NZFN Board Chairman, David Kirk, standing in front of a window with a city backdrop.

NZFN Chairman David Kirk’s 8 opinion columns written for Stuff

David Kirk is a former Rhodes scholar, All Black and Rugby World Cup winning captain and currently the co-founder and managing partner of Bailador, an ASX-listed investment fund. In addition, he is the chair of both the NZ Food Network and KiwiHarvest. He is writing a series of opinion columns for NZ's most popular news site, Stuff.

David Kirk has been involved in the non-profit sector for over a decade, and through his experiences of being the Board Chairman of NZFN as well as NZ's largest food rescue organisation, KiwiHarvest, he has learnt a lot of valuable lessons about the sector.

In a 8 piece opinion series written for NZ's most popular news site, Stuff, David gives his perspective on what it takes to get a non-profit off the ground and making an impact in our communities.

Have a read of all 8 pieces below:

OPINION: Back in 2012 Deborah Manning decided to start a food rescue business in Dunedin. She set out driving around in her car asking food retailers if they had any excess food they would donate – two-day-old packaged sandwiches, brown bananas, ready meals approaching the use-by date, that sort of thing.

When she had a boot full, she delivered it to front line organisations such as Women’s Refuge, food banks, and other social services. Six months later, when she had more food than her small car could handle she talked a car dealer into giving her a van, had a small storage facility (her garage) and was preparing to hire a driver so she could focus on acquiring food donors, raising money and finding more suitable premises, she asked me to join KiwiHarvest as her inaugural chair.

Ten years later I’m still there and KiwiHarvest has branches in Dunedin, Auckland, North Shore, Queenstown and Invercargill. In the ten years to August, it has collected and delivered 8,518,180 kgs or 24,337, 657 meal equivalents of donated food to individuals and families in need.

We call the food we collect and distribute “rescued food”. I really like that name. Food is planted and grown; bred and produced and in other cases manufactured and packaged to do one thing - provide healthy nutrition. Otherwise, off it trundles to landfill and there it rots away.

KiwiHarvest rescues food in two senses: one, so it can fulfill its purpose to provide nutrition and two, so it is prevented from messing up our environment.

Carbohydrates are the largest food group, and decomposing carbohydrates turn into lots of simpler molecules made of carbon, hydrogen and oxygen, including carbon dioxide and methane. In the ten years KiwiHarvest has been operating, the business has prevented 22,573 tonnes of CO² equivalent from being released into the atmosphere.

Then in 2020, Deborah’s second brilliant start-up vision came to pass (In my experience entrepreneurs are invariably serial. They have lots of good ideas about businesses they want to start and if their first idea is good, you better listen to their second, and the third and the fourth and…). She had for some time been banging on to the board about the need to establish a national network for the collection and distribution of bulk excess food.

Bulk food that cannot be sold is usually dumped, for a number of reasons. A few I can recall:

  • A ship is setting off for Malaysia with 24 tonnes of frozen fish when someone notices the labels are printed in the wrong language;
  • 20 tonnes of frozen chicken will pass their use-by date before they can be sold;
  • 35 tonnes of carrot and potato seconds have no home;
  • 257 pallets of dried chicken risotto are available, cause unknown.

There is really an amazing amount of bulk excess food in New Zealand that can’t be sold. And no local food rescue organisation can take it because they have nowhere to store it and it is too much food to distribute in the time available in one local area. So off it goes to the landfill.

Deborah’s second idea was to start a national network that collected all the bulk food available, centralised it and redistributed it to food rescue organisations, large food banks and iwi all over the country.

We developed our plan and our presentation deck and started doing the rounds looking for money. We targeted foundations and high net worth individuals and were making some progress, when Covid came along and changed the world. This put us in a position to work with the government at a time when the need was great.

Long story short, we established the New Zealand Food Network in 2020. It is government funded, has warehouses in Auckland and Christchurch and has distributed 15,552,685 kgs of food or 44,436,242 meal equivalents in the two years of operation to June 30, and averted 22,466 tonnes of CO2 equivalent from landfill.

Next we start on the essentials of starting a business, not-for-profit or for profit.

OPINION: When starting out in business, there is no other consideration more important than getting clear on just one thing – your raison d'être. Another way to put this is, “what’s your big idea?”, quickly followed by “why should anyone care?”.

What are you trying to do here? Is the big idea you have about how to change the world actually a good one? The first step after coming up with the big idea is to stress-test it.

