Non-profits are organizations that by their very nature face a difficult challenge – they are set up not to make a surplus from their operations and therefore rely on donations, grants and other forms of direct cash injections to fund themselves.
Where a typical commercial corporation can make financial projections based on variables such as market demand, resource costs and target-based productivity performance, a non-profit cannot benefit from that type of approach. Essentially, the difference is that although a commercial company may be at the mercy of the prevailing winds of the market, a non-profit is, at its core, dependent on the goodwill of others.
What happens when the basic funding model of a non-profit dries up and it has to learn to survive without donations?
The first question to ask is why would donations dwindle if the non-profit is doing the work it has been set up for well? You don’t have to look much further than the ongoing worldwide coronavirus pandemic for an answer. When people find themselves out of work or facing hard times financially, their own priorities have to change and one of the first things that can be affected is charitable giving.
Also, government funds that might usually have been offered to non-profits to help them in their work may have to be used elsewhere to deal with unforeseen macro-economic problems caused by events such as the COVID-19 outbreak.
Of course, the current crisis is something of a once-in-a-lifetime event, but more often severe weather, economic crashes and many other factors can come into play that can severely restrict, disrupt or even completely stop the stream of donations that a particular non-profit can usually rely on.
Of course, many commercial companies can find themselves open to these self-same problems and more, so by looking at how they deal with these types of challenges, a non-profit might be able to learn how to put certain innovative solutions in place for its own circumstances.
Alex Friedman is the co-founder and managing partner of Jackson Hole Economics, and together with his experienced team, he uses market intelligence to come up with answers to a wide range of problems. The understanding that comes from Friedman’s approach to analyzing data means that a unique perspective can be gained, resulting in actionable strategies that may offer a brand-new way of looking at things.
Thinking like a commercial outfit might not come easy to many people involved in running a non-profit as it might seem to be at odds with the whole ethos of the way that the organization is set up. However, self-funding can essentially benefit from taking a view that both end users and supporters are different types of ‘customers’ and then take actions to target their needs in specific ways.
This redefinition of the idea of a ‘customer’ can lead to an insight that might not have been applied before. In essence, those who benefit from the work that a non-profit does can easily fit into the category as they are received services, goods or other benefits that are provided by the NPO.
It might be a little harder to make the jump to thinking of donors, fundraisers and even volunteers as ‘customers’, but in fact almost everyone involved in the running of a non-profit gets something out of it, even if it is simply a ‘feel-good factor’ of knowing they are helping others.
Branding and packaging
When times are tough in terms of donations, it doesn’t mean that it’s the end of the line for them. Often, it just needs a refocusing of efforts and attention in terms of attracting donors. Like any commercial business, a modern non-profit needs to pay great attention to the core messages it has and how it puts them across.
Using all the necessary marketing techniques available, a non-profit needs to brand itself in order to define its identity and role. In this way, it can highlight the value of the work it does and the way that it uses funds efficiently and transparently.
Creative thinking needs to be applied to the notion that even a non-profit organization is in effect ‘selling’ a product or a service, and sometimes this can be realized by going into partnerships or cooperating with commercial business.
The promotional value of being involved in ‘good work’ is something that many major corporations understand very well, so having an advertising, sponsorship or even direct financial relationship can be in the interests of a non-profit when undertaken in the correct way.
Above all, when it comes to donation funding, a non-profit must have an operating model that takes into account fluctuations. Once again, this is no different from a commercial company that needs to have a ‘plan B’ to get it through lean trading times.