Stacy Ratner spent 7 years co-founding and building technology businesses — and the last decade applying everything she learned as a serial entrepreneur to growing a high-impact nonprofit organization.
That organization is Open Books, whose businesslike approach is helping thousands of Chicago youth learn to read and, what’s more, write for fun. It collects hundreds of thousands of used books each year, sells them at two bookstores and online, and channels the proceeds to its reading and writing programs, measuring “profits” in literacy gains.
Ratner founded Open Books in 2006 after learning that a shocking 30 percent of Chicagoans are functionally illiterate — they have trouble reading labels on food, filling out job applications, deciphering bus schedules. An avid reader (and novelist in her dreams), Ratner realized there was a huge need for literacy services, and believed she could make the biggest impact by targeting young people.
Today, Open Books has 18 employees and 500 volunteers a year and runs on an annual budget of $1.4 million. Some 70 percent of that sum is earned income from book sales, with the rest coming from grants and gifts. That budget allows Open Books to operate its stores, run programs that serve about 5,000 K-12 students a year, and give away 100,000 books to students, teachers and other Chicago nonprofits.
By design, Ratner, whose business acumen is belied by a shock of green hair, operates Open Books a lot like a typical for-profit business. The organization sells a product, donated used books, to make money. As with profit-making businesses, all its efforts serve one end: “build something that people want to be a part of and get them to put their time, their money and their heart into it,” she says.
A business model that supports scale
Of course, operating a nonprofit is also quite different. There’s less latitude to spend money in ways she may deem necessary, Ratner says, amid pressure to appear frugal. Also, reporting requirements make you answerable to the public at large, not just investors and shareowners.
She finds the first issue particularly challenging. Funders, tuned to look for financial efficiency, “don’t want to see large and, in some cases, competitive salaries. They don’t want to see nice or fancy workspace,” she says. While efficiency is a virtue, it can go too far. “It’s very difficult to attract people to do really critical work in literacy or anything else when you can’t compete with what they would make on the open market.”
There are many other differences, she says, but these two “make a really stark point about how different it is — and, in a way, how much more difficult it is — in the nonprofit world” to build a sizable, lasting and effective organization.
To make it easier, Ratner relies on a business model that has let her scale up and drive social impact. Selling books both provides significant financial independence and ties in directly to Open Books’ literacy programs, she says. And having stores provides avenues for promotion and venues for reaching the public.
“I don’t know exactly what Open Books would have looked like without the books and, therefore, the stores and the income that comes with it,” she says. “But it would be, I imagine, small.”
In addition to scale, the entrepreneurial approach leverages Ratner’s experience. “That was super helpful when I started Open Books, because I had never written a grant, I had never asked for a charitable contribution,” Ratner says. “That was a direct carry over from the for-profit world, and I was really, really fortunate to have that in the arsenal.”
Lessons for other nonprofits
But Ratner cautions other nonprofits against racing to an earned-income model.
“It happens to work really nicely for Open Books. That doesn’t mean it will work well for everybody,” she says. “I would really be careful about forcing an earned-income model where there isn’t an obvious fit, because you can certainly waste a lot of time and money trying to build a thing that isn’t viable,” and divert resources from your mission in the process.
Her advice? Consider whether there is a real business opportunity that fits your mission. For instance, if you’re focused on job training, you might start a social enterprise that gives trainees work experience in a particular industry, say hospitality or landscaping. Then consider whether the enterprise is financially viable. Can you can test it and scale it affordably? And finally, find out how much competition you would face. If there are a slew of local landscapers, beware. Your effort might not be sustainable.
If a well-applied business model can give a nonprofit organization independence and scale to do good, adhering to the principles of organization-building can make sure it lasts and keeps growing. It’s especially important to create a strong leadership team to take on day-to-day operations, so the founder can focus on the big picture and what’s next.
“It’s kind of where I see Open Books right now. There’s a fantastic leadership team in place. They are building and growing and maintaining and doing everything they should be doing. We just finished working on our next strategic plan, in which my role is very clearly set out as evaluate new things,” she says.
So, on the cusp of Open Books’ 10 year anniversary this month, Ratner is considering an array of growth possibilities. Expanding into other cities is interesting to her, particularly if former Open Books leaders who left Chicago would take up the challenge. Many other ideas are percolating, though she’s hesitant to reveal them. One involves combining existing pop-up Booksmobile sales, programming and storytime “in a big and interesting way.”
