Hospitals have long operated cafeterias, not just for convenience but for extra income. And museums long have supplemented admissions receipts with gift shop sales of everything from postcards to art reproductions. Now, nonprofits of all kinds -- from food banks to organizations that provide job training to the disabled -- are being encouraged to look for opportunities to become more self-sustaining.

	Ted Crow/Post-Gazette

Soon, Life's Work, the region's largest vocational rehabilitation program, will be the owner and operator of a Ben & Jerry's franchise in Oakland or Squirrel Hill. The Boys and Girls Clubs of Western Pennsylvania, which already operates a variety store in Lawrenceville, is planning a catalog retail venture. And a network of health-care "safety-net" organizations are providing pharmaceuticals warehousing and mail-order prescription services for community medical clinics.

The new enterprises all are part of a national trend toward so-called "social entrepreneurship" that has gained much of its local impetus from private foundations, whose philanthropy is crucial to nonprofits. But a tattered stock market and a tight economy have cut into foundation support -- and corporate backing, too.

Conservative political ideologies, as much as budget deficits, also mean most nonprofits can expect further curbs on their other main source of funds, the government. Moreover, there's a growing feeling among foundations and corporations that nonprofits might be invigorated if they viewed themselves less as dependents and more like businesses with something valuable to sell. It helps, proponents add, that social entrepreneurship can provide a more stable source of revenue.

The inspiration for this shift comes, in part, from former Pittsburgher Bill Shore, whose nonprofit, Share Our Strength, was built on the premise that it could create, rather than merely redistribute, wealth. Shore, who served as political director for Democratic Sen. Gary Hart's ill-fated presidential campaign, was brought up on liberal Democratic politics at the side of his father, who ran the late U.S. Rep. William Moor-head's Pittsburgh office.

Convinced that government alone couldn't solve social problems, he started his nationally renowned anti-hunger organization in 1984 in the basement of a Capitol Hill row house. When traditional pitches to raise cash donations from food-related businesses fell short of expectations, Shore sought contributions of talent. Chefs, vintners and others rallied around a series of food- and wine-tasting events, offering up their marquee dishes and bottles. The grass-roots events grew into a nationwide campaign known as "Taste of the Nation."

As time went on, Shore expanded his nonprofit's reach through a range of ventures that enlisted everyone from artists to accountants to invest nearly $70 million in fighting poverty and hunger through more than 1,000 social service organizations. In a book about the effort, "Revolution of the Heart," Shore describes social entrepreneurism -- which takes forms ranging from affinity marketing relationships between nonprofits and for-profit corporations to business ventures run by nonprofits -- as both a natural response to government funding cutbacks and a potential remedy for problems the government has struggled to solve.

In Pittsburgh, the McCune Foundation, and nationally, the Alcoa Foundation, are considered spearheads in the movement to help nonprofits reinvent themselves as social entrepreneurs.

Martha Perry, associate executive director of the McCune Foundation, likened the thrust to federal reforms designed to move individuals from welfare rolls to workplaces. "Just as in 'welfare-to-work,' we want [nonprofits] to earn as much as they can," she said. Some nonprofits, such as Goodwill Industries, whose thrift shops help generate revenue and provide job training, have been doing it for some time, Perry said.

But, she said, far more of them need to adopt a similar approach. Even if the stock market's collapse hadn't made foundations less flush, government at all levels is cutting back and the appetite for traditional corporate-sponsored fund-raisers, from black tie dinners to golf tournaments, "is maxing out," she said. "What we're trying to do is find a different kind of relationship between nonprofits and the business community."

The Alcoa Foundation, which later this week will feature Shore and other experts at a global conference near Milwaukee called the "Alcoa International Social Enterprise Venture Initiative," is promoting the change too. The conference is "an extension of a philosophy that it's more than just money" that corporate foundations can bring to nonprofits, said spokesman Kevin Lowery. Alcoa, among other things, is interested in helping nonprofits learn business disciplines ranging from marketing to performance measurement.