There is a saying that goes around in some of the circles I move in that goes, “ideas count for nothing; it’s all about execution”. That’s not true of course, and it’s pretty obvious why. If there is no idea, there is nothing to execute. “Nothing will come of nothing," as King Lear says.

But it’s true in another sense. In the history of business - profit and not-for-profit - there have been a gazillion good ideas and relatively few successes. We should call this the execution gap. The gap between the number of good ideas and the number of successful ventures. It’s huge. Ten times? Twenty times? A hundred times? Nah, probably more like a billion times.

For every good idea, only one in a billion turns into a long-term successful business. I have absolutely no data to support this contention, but I’ve seen it heaps of times. And so have the people who thought up the saying.

A good idea that is executed well is something. A good idea that isn’t, is nothing. And the former are a billion times rarer than the latter. But this piece is about the idea itself. Before you start spending a lot of time on it, and possibly some money, you need to know that it is a good one and that with good execution it will actually work.

Here are the questions you need to ask yourself and answer yes to, to know if you have a good idea when it comes to starting a new business, for profit or not-for-profit.

  • What problem am I solving? Is it important?
  • Is it important enough that people I don’t know will give me money to solve this problem?
  • Do I understand the business model that is needed to solve the problem?
  • Is the business model scalable? That is, will the business get increasing benefits for each extra dollar invested as the business gets bigger. Or alternatively, will the business reach a point when it will not need more money, but still be able to grow the benefits it delivers?
  • Is anyone else working on the problem? If yes, is my idea about how to solve this problem better than theirs?

No doubt there are other important questions. But if you are confident that your idea is important, you understand the business model needed to execute it, it scales well, and no one else has shown they have a better way to solve the problem, then you are likely on to something. And you will be able to raise funds to turn the idea into a first step reality.

Whether you are personally up to the execution challenge is another matter. The next step after stress-testing your idea is to stress test yourself. Are you up to it? Can you execute on the idea? That’s the subject of the next piece.

OPINION: Literature, ancient and modern, is full of commentary on human nature and on the value of attempting to understand ourselves. A wise business person also seeks self-awareness.

Two thousand years before the birth of Christ, in the forecourt of Apollo’s temple at Delphi in Greece, three maxims were inscribed in stone, the first of which is “Know Thyself”.

We have talked about stress-testing an idea to start a not-for-profit. Now we are stress-testing you. Do you know yourself? Are you up to what will be required to make the idea a successful reality?

The first thing to get straight is that this is not an evaluation of whether you are good or bad, capable or incapable, smart or not. This is all about fit. There are certain attributes that are necessary to start a business – profit or not-for-profit - from scratch. The good news is if you don’t have all the attributes, you can learn them or team up with a partner.

In fact, two people partnering to start a business is more common than one. When it is only one, that’s usually because the one is super-driven and just about impossible for a partner to work with – Steve Jobs, Jeff Bezos and closer to home, Graeme Hart come to mind (this is not a criticism. Graeme will happily tell you he is obsessive about everything he does).

So, what are the key attributes required of a start-up founder?

Focus is crucial. It’s important not to get distracted. The big goal is clear – to get the venture up and running – but you need to focus on the building blocks required to achieve the big goal, such as investigating the market opportunity, thinking through a plan, talking to people in the industry and identifying possible sources of funding. There will be lots of details and distractions. You need to stay focused.

Analytical capability is the ability to recognise a problem and analyse what is required to turn the problem into an opportunity to build a business. In food rescue the problem is hungry people. Some of the pieces of the problem are excess food availability, appropriate food recipients, food transport, food storage, people, the cost of it all and sources of funding. The pieces of the problem need to be organised into an operating plan – what we are going to do every day – and a budget – what will it cost to do it. It was this kind of analytical problem solving that enabled KiwiHarvest and the New Zealand Food Network to get off the ground.

The ability to sell is important. Really this means the ability to explain to others, with passion and clarity, what the problem is, how it can be solved and that with help you are the right person to solve it. You’re not selling a tomato or a banana but something that is good for other people. You are selling your passion, your commitment, your plan and other people’s well-being.

The ability to inspire other people is another key attribute for a not-for-profit founder. How do you inspire people to come on the journey when you pay less than they can get elsewhere, the work is tiring and never-ending, and stuff goes wrong pretty regularly. It’s not exactly as UK Prime Minister Winston Churchill put it in his first address to the House of Commons in May 1940 – “I have nothing to offer but blood, toil, tears and sweat.” - But take out the blood and you won’t be far off.

