In Chicago, literacy rates are pretty grim. More than one in three adults cannot read well enough to fill out a job application. Many are working toward improving literacy rates in Chicago, among them, the nonprofit Open Books. In the second story in our series on nonprofits, I took at look at Open Books, mostly because of the organization’s funding structure.
At Chicago International Charter School’s Bucktown campus, second grader Jayla Mercado is reading a book about dinosaurs. They’re her favorite topic, but she’s having a hard time sounding out some of the bigger words.
Before I can step in, she’s got another reader to help her: Open Books program director Anna Piepmeyer.
Usually, the second grader has another reading buddy who visits each week, simply to read with her. The buddies are part of a program the nonprofit has this year with 11 Chicago public schools.
“We want to develop reading as a habit,” Piepmeyer said. “We want to show students that it’s something fun that they can do, something that will add meaning to their life and something they should pursue on their own.”
Open Books has three other programs besides the buddies. It runs creative-writing workshops for other elementary school kids, does mentoring and is starting a new program working with teens behind on their reading skills.
In all, the organization works with about 3,000 students a year on an annual budget of $1 million.
Open Book’s funding comes mostly from selling books, which generates half the organization’s revenue. The goal is to eventually have 90 percent of its budget funded from book sales.
“I’m a serial entrepreneur,” said Ratner, who also has Kool-Aid blue dyed bangs (that’s how she told me I wouldn’t miss her at the Fair – ‘I’m the one with the blue hair!’ she said over the phone, before we met).
Ratner started Open Books in 2006 from her basement, nothing unusual for a former dot.com professional who had started five companies before she turned her energies to the nonprofit world.
When she thought about how to fund this nonprofit start-up, she wanted it to be self-sustaining.
“The first thought was, how can we be financially independent and not go the traditional route of getting funding from the state, or applying for grants, or the kind of things that nonprofits normally relied on,” Ratner said.
That kind of funding has become more tenuous.
Government funding supplies about a third of a typical nonprofit’s budget. But with local, state and federal budget shortfalls, that money is coming late or in some cases, not at all. And in 2009, individual giving to nonprofits declined for the first time in fifty years.
That’s why the issue of sustainability is going to become “the driving force” in the nonprofit sector in the next few years, according to Bob Ottenhoff, the CEO of Guidestar, an information source of financial data about nonprofits across the U.S.
There’s a buzzword in the nonprofit world these days called “social enterprise.” Ottenhoff said Open Books follows the social enterprise ethos, in that it’s a group that meshes for-profit business principles with a nonprofit world.
“It’s one of those trends that we’re beginning to see more of – this double-bottom line where people want to do some social good, but they think they can also raise revenue at the same time,” he said.
Ottenhoff said the biggest problem nonprofits run into with this approach is that they lack the business skills or business plan to get it done. Gaining that savvy will be crucial for nonprofits in the future. Especially those who want to operate in the Midwest, where government funding won’t be growing.
Are you in the nonprofit sector? How are you looking at funding these days?