By Christian Brislin
Challenge Enterprises operates 11 business units with almost 300 employs, most of whom the nonprofit also serves.
The business model for Challenge Enterprises of North Florida Inc. is branded into its corporate culture – to turn challenges into business enterprises that support the community.
Challenge Enterprises operates much like a for-profit company. It faces challenges like the ebb and flow of revenue streams and keeping up with ever changing regulations. But, unlike a for-profit company, instead of the profits going back to its shareholders, the proceeds from the nonprofit Challenge Enterprises go back to those it serves.
Challenge Enterprises enriches the lives of hundreds of Northeast Florida residents with disabilities through lifelong services that include education, housing, job opportunities and a host of support services. One of the company’s goals is to help those it serves become more independent.
To pay for all of its services, the Green Cove Springs-based company started developing a self-funding method to generate revenue from its earliest beginnings in 1972.
“There’s not enough funding out there,” Enterprises CEO Nancy Keating said of the company’s decision to operate more like a traditional for-profit business. “There are people on waiting lists waiting for the types of services we provide.”
Today Green Cove Springs-based Challenge Enterprises operates 11 business units with nearly 300 employees. About 66 percent of the company’s workforce is comprised of individuals with disabilities, many of whom also benefit from some of the company’s other services. Those employees take great pride in their work and their place within their community, Keating said.
“Our folks have great value,” Keating said. “This is what our nonprofit community is trying to show the world.”
Self-funding through its business units is not only a practical solution to raise funds, Keating said, but also serves as a learning mechanism for those it serves.
“We need to be as self-sufficient as we possibly can because that’s what we try to teach the individuals we serve,” said Keating, who has worked for the company for 43 of its 44 years. “It’s just like any other business, you have to have an income.”
Just as there is a wide variety of organizations that make up the nonprofit sector, there is a wide variety of business models within the sector, said Rick Cohen, director of communications at the National Council of Nonprofits. Many nonprofits, he said, do not depend on donations entirely, or even for a significant portion of their revenue.
“That’s kind of a myth about the nonprofit sector,” Cohen said, adding that a nonprofit’s business model is often dependent on the type of services and support it provides.
“Every organization is different,” Cohen said.
Sector-wide for nonprofits, 47.5 percent of annual revenue is generated from fees for service, while 10.3 percent is generated from private and corporate donations, according to the Washington D.C.-based nonprofits advocacy group. The balance of the sector’s annual revenue stream is generated from investments, foundations, bequests and other sources.
Challenge Enterprises’ first business venture in the 1970s was delivering JC Penney catalogs door-to-door. From there it expanded into cutting grass and raking leaves. In the 1980s, the company was asked to do janitorial services for what is today the Fleet Readiness Center at Naval Air Station Jacksonville. That opportunity opened many doors, Keating said, and with the help of the nonprofit agency SourceAmerica, led the company to become a producing agency under the AbilityOne Program of the federal government.
Challenge Enterprises has won contracts with a host of government agencies, such as the Department of Defense, the Department of Labor, the US Marine Corps and the Defense Commissary Agency. Those contracts have allowed the company to partner with other local nonprofits to provide jobs to even more people with disabilities.
Partnerships, Keating said, are essential to Challenge Enterprises’ success.
“It’s an extension of our entire community,” Keating said of the relationships the organization has forged. “Every business needs a partner.”
Challenge Enterprises provides services to nearly 200 different companies and agencies, with about 90 percent of those customers being local.
The company’s units include: packaging and assembly services; industrial sewing; contract closeouts; mailroom services; shipboard logistic services and the largest business unit, janitorial services, which accounts for about 74 percent of all the company’s total business.
From its 16,000-square-foot warehouse in Green Cove Springs, Challenge Enterprises operates as a fulfillment center for commercial packaging and assembly projects for customers like Michael’s and Bandzorb.
Through its Shred for Good business, Challenge Enterprises provides sensitive document destruction for companies and the government.
Overall, the company generated $8 million in revenue in 2015, according to the nonprofit resource provider GuideStar. That was up from $7.6 million in 2014. Keating estimated that 81 percent of the company’s total revenue last year was self-generated from its business units.
Penney Retirement Community Inc., a nonprofit retirement community based in Penney Farms, has used Challenge Enterprises’ Lawnability business unit for its landscaping and lawn services for about three years. Teresa Scott, president and CEO of Penney Retirement Community, said she chose Lawnability because as a practice she tries to support other local businesses and nonprofits. She’s always been impressed, she said, with Lawwnability’s ability to meet and exceed expectations, as well as the team’s respect for the residents at Penney Retirement Community.
“The relationship is very much valued,” Scott said, “and not just as a business.”