Finally, and obviously, all founders have a great capacity for hard work. You are going to need to make some sacrifices to succeed in your aim to start something new and take it on to longer-term success. Figure out how much time you have to commit and only commit what you can to the task. If you are founding a business, the time commitment will be more than you have got, at least for a while.

Next time I will talk about a fundamental building block of starting and running a not-for-profit: measuring the good you do.

OPINION: Most people who start and run not-for-profits do it for the goodness they deliver to other people. What keeps us going is the knowledge that other people’s lives are better because of what we do. Quite rightly, it makes us feel good.

But to be successful growing a not-for-profit business we need to engage other people – funders in particular - who are not involved in the business and don’t get to share the warm feelings we have about what we do. To engage these people, we need to measure and quantify the goodness we deliver.

“Feeding people who are hungry” is one way to describe what we do at KiwiHarvest and New Zealand Food Network (NZFN), but it’s not the most useful way. This describes what we do, but it doesn’t help us quantify the benefit we deliver.

Meeting a potential funder and saying, “please give us some money because last month we made a lot of people a lot less hungry”, is a reasonable start, but we need more. What we really need are numbers, and therefore we need to identify what to measure in order to show how much good we are delivering.

The good news is that it is usually fairly obvious what the right things to measure are. They are the things that directly measure the good we are doing. At KiwiHarvest and NZFN, the key measures we have are:

  • number of meals delivered
  • percentage of the various food types to demonstrate the quality of the food we are delivering: produce, protein, packaged etc.
  • tonnes of CO2-equivalent diverted food from landfill

We also measure and try to grow the number of food donors we have, the amount of donated food we collect, and the number of recipients we can support.

Every business is different, but there will be a few key metrics which quantify the good each business delivers. You need to identify what those measurements are and set yourself up to collect the data from day one.

Be rigorous in this. This is the data you will need to put in front of funders and potential new staff and anyone else you need to show how much good you are doing.

These key measurements are called Key Performance Indicators or KPIs in most businesses. Apart from tracking them to see how much good you are delivering, there are two other uses for KPIs: to measure the efficiency and scalability of the business.

Efficiency is a static measure, meaning it tells us at any one time how much good we are delivering with a fixed amount of investment.

At KiwiHarvest and NZFN our main measure of efficiency is the cost to deliver a single meal. We measure this by dividing the total number of meals delivered in a period by the total cost of running the business in that period.

As we deliver more meals with the same cost base, we become more efficient. How fast a business becomes more efficient is called its scalability and that’s what we’ll talk about next week.

OPINION: Scalability is a bit of a buzzword in the world of information technology investing that I work in. It gets thrown around as if it were the universal panacea. It’s not, but without scalability the opportunity to do good in a not-for-profit is limited.

The aim of any venture, not-for-profit or for-profit is to deliver the most good (good = money in for-profits) for the lowest amount invested. In the finance world, lots of profit for a small investment is called a high return on invested capital and it’s what everyone aims for.

It is exactly analogous to a high interest rate at the bank. I give the bank $1000, that’s my invested capital, the first bank gives me a 2% interest rate and the second one gives me a 3% interest rate. The second bank gives me a higher return on my invested capital. I get $30 at the end of the year compared to $20.

In the not-for-profit world we are focussed on delivering the most good (however we define it, and we have to define it as explained last week) for the lowest investment required to get it. The best returns (the most good or money) are delivered by businesses that, as they get bigger, deliver a greater additional return for every additional dollar invested.

Imagine a line on a graph that goes in a straight line up from the bottom left-hand corner. On this line for every move along the x-axis the corresponding move on the y-axis to stay on the line is proportionally the same. For example, if a move from zero to one on the x-axis produces a move of zero to two on the y-axis to stay on the line, this 2 for 1 ratio will be the same at all points on the line no matter how big the numbers. No scalability.

Now imagine a graph in which the line starts in the same place and bends upwards as it proceeds. Eventually it is going nearly straight up. On this line for every small move on the x-axis there is an increasingly larger move on the y-axis to stay on the line. Technically this is called increasing returns to scale. Around the office its plain old scalability.

Now, why is this important for the business model of not-for-profits? Two reasons: a scalable business model means you can do increasing good with a decreasing rate of increase in investment; and two, a scalable business model is much more likely to excite funders.

