model of growth: selling goods and services. This often enables nonprofits to generate more revenue than they can raise from membership fees, grants, bequests, and donations alone. And as long as the money raised is related to their charitable missions, it remains tax exempt.
"It's just a basic survival technique," said Peter Dobkin Hall, who lectures at Harvard University's Hauser Center for Nonprofit Organizations. "If you want to survive as an organization, you can't have all your eggs in one basket. So virtually all smart nonprofit managers in all industries have moved into developing a mixed-revenue base."
Some nonprofit commercial enterprises, especially museum gift shops, have developed reputations as cash cows. But as nonprofits dip their toes into revenue-generating ventures, they are basically creating start-up businesses, which are not without risks; about half of all new businesses ultimately fail, according to the US Small Business Administration.
"People look at this as the Holy Grail, but they have to be careful because the downsides are really big," said Andrew Wolk, founder and chief executive of Root Cause, a nonprofit Cambridge consulting firm and think tank. "The odds are significantly against the start-up business . . . and it needs to be run with the same business rigor, market analysis, and entrepreneurial ability" as would a for-profit business, particularly since nonprofits have different missions than profit-making ventures.
At many nonprofits, the shift toward a more entrepreneurial model is also being driven by growing ranks of nonprofit executives with corporate backgrounds. Often, their numbers-driven, data-oriented management style involves pushing the nonprofit sector to consider alternative revenue streams.
The expansion of the nonprofit sector has been fueled in part by privatization, which has left nonprofits responsible for providing many of the social services that city, state, and federal government programs once did. Many of these newcomers are now competing for the same pool of funds.
One local nonprofit that runs a money-making operation is Waltham's Teen Leep, which provides youth leadership and job training and operates a youth-run bookstore called More Than Words, located on Moody Street in downtown Waltham. The store's primary purpose is to be an incubator for youth entrepreneurship.
But in its first two years, its revenue covered 50 percent of Teen Leep's costs, according to founder and director Jodi Rosenbaum. As the organization's budget increases, the percentage of bookstore income that can cover Teen Leep's costs has gone down, even though store revenue has gone up; this fiscal year, for example, Teen Leep hopes to cover 35 percent of the organization's $600,000 budget with store revenue.
Still, Teen Leep did not create a bookstore "simply to earn money for our organization," Rosenbaum said. "We do this because it's the best, most hands-on, real-world way to give young people the skills they need to equip themselves for the future."
In Watertown, Perkins School for the Blind plans to acquire the assets of Adaptive Technology Consulting Inc., a private Salisbury company that last year generated $2 million in revenue by offering technology training services and selling assistive devices for the visually impaired and learning disabled, such as magnifiers and portable computers. The company, whose nine employees will keep their jobs, will become part of Perkins Products, a division of the school that manufactures a Braille writing machine and other products.
Perkins did not disclose cost of the acquisition, which it hopes will allow the school to grow more quickly, expand its services, and increase teaching salaries. Despite robust fund-raising, Perkins must dip into endowment earnings each year to balance its $57 million budget - in part because government tuition reimbursement has declined from about 90 cents of every dollar a decade ago to about 80 cents now, according to Rothstein, the school's president.
"One of the exciting things about this acquisition is that we can increase our services without having to raise additional funds for this," he added, "and the generosity of individuals can be used for other initiatives."
Sacha Pfeiffer can be reached at pfeiffer@globe.com.