“I’m always in an inventing phase, because that’s kind of what I do. I’ve got three new ideas each week that I’m so excited about,” she says. “One of the great things about having this leadership team is they are a good break on what would otherwise be my extremely forward-moving ambition.”
Stacy Ratner – Founder – Open Books
Stacy Ratner (SR): When the Open Books idea came along in 2006 and I started really working on that, that was the first moment to say, "This is what I have really had in my heart my whole life and now I think I would like to do it," I would say nine-to-five, but it is really like 7 in the morning 'til 9 at night, every day for as long as I can continue to work those kind of hours because I think this is really the thing that I am supposed to work on.
CARD: Stacy Ratner – Founder, Open Books, Chicago, USA
SR: Open Books is a nonprofit literacy organization headquartered in Chicago. We collect used books. We sell those in our two bookstores and online. We use that money to fund literacy programs, reading and writing, for about 5,000 students a year, across the city.
CARD: Stacy grew up in Chicago.
SR: I liked to read. That will not be a surprise to anybody. My parents were both teachers and so many summers we would be out of the country. We lived in Denmark for several summers; we lived in Israel for several summers. I was the kind of kid who reads a lot and plays with my brother.
SR: I really cared a lot about working with words, so I wanted to be a copy editor from the time I was about six, and I went off to college to become a copy editor many years later.
CARD: Stacy studied comparative literature at Brandeis University in Boston.
CARD: But when she graduated in 1994 she couldn’t find a job.
CARD: She decided to study law at Boston College and to become a legal copy editor.
SR: Halfway through my first year of law school the big legal publishing firm in Boston closed and moved to Minneapolis. So, there I was in law school thinking I'm not really sure what comes next.
CARD: When Stacy graduated in 1999, her brother, Dan, made her an offer.
SR: My brother said, "I am going to start a company. Do you want to work with me in my first start startup?" and I said, "Like when we were little and we would have companies and you would be CEO and I would be everything else?" And he said, "Exactly like that." So we did. He was the CEO of our first company and I was everything else until we could hire some people.
CARD: Stacy and Dan went on to start five other companies.
CARD: When she turned 35, she decided to move back to Chicago to strike out on her own.
SR: I decided that the really big challenge I wanted to devote myself to was something in the nonprofit sphere and literacy was on the list because literacy has been sort of a thread throughout everything in my life.
CARD: Stacy discovered about 30% of adults in Chicago need basic literacy training.
SR: And when we say "basic" literacy we are talking about beginning at the level of difficulty reading the label on a can of food, difficulty filling out a job application, difficulty deciphering a bus schedule. And one of the reasons that we’ve chosen to focus on children is of course those are the adults of tomorrow.
CARD: In 2006 she decided to start Open Books.
SR: The Open Books concept from the beginning was: Let's have a used bookstore. If my cost for picking up a bag of books is a couple of dollars and I can sell each of those books for a couple of dollars I have just made a profit on that particular bag of books and now I can make it work to scale.
CARD: With the money from selling books, Stacy planned to launch literacy programs for Chicago students.
CARD: Working from home, she soon had dozens of volunteers and thousands of books.
CARD: But she had no store.
SR: It was so hard to find the right space because we had very specific set of needs. We were looking for a retail facility which could also have offices and classrooms, which was near public transportation, that was in a part of the city that students could access, that had ideally some processing space and a loading dock because the books had to come in and out.
SR: That was really the driving challenge for the first three years. I looked at envelope factories. I toured a not-entirely-cleared-out funeral home that was on the market. True. And when we eventually did find the first Open Books location it was a Wizard of Oz "no place like home" moment.
CARD: With space for the shop, classrooms and offices, Open Books has scaled up fast.
CARD: Now they offer reading and writing programs across the city.
SR: Creative Writing Workshops is our largest program in terms of students served – about 4,000 a year. Those are two-hour writing workshops for third through twelfth grades. And at the end of the session, those who choose to can share their work with the class.
SOT: The year turned on and the water, uh . . .
SR: They then each go into our bookstore and choose a book to take home. And then a few weeks later they get a published, bound anthology of all the writing that the class did.
CARD: Open Books now has 2 stores.
SR SOT: Is it a whole bunch of Portuguese stuff or just that one?
-Oh, just this one.
CARD: They sell books online.
CARD: They give away 100,000 books every year to students and teachers.
SR: We now have 18 people on staff, 500 volunteers a year. Every single one of those people is here because they care deeply about the mission. So, my job as founder is going to be to support all of that. We are all heading for the same ideal vision, which is, turn Chicago into 100 percent literacy. We all want to be a part of that.