Known for producing classic plays by Ibsen, Chekhov, and Shakespeare, the Guthrie Theater in Minneapolis didn't originally set out to put outrageous costumes on the backs of rowdy revelers at Mardi Gras or Halloween.

But costs upwards of $30,000 per year for costume storage led managers at the historic theater to think outside the box, or closet, as the case may be. Result: a three-year-old costume-rental business that not only pays for all storage costs but also generates extra cash flow for the Guthrie and its business partner, the Children's Theater Company.

"At first, we thought maybe we'd make a little money and put it into the theaters, but not make this a for-profit business," says Maribeth Hite, special-projects manager at the Guthrie. "But we discovered we had a really good idea."

Others in the nonprofit world are discovering the same thing. For-profit side businesses that leverage unique physical and intellectual assets found at schools, museums, and charities are generating much-needed revenue in a time when few nonprofits can thrive on beneficence alone.

One contest in particular bears witness to the trend. For the third year in a row, about 500 nonprofit organizations have submitted for-profit business plans in a competition cosponsored by the Goldman Sachs Foundation, the Pew Charitable Trusts, and the Yale School of Management. This month, the contest announced eight winners who will share $500,000 in prize money. One example: EcoLogic Finance, a microlender in Cambridge, Mass., that over five years has largely weaned itself of its original reliance on grant funds to encourage eco-friendly farming in Latin America. Instead, it borrows its capital at 2 or 3 percent, loans it out to farmers at 9 percent or higher, and secures collateral in the form of signed purchase contracts for organic and otherwise environmentally friendly crops.

"Our end goal is to demonstrate that these community-based businesses, given the new market ingredients in play in wealthy consumer countries, are absolutely bankable and they're good business," says EcoLogic's founder and president, William Foote. By becoming financially sustainable itself, the nonprofit is creating a model it hopes local banks in Latin America and Africa might follow.

Of course, some nonprofits find that for-profit doesn't fit, says Cynthia Massarsky, co-deputy director of the nonprofit contest. But for many, the right match might do more than coexist with a nonprofit mission, it could also enhance it. "The taboos are shrinking," Ms. Massarsky says. "You can use the word 'marketing' at nonprofits and people don't freak out. If you had mentioned that 10 years ago, it would have been a different story. People then wanted to hear nothing about it.... There's been a fundamental shift that says nonprofits have to at least be thinking about [for-profit enterprises]."

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