There are two relevant types of scalability to think about – economies of scale and economies of scope. A real-life example is the best way to explain what these are. Sam Morgan, who is my exemplar of how to be an impact philanthropist, gave me a great example from a project he got involved with in Africa.

The investment was in a lot of small-scale water pumps to lift water from small, dispersed wells. The pumps are powered by solar panels and a small battery. You can see the project has economies of scale in that once the pump is in and running it can provide clean water for more and more people without any more investment being required. But the project also has economies of scope.

Not only does the fresh, abundant water provide safe drinking water, it also provides water for stock and crops. Clean water and improved nutrition from crops improve neonatal survival rates and growth rates and health in young people. Healthy young people contribute more in general to the community and are more likely to become better educated.

At KiwiHarvest we have good economies of scale. Investment in vans, a warehouse and relatively few people remains fixed for a large increase in food delivered. We also have pretty good economies of scope. Not only does the food we collect provide nutrition it also does not go into landfill avoiding greenhouse gases emissions.

And, insofar as we cause a reduction in production because less food is made because more is rescued, we reduce the waste of water, electricity, packaging and other inputs that go into food production and manufacture.

OPINION: In previous articles in this series we’ve discussed all the steps business founders need to take to turn their ‘big idea’ into a reality. These were:

  • Stress test your idea
  • Stress test yourself
  • Figure out what to measure
  • Determine that your business has pretty good efficiency and scalability

Chances are, when you have done all of that you will just get on and start doing stuff. Like Deborah Manning, founder of food rescue not-for-profit KiwiHarvest and NZFN.

She just got on with driving around in her car, walking into shops asking for excess food and delivering it to organisations that served hungry people.

But before long, especially if things are going well, you are going to need a plan. The plan will start in your head, which is fine. Your first plan is simply all the ways you are solving the problems that arise as you do what you are doing.

If you want to stay in a one-woman band, then the plan can probably stay in your head. But if you want to grow your business and have other people join you to do more good over time, you will have to get the plan written down.

This is for two reasons: one, people forget stuff if it isn’t written down; and two, you need to be ahead of the game, you need to be doing things now that will avoid or solve problems that will otherwise bite you in the future.

Start with a vision and a purpose. Your vision is an aspirational, action-oriented, big-picture sentence capturing what success will look like. Your purpose is what you have founded your business to do. It is practical and clear on what outcomes you will achieve on the way to your vision.

The rest of the plan is about what you need to do to achieve your purpose and move you closer to your vision, starting with your company’s strategic priorities. These are the three or four big things that really matter for success. For KiwiHarvest and NZFN these are things like:

  • Build a wide base of food donors
  • Identify the most appropriate food recipients
  • Set up transport and storage infrastructure and systems
  • Hire and train the people needed to run the business

Each strategic priority is then broken down into the activities required to make it happen – the operational priorities. For instance, for the first strategic priority, to build a wide base of food donors,- the activities will be:

  • Build the case for why potential donors should donate
  • Research and build a list of potential donors
  • Identify who to speak to at each potential donor
  • Meet and present your case for donation
  • Chase them up if you don’t hear back from them in a week

For each operational priority there needs to be a description of what success looks like, who will do it and by when.

One useful way to think about the difference between strategic and operational priorities is that strategic priorities are what the whole organisation needs to achieve in the long term, and operational priorities are what someone in the organisation needs to achieve in the short term.

Once you have filled out all the operational priorities for each strategic priority, you will have a good idea how many people you will need to help you, how much it will cost to run the business and how much good you can do with the resources you can muster. The plan will develop and change over time, but the strategic priorities should stay pretty much the same unless there is a big change in the operating environment.

The next step is to add a budget to your plan.

OPINION: Everyone thinks of budgets as something that starts with the revenue and follows with the costs. That’s because we subtract the costs from the revenue to get the profit, which is what matters in the end.

But when we budget at not-for-profits, I think it makes sense to put the costs first.

We should work out how much it is going to cost to do the good we want to do and then figure out how to raise the money to fund it. If you are not confident you can raise the money to fund the costs you will incur you need to reduce costs to make ends meet.

If you are not working out of your house it is almost certain that the two biggest costs in your social venture will be what you pay staff and rent.

Assuming you are working in the venture, you need to pay yourself. Not paying yourself is ok while you get the venture up and running, but if it is to be sustainable all staff need to be paid and that includes you.

