“There is a lack of innovation in the non-profit sector because:
(a) it is very easy to enter the sector (no barrier to entry) but very difficult to scale, and
(b) no one is willing to take sizeable risks that could significantly accelerate growth because 2 to 5 percent annual growth is safer and preferred.”
– Phillip Haid of Public Inc., “Charity Ratings Kill Innovation,” Huffington Post, March 8, 2012
Nonprofits and Nonprofitables
As someone who worked inside an international nonprofit with much of its footprint in the US, but with a presence in Canada and elsewhere, and took it from a position of years-long shrinking revenues to that of significant gain and cost savings in just one year using Business 101, I can accurately and authoritatively say there are nonprofits and “nonprofitables.”
Much of the nonprofit world at the senior ranks is populated by people who have never worked at a Fortune 100, or even 1000, but rather have lived in their nonprofit or charity bubble their entire careers.Â And when they see something not working well, they usually bring in a consultant from within that same nonprofit bubble, rather than an accomplished marketer from the for-profit world who’s familiar with being under pressure every day to meet budget.Â Bottom line:Â Nonprofits often simply don’t know anything — or learn anything — different, even from the experts they bring in as hired guns.Â Or they continue to make the same mistakes, or farm things out to outside vendors (somebody, please tell me the logic of outsourcing fundraising to a for-profit company that takes 40% or more off the top).
Make the board of directors work
Another prevalent issue to overcome is at the board level; volunteer boards often consist of people who have no idea what they’re supposed to be doing or have zero sense about how business works, even though may be quite accomplished in their “real” lives.Â For example, the time I was asked by the English department head of a major university, when reviewing financial returns — her only utterance throughout the session — if I could “change this chart color to blue from red” next time.Â Seriously.Â That would never even be breathed in a corporate board room; we’d be drilling into the numbers.
Nonprofit is a business
These issues are often intertwined.Â A strong business-oriented CEO is needed to both operate a nonprofit like a business (with the “profit” driver being how much more it can help), while also getting the board members on the right track and even responsible for generating funds themselves. Yes, not an easy task. But “doable.”
There are 2 consistent truths in for-profit business and charity / nonprofit:
1. It takes money to make money.
2. What you did 30 years ago — or even 2 years ago — may not work like it did then.
And, no, innovation is not starting a lottery like I noticed every other charity in Canada is doing, seemingly by default, or perhaps due to a void of good ideas.
Some metrics, courtesy Chip Grizzard, who runs an agency in Atlanta:
- 85% of the top US 1,000 e-commerce retailers donâ€™t have shopping cart abandonment retargeting campaigns. Most charities donâ€™t even track this.
- Only 1% of US retailers send a welcome series to engage new email subscribers.
- 10% of supporters now visit charity websites on a mobile device; mobile device adoption increasing dramatically.
- Charity websites with a branded donation page received 5x more donations and at higher avg. values than those with a generic donation page
- In 2011, social giving made up 15% of all donations through NetworkForGood.org, up from 10% in 2009 and virtually 0% prior to 2008
- 70 to 1: the number to which brand email subscribers outnumber Facebook “likes”
- Email remains a mainstream communications channel for 90% of US online adults.Â So, don’t abandon that just to join the social media wave.
Yes, these statistics are US-based.Â But charities in all countries must take note and act to survive.Â Charities and nonprofits are not in a bubble.Â Whether they like it or not, they are competing for donors’ money and their quickly-splintering attention.Â Those that depended in the past on government or corporate handouts are much more at risk.Â It is the grassroots $10 and $25 donations that will increasingly drive much of the future.
Remove the barriers to giving
If you run a charity and put donation barriers or speed bumps in place, you will lose. Guaranteed.Â Some easy, quick fixes:
- remove requirements for registration from your website
- initiate quick and easy online donation, such as via PayPal and wireless phone SMS
- “mobile-ize” your website
- use landing pages for all campaigns
- send Thank You and welcome messages.
And then there are the charities that are seemingly embarrassed to ask for money on their home page, so they put “Donate” in small text next to the “About Us” link.Â Make sure it’s a prominent, but tasteful, banner that folks don’t need a magnifiying glass to see.Â Yeah, I know that you want to tell the world about all the wonderful things you do.Â But, really, many people just want to visit your site, give you money, and leave.Â Making donors hunt for the way to do that is only going to keep the money in their wallets.Â As my broadcasting teacher was fond of saying years ago: Keep it Simple, Stupid.
Of course, these are the Band-Aids and duct tape.Â Much more has to be done at the fundamental level to compete and survive in the post-recession New Normal.