Life's ventures

Some nonprofits have quickly embraced the change. Inspired by Shore's seminar here two years ago and backed in part by McCune, Life's Work, formerly known as the Vocational Rehabilitation Center, has mapped plans for a number of income-producing ventures.

Among them, it opened a for-profit print shop with Panther Press, where its clients help handle mailings for customers. In addition, it has formed partnerships -- one with Ben & Jerry's, which waives its usual $30,000 franchise fee for compatible nonprofits -- to open an outlet in Oakland or Squirrel Hill, and another with Jurassic Dog Products, a local maker of dog treats that has national aspirations.

Life's Work also plans to start an "upscale thrift shop," which will sell a combination of donated and purchased merchandise, perhaps including the kinds of close-out items sold at places such as T.J. Maxx.

"The foundations all like the idea that we're trying to support ourselves rather than just rely on them," said Life's Work executive director, Bob Mather. "They don't want you to get to depend on them. It's the same as if you're on welfare."

Life's Work long has had contracts with industry and government. Through its programs, people with disabilities or other employment barriers find opportunities to work. The contracts, in turn, provide Life's Work with revenue to run its programs.

But those contracts alone don't cover all expenses, particularly some $450,000 in annual depreciation costs for plant and equipment, Mather said.

Capital costs, in the past, have usually been funded with grants, but prospects for getting them are "getting real tight,'' Mather said. "Some of the grants are going to run out. President Bush doesn't want to renew them." In addition, "The foundations are saying they can't give at the same level [as in the past] and they can't give as often."

Some in Congress would dispute that. Outraged over compensation packages for some foundation officials and other foundation overhead costs, two Republican legislators have co-sponsored a House bill that would require foundations to earmark a full 5 percent of their endowments for philanthropy and pay overhead costs with other funds. While obliged to give 5 percent now, foundations are permitted to include overhead expenses in the calculation.

Some misgivings

The disagreements notwithstanding, the move toward social entrepreneurship also elicits some misgivings.

"Of course we need to be less reliant on philanthropy. That's a given," said Myrna Zelenitz, executive director of the East End Cooperative Ministry in East Liberty, whose projects run a gamut of social services, from homeless shelters and meals-on-wheels to after-school tutoring.

And although her organization is considering some revenue-generating opportunities, Zelenitz said, "I think the problem is larger than just, 'The money is down and you need to be self reliant.' We as nonprofits and the funders need to come together and say, 'How do we effectively address the problems in this area?,' not for every nonprofit to go out and start a business."

While there are no reliable statistics on how many nonprofits there are in the region, foundation officials and nonprofits themselves estimate there are several thousand, many with the same or overlapping missions.

One way East End Cooperative Ministry has tried to promote efficiency was by absorbing two that performed similar functions, Zelenitz said.

Zelenitz said part of her hesitancy to launch an entrepreneurial venture has been that she tends to be risk averse, is not schooled in business and is well aware that many start-ups fail. But those aren't the only qualms about the concept of social entrepreneurship.

Joyce Rothermel, executive director for the Greater Pittsburgh Community Food Bank, said such ventures might raise the hackles of for-profit companies that have to compete without the same tax breaks, thereby threatening a nonprofit's tax-exempt status.

Moreover, as much as she admires Shore and Share Our Strength, Rothermel, a former nun who doesn't believe the private sector can provide social justice, worries that social entrepreneurship could become a political rallying cry for yet more self-sufficiency and further government cutbacks.

"The history of the food bank paralleled the dumping of responsibility for the common good onto the private sector," she said.

Shore, in an interview, said he's heard the concern expressed elsewhere, but "I actually think just the opposite."

In his view, grass-roots organizations can identify community needs and take risks that government is unable to, while government is able to enlarge upon successful ideas in a way that grass-roots organizations can't.

"I think the result is [that a successful social venture] creates almost more of a moral obligation, not less, for government to go in and say, 'The private sector has invested the risky capital to create and prove this model. Now we have to come in and bring it to scale'."