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Center for
Social Innovation

Center for Social Innovation

Nonprofit Management

TransFair USA

Academic Case Study by:
Rick Aubry, Greg Powell
Published: 2004
[photo - Rick Aubry]

TransFair USA, the U.S. fair trade labeling arm of the Fair Trade Labeling Organization (FLO), faced strategic challenges in 2003. The Fair Trade label denoted coffee (and other products) sold at a price high enough to allow small certified farmers to earn a living wage.

TransFair, like the other fair trade organizations worldwide, enjoyed an exclusive niche status in the United States. In 2003 Fair Trade Certified™ coffee accounted for 3-5 percent of all coffee sold in the United States, a substantial accomplishment given that TransFair was founded in 1998.

Paul Rice, founder, president, and chief executive of TransFair USA, wanted to push Fair Trade Certified™ coffee beyond its niche status, into the mainstream. In doing so he faced the challenge of convincing uninformed mainstream consumers and skeptical large-scale coffee roasters to buy Fair Trade Certified™ coffee, and FLO to allow TransFair to certify large coffee-growing estates.

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Case No: SI39

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The Seattle Theater Industry

Academic Case Study by:
James A. Phills, Lesley Koenig
Published: 2003
[photo - James A. Phills]

Seattle’s theatre industry had a rich, 38-year history of producing top-quality plays and musicals. In a typical year, the theatres collectively sold over a million tickets and pumped over $8 million into the local economy.

Historically, the five major theatre companies—Seattle Repertory Theatre, A Contemporary Theatre, The Empty Space Theatre, Intiman Theatre, and Seattle Children's Theatre—each had a clearly defined mission statement and unique artistic focus. However, by the close of the 2001 season, the theatres’ strategic and artistic identities had blurred as each company pursued growth.

Some attributed theatregoers' and donors' waning interest and declining support to this homogenization in addition to the slumping U.S. economy. Others argued that there was too much capacity in the industry and that, in order to survive, the stronger theatres had to expand their niches and even drive smaller, weaker players out of business.

The vibrant Seattle Theatre Industry appeared to face monumental challenges to remaining both critically acclaimed and financially sound.

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Case No: SI37

Lutherwood-CODA (Community Opportunities Development Association)

Academic Case Study by:
James A. Phills, Daniel M. Kalafatas
Published: 2003
[photo - James A. Phills]

In early 2003, Reverend Doctor Dieter Kays, the CEO of Lutherwood-CODA, was, by his own account, “worried and spending a lot of time in prayer.” The subject of Kays’ spiritual reflection was Luther Village, the Canadian nonprofit’s bold, three-phase, 12-year, $75 million real estate project to develop a sprawling, high-end, 20-acre, 750-member retirement community in downtown Waterloo.

With the first two phases of the project complete, Luther Village had accumulated $4.5 million of profit from construction. Phases I and II of the Luther Village had sold out with some headaches, but fairly quickly nonetheless. At the time, Lutherwood-CODA had brought to market a new concept in elderly residential services.

But Phase III, a $20 million assisted living center serving individuals with daily service and care needs, would be completed in a much more competitive market. Now, there were many competitors for assisted living services in the region, and early indications were that demand for the new facility was lower than it had been for Phases I and II.

Moreover, Lutherwood had assumed substantial debt to finance Phase III. All of the equity generated during Phases I and II had been reinvested into Phase III. Kays knew that the organization’s ability to service its obligations depended on being able to market and fill the new assisted living facility as quickly as possible.

Could Lutherwood-CODA tolerate this new level of financial risk? Would market and economic conditions allow Phase III to execute its aggressive marketing program? Could the project really generate sufficient funds for Lutherwood-CODA’s social programs to make all the work and stress worthwhile? Was the development and operation of Luther Village consistent with Lutherwood’s social mission?

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Case No: SI35

Mirae: Charitable Giving in North Korea

Academic Case Study by:
David W. Brady, Erik N. Budde
Published: 2003
[photo - David W. Brady]

For nearly 50 years, the Korean peninsula has been separated by a band, 2½ miles wide, which has divided the land into North and South. Heavily armed on both sides, the Demilitarized Zone itself has become an environmental haven. Since the end of the Korean War, this land has been virtually untouched by humans. Surrounded by tanks and electrified fences, cranes, egrets, and bears roam free.

A three-hour drive to the south is Seoul, one of Asia’s most important cities. With 20 million residents, Seoul is the home of South Korea’s government, largest businesses, and thought leaders. There, a small, grass-roots group of affluent, well-connected, self-described “housewives” struggle with some of the key issues of South Korea’s future. Their group is called Mirae, meaning “future” in Korean. They work to prepare for what almost all South Koreans see as the inevitable reunification of North and South.

