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improveMany nonprofits are losing ground in the highly competitive fundraising game. A recent report our organization produced called “The Business of Nonprofits” (based on a survey of 450 nonprofit executives and program directors), underscores the missing link to increased donor dollars: nonprofits need to apply best practices and use technologies that create measurable and high-impact success across business sectors to reach campaign goals.


The survey’s results also highlight fundraising tactics employed by nonprofits and compare them against similar practices used by for-profit businesses. Some the questions we asked, for example, touched on nonprofits’ online fundraising techniques and the technologies they use, and examined how likely nonprofits were to approach retailers for discounts.

Tapping into real-world business acumen is not a new idea for nonprofits. But it’s one that has been slow to catch on. Entrenched in legacy systems and reliant on less-effective technology platforms, many nonprofits have shied away from universal acceptance of this new method of business-influenced, technology-driven revenue generation. The way we see it, the giving train has already left the station, and nonprofits could miss the trip entirely unless they adapt to the changing marketplace.

Among the key findings of our survey:
- More than half (54%) of nonprofits do not ask retailers for discounts on products; among those who do ask, 25% receive discounts of 15% or less
- 22% ask the community to donate products directly
- 2% raise money online for products they need (and 51% of donation drives are held during the holidays); nonprofits use online donations to buy products in stores or online
-  Only 7% of nonprofits use online crowdfunding resources to raise funds
-  68% say they pursue grants to cover operational expenses

Applying a Business Mindset
Data backs up this new way of thinking and illustrates how much giving behaviors have changed in just a few years. For example, 70% of nonprofit funders now demand impact data and program metrics to justify their contributions, according to a 2014 Nonprofit Finance Fund Survey. 

Among the calls to action in our report is a key finding that, like most businesses, nonprofits must negotiate and bargain to save money and earmark grant dollars for programs rather than operational needs. Marketing strategies should be re-energized to consider donor group behavior and shifting demographics that impact how people give across the U.S., rather than using a broad, sweeping, one-size-fits-all approach. Nonprofits could collect and analyze donor, in much the same way that businesses collect customer data, and then leverage that data to prove the value and impact of their programs. Many, however, do neither.

In the data-driven environment of the millennial generation, measurements are needed to calculate success, goals and impact results. Why? Because younger donors demand it in order to be convinced to participate. Once involved, younger donors’ social media capabilities and sophistication can help connect communities of donors, employees, volunteers, influencers and others to promote campaigns and initiatives locally and nationally.

Our report also underscores the importance of technology in giving. Investing in software and technologies increases efficiencies and reduces the labor associated with core functions. Nonprofit labor roles can be vast, and even the best-run nonprofit organization can feel hamstrung by the enormity of its various moving parts, including fund-raising, donor recruitment and donor relations, volunteer coordination, product procurement, and internal and external communications.

Many of these challenges and opportunities are part and parcel of the crowdfunding phenomenon. With its roots in the private sector, crowdfunding  is the darling of start-ups and commercial investors. It’s also the online giving platform where 121Giving lives, offering transparency, choice, technology and built-in measurement tools.

By modernizing their technology and business practices, nonprofits stand to gain significant long-term benefits from the (new) ability to track and measure the impact of their efforts for missions they serve.

Change is daunting on any level, but nonprofits can embrace and enact change one step at a time, however small or large.

Nonprofit executives, managers and employees who read the “The Business of Nonprofits” report might see themselves in the results. The hope is that the results will inspire them to take action. They should explore and adopt new ideas and business mindsets, find new resources, procure new fundraising technologies, and implement data-driven, measurable processes that demonstrate impact and results. Byusing sound business practices and developing broader, more connected partner networks, it’s now entirely possible to reach fundraising goals once thought unattainable.

 


Liz Deering is a social entrepreneur and risk taker whose career love for start-ups took root early when she joined Boston-based Picasa while earning a master’s degree in graphic design. She then spent more than 15 years in marketing, interactive technologies and account management positions at both category-disrupting startups and traditional nonprofit organizations --- experiences that fueled her passion to launch Austin-based 121Giving.

Last modified on Thursday, 03 September 2015
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