How Business-Like is Your Nonprofit?

By Larry Checco, Checco Communications

Q. Why is the world's richest man, Warren Buffet, committing more than $30 billion of his personal fortune to the philanthropic foundation of the world's second richest man, Bill Gates?

A. Hint: It's not because Warren Buffet and Bill Gates are good friends (which they are) and often play bridge together (which they reportedly do).

The reason Buffet committed—nay, will invest—more than $30 billion to the Bill and Melinda Gates Foundation over the coming years is because the Gateses are not running a nonprofit charity. They're managing a transparent, evidence-based, philanthropic organization that understands the value of operating in a businesslike manner.

As a result, over the years the Gates Foundation has earned a solid brand reputation for achieving and reporting results, which Buffet respects, values—and wants his philanthropic legacy to be a part of! Yet this concept still eludes many nonprofits.

When asked how they would feel about operating in a more business-like fashion, as well as incorporating branding strategies into their daily activities, many nonprofit leaders still tell me that "it would make us look too much like the for-profit sector." And my response is always the same—"Get over it!"

In no way am I suggesting that nonprofits compromise their passion for their missions or co-opt their values or program strategies to appease business-oriented donors. On the contrary, it’s that very passion and focus on helping people that many of today’s donors are looking for in an organization.

In fact, there is a growing number of civic-minded individuals, foundations, and giving circles willing to invest substantial sums of money in nonprofit organizations. But because many of these donors amassed their wealth by working in the for-profit sector, they are primarily seeking to invest in organizations that reflect the business environment from which they came—and understand.

For nonprofits, attracting these major donors means:

• Being transparent
• Being accountable
• Tracking and measuring results
• Professionalizing your marketing and development efforts
• Having a Web-based presence
• Actively promoting your brand

Would you invest heavily in a business you could learn little, if anything, about? Neither would savvy major donors. How open is your organization to public scrutiny regarding its finances, operational functions, decision-making processes, and more? This kind of openness facilitates relationship building among large donors who want to support organizations they understand, respect, and trust—namely those that own and consistently demonstrate a quality, transparent brand.

Being Accountable

It's not enough simply to be transparent. Accountable and ethical behavior is high on the list of reasons one organization may receive funding over another. According to a reliable Web-based resource, Accountability-central.com, organizations of all kinds are "increasingly being held accountable for their decisions, actions, behaviors and performance by a wide range of external and internal stakeholders," including funders.

At the very least, supporters want an accurate accounting of how their money is being spent and what impact it is making. Which leads us to ...

Tracking and Measuring Results

Touting "we make a difference" doesn't cut it these days. Nor are today's funders satisfied with simply knowing how many people your organization served last year. What they are most interested in is what long-lasting impact your organization has had on the individuals and communities it serves.

For example, if you provided home ownership counseling to 226 people over the last several years, how many are actually in the process of purchasing a home? How many have bought homes? How many are still in the homes they bought? If you are in the business of providing adult literacy classes, how many of those who have gone through your program can now read at an eighth-grade level? How many have gotten better jobs as a result of their new reading skills? What's been their average salary increase?

The more measurable results and outcomes you can document, the more businesslike—and better—you look to large, serious donors.

Professionalizing Your Marketing and Development Efforts

Can you name a successful for-profit company that doesn't have a strong marketing or research development component? Yet many nonprofits forego investing in these critical functions for fear they would be shortchanging their programs and services. The fact is that it is very difficult to grow programs and services if you're not actively out there raising funds or promoting your organization. Your executive director can't do it all.

If need be, hire professional communicators, marketers, and fund developers on an as-needed, consultancy basis. Over time, it will prove to be a worthwhile investment.

Having a Web-Based Presence

You'd be surprised to learn how many nonprofits still don't have a Web site. If you're one of them, seriously consider creating a Web site for your organization. It's the first place many donors go to learn more about an organization they may be interested in supporting.

If you already have a Web site, make sure it accurately reflects your brand, is easy to navigate, and is updated on a regular basis.

At the very least, you should be regularly communicating to current and prospective donors with a newsletter, preferably an electronic e-newsletter that is brief and compelling.

Actively Promoting Your Brand

For argument's sake, let's say you're doing some, if not all, of the above. How well are you communicating this information through a solid brand image and good brand messaging? How easy is it for motivated funders to find you? Do funders you seek to attract truly understand:

• Who you are?
• What you do?
• How you do it?
• And why they should care enough to support you?

If not, you need a new business plan—and better branding.

© 2007, Larry Checco. Reprinted from Branding Bytes, vol. 1, no. 8 (fall 2007). Reprinted with permission.