So, when you are putting together your budget, put in a line that says: “Founder salary” and put in a number you think is reasonable recognition for all the work you do. No doubt you will put in a lower number than you should but by budgeting for your salary you are focusing on financial sustainability.

Next you need to budget for additional roles in the organisation, which means you need to design the organisation structure. Start small and grow as you can afford it. Just you at the beginning. Then perhaps an accounts/fundraising person and an operations person. Volunteers are another good option, but you need permanent staff to work with volunteers to ensure they are properly trained and directed and can work safely and well in the organisation.

You may start your social venture in your house, but again, this is not sustainable. Especially if you are dealing with physical goods, you need to budget for rent. Again, start small and don’t lock yourself into a long agreement. Ideally you will be able to go along month by month or even better you will find someone who will donate space for you to use. You might end up perching in the corner of someone else’s office. That’s fine.

Other costs will depend on the nature of your venture. Vehicle costs, phone and data costs, insurance, travel etc. are other typical costs you will need to budget for. In addition, you will need to budget for capital expenditure. Capital expenditure is money you spend on assets that the business owns. These will include computers and perhaps furniture.

In our case at KiwiHarvest and NZFN we also need to have cars, trucks, racking and cool stores in warehouses and even fork-lifts. All businesses need to budget for depreciation on capital assets. That is, the budget needs to include a percentage (say 20% a year for computers) set aside each year for the replacement of the asset you have bought.

Turning to revenue, you need to include all possible sources of revenue in your budget.

  • There are five broad sources of revenue for social ventures:
  • Donations from individuals large and small
  • Grants from private Trusts and Foundations
  • Grants from local and central government
  • Sponsorship by corporates
  • Sale of services or products associated with the work you do

You will need to investigate, plan and approach possible funders in the first four of these categories. You need to be realistic and conservative in your budgeting for revenue. It usually takes longer than you think.

Try trusts and foundations that have a mandate to support the type of social venture you have created. Try local government and local businesses for support in-kind. Try donations but be aware they are often one-off and you need consistent sources of funding. Fundraising will be the subject of the next and last note.

OPINION: Anyone who starts their own not-for-profit will need to overcome any reluctance to ask for money. The five sources of funding for social ventures are:

  • Donations from individuals large and small
  • Grants from private trusts and foundations
  • Grants from local and central government
  • Sponsorship by corporates
  • Sale of services or products associated with the work they do

Which source of funds it is most appropriate for your social venture to pursue will be determined by the specifics of your situation.

Most people don’t like asking other people for money but going in with the right mindset when raising money is very important. Here are some bullet points with some of the fears and concerns we all have and corresponding thoughts on what we need to tell ourselves to get into the right mindset.

Fear or concern:

  • My project isn’t worthy, other people probably deserve the money more than me
  • They probably won’t want to give; I’ll just be annoying them
  • I’ll be in their debt and that feels uncomfortable

The Truth: What to tell yourself

  • This is a great idea, I have stressed-tested it, the need is clear to see, and I know my work will address the need
  • For a project that resonates people do want to give. I am giving them an opportunity to do something they will feel good about
  • That’s ok. They will only give if they want to. I would be pleased to support an important cause for them if they asked me

The single best way to overcome these and other fears and concerns when asking for money is to have a clear and simple pitch prepared. The pitch can be as simple as a 30-second verbal explanation, or it can be a 30-page Powerpoint presentation.

First approaches should generally be simple, quick and verbal to gauge interest. Often, the aim is to set up a meeting.

Whatever the length or sophistication, the pitch needs to address the following points in order:

  • The problem
  • What your plans are to address the problem
  • What you need/are asking for from the potential donor
  • The benefit you will deliver with theirs and other donations
  • How you will measure success
  • How you will report on progress

Put even more simply the pitch goes: Problem – Plan – Ask – Outcome – Report.

Above all, you have to be organised, prepared, energetic and committed when asking for money. Potential donors need to believe you are going to be successful and people want to be associated with success.

Inevitably, because we are talking about start-ups, you will be starting small. The fund-raising goal you should have in mind should be the amount you need to run your social venture for long enough to achieve milestones that demonstrate you are achieving success and doing so efficiently and in a manner that is scalable.

As you get bigger you will need to transition from a group of small supporters to fewer larger supporters. This requires more professional presentations. You will also need to diversify sources of funding. At times a particular source of funding, say local business support, will be easier to get than at other times. Having a range of sources of funding is an important protection if you lose one source of funding.