As they raise and use funds, their challenges are myriad: How to best create a nonprofit in a society that has traditionally thought of charity as an intrafamily issue, whether they should limit their giving to people in their own country, and how to support the North Korean people while not supporting the oppressive North Korean government.

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Case No: SI33

Innermotion on the Move

Academic Case Study by:
James A. Phills, Peter Laub
Published: 2005

A nonprofit organization founded in 1990, Innermotion was a dance company that presented performances based on themes related to incest and childhood sexual abuse as well as therapeutic workshops for survivors of such abuse. The organization consisted of an all-volunteer troupe of childhood sexual abuse survivors, and its lone full-time employee, founder, and artistic director Sharon Daugherty.

Innermotion relied primarily on state and federal funding from sources intended to provide support services to victims of crime and domestic violence. Precipitated by the loss of a major grant and participation in an executive program on strategy, Daugherty felt pressured to reexamine her focus and priorities.

The text-based case SI-25, “Innermotion, The Coalition for Essential Schools,” provides detailed background on the organization, the issue of childhood sexual abuse, and the nature of movement therapies. It is intended to be used in conjunction with the videocase, “Innermotion on the Move.” DVD, Total Run Time: 29:56 min.

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Paper Copy: You may purchase this case from Harvard Business Publishing.

Case No: SI25A-SI25V

Coalition of Essential Schools

Academic Case Study by:
J. Gregory Dees
Published: 2000

In May, 2000 Hudi Podolsky assumed the position of executive director of CES and needed to act quickly. CES was an early educational reform organization dedicated to widespread implementation of certain fundamental educational principles in primary and secondary schools in the United States.

The main problem was that traditional sources of funding (primarily foundations) were increasingly less willing to support CES. Podolsky needed to determine a new and sustainable fundraising strategy, and had asked Stanford’s Alumni Consulting Team (ACT) to help do it.

The case is narrated from ACT’s perspective, which allows deeper questioning of organizational issues and capabilities as well as Podolsky’s ability to turn CES around. There are significant challenges around organizational structure, value proposition, marketing, and operating procedures, as well as around fundraising.

Teaching Note available.

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Case No: SI2

American Repertory Theatre in the 1990s

Academic Case Study by:
James A. Phills, Gregory Scott
Published: 2003
[photo - James A. Phills]

In early January 1993, American Repertory Theatre’s (ART) Artistic Director Robert Brustein and Managing Director Robert Orchard were concerned about ART’s financial situation. Major government funders had communicated plans to cut sharply, and possibly eliminate, their annual support for ART.

Budget cuts and policy shifts at the National Endowment for the Arts (NEA), for example, had made it likely that there would be significant reductions in the funding for major theatres like ART. These threats raised the specter of a reduction in resources that could undermine ART’s continued ability to realize its ambitious, but costly, artistic vision.

Brustein and Orchard had pursued ART’s vision aggressively since the theatre’s founding in 1980, and had enjoyed considerable success. Its annual budget had grown from just over $1 million to nearly $6 million, with substantial increases in earned income, contributed support, and endowment.

In particular, ART had been very successful in garnering support from national funders such as the National Endowment for the Arts (NEA) and National Arts Stabilization Fund (NASF). But, given the deteriorating outlook for contributed support in 1994, Brustein and Orchard faced a limited set of options, all of which were likely to constrain the artistic freedom Brustein and Orchard prized so highly. Any of these options could alienate the loyal but discerning audience that ART had cultivated so carefully, damaging its hard-won reputation among critics and theatre professionals, and eroding the cutting-edge image that appealed to the national funders.

As they met to finalize the program planning and budget for the 1994 season, Brustein and Orchard were finding it increasingly difficult to identify new sources of income to compensate for the cutbacks they expected. Although, in the past, ART had been able to fundraise its way out of impending fiscal crises, this time it did not look as if it would be able to rely on increased contributions from any source.

Alternatives such as courting a broader audience through more conventional work or cutting costs were unpalatable both from an artistic perspective and from a practical perspective. Both seemed risky ways to attempt to ensure ART’s long-term prosperity.

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Case No: SI16A,B,C

Three Museums in One

Author: Jean Butzen
Stanford Social Innovation Opinion Blog, May 08, 2009
Comment on this post at the Opinion blog

Do Goals Hurt Your Chance of Success?

Author: Sean Stannard-Stockton
Stanford Social Innovation Opinion Blog, May 20, 2009
Comment on this post at the Opinion blog