CASE: BAYCAT –
 a New Hybrid Nonprofit Model Driving Social
 Change

It was a video premiere like no other. The debut was shown during the first timeout of the third quarter at a packed home game of the NBA’s Golden State Warriors at Oakland’s Oracle Arena. And the video was created in part by two teenagers during their after-school hours. Produced to celebrate Black History Month, the video featured creators Angela King and Isaiah Manuel rapping, “I learned through our history the best is in us. When the odds are against us we never give up.” The teens didn’t give up, despite being raised in a poor neighborhood of San Francisco, partly because they joined 
BAYCAT 1 —a nonprofit which teaches the art and technology of digital media and video production to underserved youth.

BAYCAT empowers kids like King and Manuel by giving them a platform to voice their stories. Their Black History Month story, shown in February 2018, was appreciated not only by their client, the Warriors, and their parents, who were in the audience, but also by Bay Area rapper E- 40. The professional rapper just happened to be at the game and found the pair to first-bump his congratulations. “Imagine you just got fist-bumped by your favorite music artist for a song you created!” says 
BAYCAT founder Villy Wang.

Spotlight on a Hybrid Nonprofit 

Wang founded BAYCAT in 2004 with an ambitious mission—to end racism and social inequalities through powerful storytelling.To create a more sustainable organization, BAYCAT (Bayview-Hunters Point Center for the Arts and Technology) is run more like a business than a typical nonprofit. For example, they created the “clonor” model, where clients become donors and donors become clients. (client + donor = clonor) “It’s not just about [giving] us a dollar so we can support underserved youth, but a unique model benefitting multiple stakeholders including corporations, employers, foundations, local cities, governmental agencies, nonprofits, small businesses, schools and local communities simultaneously,” says Wang. Within BAYCAT there are two operations. BAYCAT Academy is a hands-on media school for underserved kids, ages 11 to 17, and young adults, ages 18 to 24. Graduates can be employed by BAYCAT Studio which partners with media professionals to create marketing materials for socially-minded organizations. With these two symbiotic elements, Wang developed a novel model for financial sustainability and job placement for the youth BAYCAT serves.

Many Academy alumni have been hired by clonors and employers in the tech, media, and creative industries. BAYCAT itself has hired especially talented graduates for its Studio. “When we started BAYCAT, we knew we wanted our students to be educated in media and video production, but we also wanted our students ultimately to be employed,” says Wang. “I knew that a program like this didn’t exist, because what company would employ a disadvantaged kid without much experience who isn’t already in mainstream media? You have to prove they are capable people. So, my job became figuring out how to employ these young people to produce top-tier media for paying clients.”

BAYCAT has more than 4,000 graduates, many of whom have landed internships and jobs at Netflix, Lucasfilm, Pixar, HBO, Universal Studios, CBS Interactive Inc., other production companies, and media and creative agencies.

In addition to benefiting young people, BAYCAT supports its ecosystem of stakeholders through its services. BAYCAT Studio has also told over 500 stories that benefit nonprofits and local businesses by increasing their marketing capacity, including 50 videos of 50 nonprofits in 50 weeks leading to help brand Super Bowl 50 as “the most giving Super Bowl” to date.

The Founder’s Inspiration 

Villy Wang says she was inspired to start BAYCAT because of three things—sweatshops, television, and Gandhi. 2 Her first “career” as a girl was manual labor in a sweatshop alongside her mother, who emigrated from China in the early 1960s. Wang saw firsthand the challenges immigrant families face. Growing up in the projects of New York’s Lower East Side developed Wang’s resiliency and drove her desire to help underprivileged kids like herself. Secondly, she says that growing up, “no one looked like me or my family on TV.” She lacked positive role models and stories that mirrored her life. And, last, she thought about Gandhi’s famous paraphrased words, “Be the change you wish to see in the world.” She reflected on her mother’s and her own lack of self-confidence and empowerment, wondering how to “be” the change when you can’t “see” the change.

Wang’s early career was not only impressive—it set her on the path to create BAYCAT. After earning a BA in engineering and economics at Brown University and a JD from Northwestern University School of Law, she worked as an attorney at a San Francisco law firm where she discovered the satisfaction of pro bono and nonprofit work. Next, she joined SFJAZZ where she launched the nonprofit’s first jazz education programs in the public schools. Also, she grew the small organization from a $250,000 budget into a $2.5 million-dollar nonprofit with a full team.

“Working at the San Francisco Jazz Festival taught me really quickly how you could grow the earn-side of a nonprofit in the music world. That got me thinking about how that money could support an education program. Moreover, I strongly wanted our education program to benefit underprivileged kids like I had been,” says Wang.

As the idea for BAYCAT was percolating, Wang earned a teaching credential and taught in the elementary grades of the San Francisco Unified School District with the goal of integrating arts, music, and media into the standard curriculum. That experience became a vital foundation for forming BAYCAT’s education model.

As YouTube was becoming increasingly popular, Wang knew that a business could make money by creating videos that had a positive social impact. However, she also wanted to include the component of a professional team who could mentor and train young people. Ultimately, this would become BAYCAT’s financial model. Wang’s personal connections from her earlier careers provided the connections for BAYCAT’s initial donors and clients.

Evolution of Nonprofit Models 

Nonprofit models have evolved in the United States through the centuries, and BAYCAT’s model is indicative of further change. In 1889, industrialist Andrew Carnegie published The Gospel of Wealth, 3 stating that philanthropy was the responsibility of the upper class. Carnegie wrote, “The man who dies thus rich dies disgraced.” He and other wealthy titans such as John D. Rockefeller set up some of America’s first grantmaking philanthropies. It’s no surprise that Carnegie has been called the father of modern philanthropy.

