Furniture Bank Increases Self-Sufficiency Through Social Enterprise Thrift Store

By
Sara Parker
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Two years ago, the Furniture Bank of Central Ohio faced a reduction in half of its revenue. Due to a change in a long-time sponsor’s giving structure, the Furniture Bank had three years to identify how to replace $1 million in lost revenue.

“To ensure a smooth transition, the Furniture Bank board created a Strategic Initiatives Committee,” said Furniture Bank President Steve Votaw. “With a gift from the sponsor spread out over the next three years, the Furniture Bank set out to incrementally build one – or more – social enterprises to generate the funds needed to balance the budget.”

The Furniture Bank serves 4,000 families including 7,000 children a year. The organization works with over 70 nonprofits, churches and social service agencies to distribute furniture and household items to families in need—85 percent of which make less than $18,000 a year. The Furniture Bank serves individuals and families who have been homeless, victims of domestic violence, have had their belongings destroyed by fire, or who have lost everything to bed bug infestation.Furniture Bank Logo

“Poverty puts so many stressors on lives, and no one organization can remove all of those stressors,” Votaw said. “We are one organization and we can remove one stressor to ensure these families have a table for kids to do homework on and eat meals, a bed to sleep in, and chairs to sit on.”

The Furniture Bank’s Strategic Initiatives Committee researched thrift stores and used furniture stores and found that Cleveland’s Furniture Bank thrift store generated $1 million in gross revenue, and $400,000 in net sales annually.

“For the Cleveland Furniture Bank, their thrift store provides nearly half of their funding,” said John Vidosh, director of operations at the Furniture Bank of Central Ohio. “With limited grants and fundraising efforts, their social enterprise and earned income allowed them to be 100 percent self-sufficient.”

When looking at the Columbus market, the Furniture Bank found there were many thrift stores, but none primarily focused on furniture.

“We estimated what it would take to run a store, visited a dozen locations and selected what has since become our Furniture With a Heart location at 2165 Morse Rd., which opened on April 15, 2016,” Votaw said.

Over the course of their opening weekend, sales exceeded $50,000, and have continued to hold at over $17,000 per week over the first several months. To maintain inventory, the Furniture Bank receives donated items from a variety of sources—from individuals to corporate community partners, such as retail furniture stores and hotels.

As they started exploring the social enterprise, the Furniture Bank realized they would need some support.

“Retail had not traditionally been one of our core competencies,” Votaw said. “It just isn’t second nature to move into a business mindset.”

That’s when the Furniture Bank reached out to the Center for Social Enterprise Development (CSED).

“CSED was instrumental in helping us identify the right people we needed to talk to, and evaluate options related to loans and funding,” Votaw said. “CSED also connected us with a consultant who has helped us since summer 2015. This consultant was critical because he helped us realize how much we didn’t know about retail.”

He also credits the board, staff, volunteers and industry experts for getting the Furniture Bank to this point.

“It was a total team effort,” Votaw said. “Our Board was instrumental in helping us build and implement the business plan. Thanks to our staff and the help of our tireless volunteers, we saved more than $60,000 in renovation costs to get our retail location ready for opening day.”

Volunteers have been and continue to be critical to the Furniture Bank’s success. In 2015, the nonprofit received furniture donations from more than 7,000 individuals. And more than 1,800 volunteers helped build and refurbish furniture—providing over 20,000 hours of service to the organization.

“Taking a broad view in terms of human resources is important for nonprofits starting a social enterprise—it’s not all paid staff that made all of this possible,” said Votaw.

The Furniture Bank knew it had just three years to make up half the organization’s revenue. Other organizations typically don’t have that kind of forewarning. In the nonprofit world, funding often vanishes with little advanced notice as donors’ priorities change. But in just over a year from finding out about the change, the Furniture Bank was able to put a plan in place and open their retail location.

“As nonprofits, we have an obligation to help as many families as we can who need our services,” said Votaw. “In today’s economic climate, there is no ‘new’ money out there. From government sources to philanthropic dollars, those sources have been very flat. We need to become more self-sufficient so that we can meet a growing need and make a difference in the community.”

Corporate foundations are exploring ways to support nonprofits that make them less dependent on their funding.

“When we met with one corporate partner to talk about the potential for funding, we learned that we were the first to ask for and receive funding specifically to start a social enterprise,” Votaw said.

Asking for startup funding required a different kind of approach, but the Furniture Bank found the corporate community welcomed the idea and opportunity to help them become more self-sufficient and thereby able to impact more lives.

“Thanks to the local community, we are beginning to make up the lost revenue,” Votaw said. “And the major sponsor is still a big partner—now just at a sustainable level. We aren’t out of the woods just yet—but well on our way making the Furniture Bank a more self-sufficient organization.”

Central Ohio’s nonprofits using social enterprise as a means to further their mission

CSED maintains a directory of social enterprises throughout Central Ohio. We are in the process of developing at-a-glance profiles for each social enterprise, intended to inform consumers, funders, impact investors and individual donors of investment-worthy causes.

Here are the social enterprises we’ve identified to date that are housed as part of nonprofit organizations. We encourage you to learn more, consider supporting these organizations, or inform us of additional social enterprises that share this focus. Connect with the Center for Social Enterprise Development on Facebook and Twitter to follow all the latest updates on more than 85 local social enterprises throughout Central Ohio.

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