Follow the money
IMR's net revenue funneled back into Independence Matters after just its first two years of operation.
What is $2.5 million?
The official mission statement of Independence Matters.
What is "to provide support, identify solutions, and offer opportunities that enable persons with physical disabilities to participate fully in life"?
This is the single most defining difference between a traditional nonprofit and a social enterprise.
What is that a social enterprise generates earned revenue through a business activity rather than relying solely on donations and grants?
This is the term for a situation where a person's personal relationships or financial interests could inappropriately influence a business or organizational decision.
What is a conflict of interest?
Before IMR existed, Independence Matters relied on this traditional mix of funding sources to operate its nearly $7 million budget.
What is government grants, private foundation grants, corporate grants, and individual donations through personal connections, annual appeals, and a golf tournament?
After the 60 Minutes feature, IMR's annual revenues grew to this staggering number.
What is $18 million?
IMR's managing director, who was also a person with a disability and who received a special commendation from the governor alongside Bruno.
Who is Eliezer Guzman?
This is why nonprofits like Independence Matters are increasingly turning to social enterprise models rather than relying entirely on philanthropy.
What is to create a more sustainable, diversified, and less donor-dependent source of revenue?
Identify one clear potential conflict of interest present in the founding of IMR based on the relationships described in the case.
What is that Bob Delaney, the board chair, personally approached Norma Chavez (whose husband sits on the Gunderfeld Foundation board) about funding — creating a situation where personal relationships influenced major financial decisions for the organization?
This is what Bruno meant when he described himself as a "hamster on a never-ending wheel" — pointing to the core vulnerability of traditional nonprofit funding.
What is the exhausting and unsustainable nature of constantly fundraising year after year with no guaranteed or recurring earned income?
Independence Matters used IMR revenue to do these four things to strengthen the parent organization.
What is expand programs, beef up the fundraising department, give senior staff raises, and build more than two years of operating reserves?
This aspect of IMR's staffing was directly connected to the mission of Independence Matters and made the business especially sensitive to clients' needs.
What is that several IMR staff members were former Independence Matters clients who were grateful for meaningful employment?
This is the risk a nonprofit takes on legally and financially when it creates a wholly owned social enterprise that generates significant revenue.
What are risks such as unrelated business income tax (UBIT), jeopardizing tax-exempt status, liability exposure, and regulatory scrutiny if the business is not properly structured?
This is a governance tool that organizations put in place to manage conflicts of interest and ensure that decisions are made transparently and in the organization's best interest rather than in the interest of any individual.
What is a conflict of interest policy requiring disclosure and recusal?
A critic might argue that IMR's explosive growth, national media attention, product lines, and franchise plans suggest this is happening to Independence Matters as an organization.
What is mission drift — where the business tail begins to wag the nonprofit dog, pulling focus, resources, and identity away from the original social mission?
This is the key financial difference between a nonprofit and a social enterprise — the thing a social enterprise does with its profits that a for-profit business would do differently.
What is reinvesting or funneling profits back into the mission rather than distributing them to shareholders or owners?
These are two ways that IMR appeared to be staying true to the mission of Independence Matters even as it grew into a large business.
What is employing disabled individuals and serving people who need home adaptations for disability or aging — directly connecting to the mission of enabling full participation in life?
This new hire at IMR was a direct result of the organization's explosive growth and media attention — a role that would not exist in a traditional nonprofit program.
Who is the director of media and community outreach?
This is the ethical tension that arises when a social enterprise generates far more revenue than the nonprofit parent needs to fund its operations — as IMR eventually did.
What is the question of what to do with excess revenue, whether mission is being prioritized over profit, and whether the nonprofit's time and energy are being diverted from its core social purpose?
This is the argument a defender of IMR would make to push back against concerns about mission drift, using specific evidence from the case.
What is that IMR directly employs disabled people, serves people who need home adaptations, expanded Independence Matters programs, built financial reserves, and grew the fundraising capacity of the parent — all of which strengthen rather than undermine the mission?
This is the legal term for the ownership structure when a nonprofit creates and fully owns a revenue-generating business like IMR.
What is a wholly owned subsidiary or social enterprise wholly owned by the nonprofit parent?
This is the term used to describe the risk that a nonprofit begins to prioritize revenue generation over its original social mission as its business arm grows.
What is mission drift?
Bruno and Eliezer's next proposed expansion idea, which would have spread the IMR model nationally while continuing to generate revenue for the parent nonprofit.
What is hiring a director of field operations to set up nonprofit franchises of IMR across the country?
These are two structural mechanisms a nonprofit board could put in place to ensure that a wholly owned social enterprise like IMR remains accountable to the parent organization's mission and does not operate unchecked.
What are things like a separate board or advisory committee for the social enterprise, regular financial audits, clear policies on revenue use, defined mission alignment criteria, and executive oversight structures that keep the social enterprise subordinate to the nonprofit's mission?
You are a consultant brought in by the Independence Matters board. IMR is generating $18 million annually — far more than the parent nonprofit needs. Identify the THREE most pressing governance, ethical, or structural concerns you would raise, and propose one concrete recommendation for each.
DAILY DOUBLE
Open-ended — strong answers would address: (1) conflict of interest policies and board governance structures, (2) mission drift risk and how to define and enforce mission alignment for IMR, and (3) the legal and tax implications of excess revenue in a wholly owned nonprofit social enterprise and how to structure it properly.