How to Run Your Nonprofit Like a Business, Part 2

In last week’s article, I stated, “A nonprofit is not a business. But if you don’t run it like a business, you will go out of business.”

A nonprofit organization differs from commercial ventures in many ways, but some important similarities exist. First, while nonprofits do not have to meet the expectations of investors and analysts who primarily are interested in financials, they do have to meet the expectations of their “investors”—the donors—and these investors are interested in mission fulfillment. Secondly, the nonprofit that ignores many of the principles of business will not remain viable, especially if it isn’t financially solvent enough to invest in mission fulfillment. Finally, nonprofits have to deliver on their commitment to various groups of people: board members, staff members, donors and outsiders. Last week, I wrote about the first two groups; this article will focus on the latter two.

Donors: Much is written in this publication and others about building effective relationships with donors, yet, for all that is said, too much is left undone. That’s evidenced by donor attrition, overall donor dissatisfaction, “failure to thrive” by many NPOs, and surveys that should lower mistrust amongst members of the public for nonprofit organizations.

But what really matters to you is what your own donors think about your nonprofit. Large industry surveys are interesting, but your own band of donors dictate what you can do when it comes to mission fulfillment. So if you don’t know, stop right now and figure out your attrition rate. (If you are a small organization and don’t have the software to calculate this “with the push of a button,” email me and I’ll send you a simple Excel spreadsheet to help you with this critical calculation.)

Secondly, commit to finding out what your donors think by frequently answering donor calls and reading emails and letters from donors if you already aren’t doing that. Yes, it takes time—time that you could be “raising money,” but investing time to listen to donors has tremendous payoffs, too. Do you hear recurring themes? Can you respond to them with simple “fixes” that won’t cost much (if anything at all)? Do you need to provide more or different information in your communications? Don’t risk losing donors because you aren’t aware of small issues that become big gripes if left unresolved.

Then, pick up the phone and call some recent donors—large and small—and talk to them about why they gave. Is there something you need to emphasize in future communications to make sure they stay engaged? Do the donors you talk to provide suggestions for improvements? Are they energized by the same things?

And never forget to “close the loop” on telling your donors what you are doing. On Monday, a Jeff Schreifels blog talked about hope. Donors want hope—hope that their gifts, large or small, really are making a difference. Given recent negative press about nonprofit spending, now is an important time to show and tell your donors that you are using donations to bring about change. That gift of hope you give your donors is important glue in relationships that stick.

Outsiders: This is a huge category that can include everyone from investigative reporters to your mom. How does your nonprofit appear to the general public that is not engaged with you already? Do they even know you exist? Do they care? Or do they only think negative things when they hear your name?

When you know next to nothing about any company, you either don’t care or you may simply assume the worse. There is a restaurant chain that I won’t frequent because, years ago, it had some bad press about racial discrimination. Maybe it has move past that, but, in the absence of any other news, mentally I haven’t moved past it. Is your reputation with the general public based on old scandals from a prior administration? Worse, do they simply not care because you have not filled the void of information with meaningful news that shows how you are providing real solutions to a problem?

Work with your colleagues to provide positive news about your nonprofit. This may mean you have to pay for it; free press is fairly rare when you’re a smaller organization (especially in a large market). You may not be concerned about the vast market around you, but are there niches you should target so the “right” people (for your mission) know that you are a serious part of the solution?

When there is bad news, don’t adopt a “wait and hope no one notices” strategy. They will. Be proactive so you can “spin” the news (honestly) in a way that is least damaging. Bad news seems to always get out, so don’t let it take you by surprise. At the very least, offset it with good news—in other words, show the hope.

There always will be outsiders who you can’t bring to your side, no matter what. Accept that. They have their jobs and you have yours. Your job is to raise funds for your nonprofit. Stay focused on what you can change—the hearts and minds of donors, your board and staff—and above all, “do no harm” when it comes to outsiders.

This old dog knows that fundraisers often are juggling many fundraising activities while trying to help their nonprofits have the best possible reputations in a crowded marketplace. Remember to think like a businessperson—not cutthroat, but always scanning the landscape and watching for the new opportunity, the next challenge, and, most of all, the next great story to tell your donors and prospects that will show them you are the answer to a problem that they care deeply about.