During World War II, average Americans wanted to support the troops and send supplies overseas to help civilians and refugees. This interest spurred nonprofits to collaborate for the greater good. In 1941, six agencies, including the Salvation Army and YMCA, joined to form the United Service Organizations for National Defense, later known as the USO.

Today, nonprofits have grown into a powerful force in America, both in the country’s social fabric and its economy. Nonprofits employ more than one in ten workers. 6 Only two other industries have larger workforces than nonprofits—retail trade and manufacturing. More than half of nonprofit employees work in the health field (hospitals, clinics, and home health services); the next two largest fields are education and social assistance.

Historically, there has been a moral issue with running a nonprofit like a for-profit business. A nonprofit’s goal of raising awareness and improving a social issue differs from the traditional goal of generating profits, and the two are often seen as mutually exclusive. However, nonprofits have significant economic force: in 2012, the nonprofit sector contributed over $900 billion to the US economy, 5.4% of GDP.

If nonprofits were run like for-profits and were able to raise more funding by doing so, would the greater financial strength, applied to the issues the nonprofit addresses, outweigh the moral issue? This blending of nonprofit and for-profit business models is not uncharted territory, since it has been the financial model for hospitals and universities for years. These organizations charge fees for health care services or an education, but are organized as nonprofits, with a significant portion of funding coming from philanthropic gifts.

In 2013, more than 47% of the total revenue for public charities came from fees for goods and services, driven largely by hospitals and universities. Today, Wang says social factors are influencing this blending of nonprofit and for- profit values. “Given the political environment, there’s more pressure on this generation to put our money where our values are. Businesses in the for-profit world are paying attention to that more than ever, which is a good trend. We need to do that to truly make the world a better place,” says Wang.

Social awareness and activism are not the values of nonprofits alone. Wang has noticed more for-profit companies stating missions that aren’t entirely about the bottom line. “Look at what’s happening with Facebook—Mark Zuckerberg claimed to the US Senate that Facebook’s mission is to bring the world together. Doesn’t that sound like a nonprofit mission? Well, they’re for-profit. So, I think over the years, there’s been a real blending of for-profit and nonprofit businesses saying, ‘We’re here for the good of the planet, we’re not just trying to sell a widget.’” says Wang.

With nonprofits and for-profits merging from both sides, businesses have found it increasingly important to promote a socially aware brand. This is apparent not only in their mission and where they donate money, but also in who they employ. “Companies are looking for talent and people who bring diversity to the employer. BAYCAT happens to deliver that, we are designed to deliver that. So in the future, I see that we could extend our business model further: is there a way to monetize this amazing service of placing young, diverse talent into big companies?” says Wang.

The future includes other models too. An article in Nonprofit Quarterly, Nonprofits as Engines of a More Equitable Economy, discusses emergent forms of economic organization including the potential of hybrid nonprofit models.

Newer models range from “nonprofit-owned social enterprise to community development finance to hybrid enterprises—such as benefit corporations and low-profit limited liability companies (L3Cs)—to new forms of crowdfunding to innovative uses of common resources for common benefit.” In addition, “Platform cooperatives—that is, common platform ownership by workers and/or community members—also show promise. While in their infancy, such instruments could assure that the profits of companies structured like Uber are broadly shared in the field by the providers of those services instead of going to outside investors.”

Considerations for Hybrid Models 

While BAYCAT is clear on its goal to help end racism by reducing the digital divide, its hybrid model ( Exhibit 1 ) has posed unique questions. For example, what is the right balance between its philanthropic work and its business side?

Companies looking to BAYCAT more for its mission would be inspired by youth development, media arts education, and workforce training, which could increase partnerships with companies interested in making charitable connections. However, greater focus on the business side of BAYCAT could bring more clonors interested in high-quality videos, leading to greater profits and the ability to reach more students. Other hybrids also need to consider issues caused by a blending of models.

Branding & Marketing: Hybrids should strategize how to communicate their blend of social activism and income-generating activities by thinking through the impact of messaging options on all stakeholders.

Government Definitions: A blended organization may not clearly fall within the government’s rules for nonprofits. For example, the U.S. Internal Revenue Service provides tax exempt status to 501(c)(3) organizations who exist for these purposes: “charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.”

Structure: The IRS usually requires a true nonprofit to have at least three board members. Nonprofits are required to submit information, including salaries and financial statements, to both the IRS and the public.

BAYCAT’s Future

In 2019, BAYCAT celebrates its 15th anniversary. Reflecting on this milestone, Wang is optimistic about BAYCAT’s growth and the ability for other nonprofits to replicate the model because companies are increasingly paying attention to diversity and inclusion. She says her organization has been sustained by a “whole village of people” who embody both nonprofit and for-profit values. “Each one of these giant corporations that we get to work with—we know they have a heart in addition to being business people,” says Wang. In her 2016 TED Talk titled A Business Against Racism, Wang closed by saying, “I am a storyteller… let’s keep changing the storytellers. I want racism to end. Let’s make it a business, one story at a time.”

QUESTION(S)

1. How can other hybrid nonprofits communicate how they are positively impacting social change through their work?

2. How should a hybrid nonprofit measure its success? Through its profits, growth, impact on the population it serves, amount of contributions, or a combination of these?

3. If BAYCAT can exist both as a non-profit and a business, are other organizations capable of replicating this balance? Is this model the future of non-profits?