Partners in Philanthropy   Partners in Philanthropy
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mmaude@develop-net.com

Marketing Is Different
In The Not-For-Profit World

Marketing has earned its place in the not-for-profit world. But marketing and development are not the same. Marketing is about exchanging goods and services for money. Development is about relationships — it is not about money.

Increasingly, not-for-profit organizations have taken to emulating the moneymaking practices of corporations. These days, for example, most charitable institutions market themselves, a practice that once was anathema. This powerful trend has three primary causes: the decrease in funding from the public sector, the increase in competition for funds among an expanding number of not-for-profit organizations, and the rise in funder pressure for not-for-profits to operate in a "businesslike" manner.

Immersed in a capitalistic and materialistic society, development professionals were able to effect a huge change in outlook and behavior after a relatively brief and easy transition. We now are accustomed to calling our constituents "clients" and "customers." We segment our "target market" and develop strategic marketing plans. We focus on the exchange of goods or services for money. In all these efforts, we are aided by board members and other volunteers from the for-profit world who are eager to embrace activities that to them are comfortable and familiar.

The effects of the rise of marketing on the attitudes and practices of development professionals have not always been for the better. We have refined to a science the execution of direct mail, telemarketing and special events, making them predictable and rote. Unfortunately, the way we imagine, plan and carry out these activities can lead us to think of our donors as numbers and objects. Too often, we aim our communications at the masses rather than at individuals. In our sophistication, we risk depersonalizing and devaluing our donor relationships.

In this article, I will attempt to make clear what I believe is a key distinction between development and marketing. They are not the same thing, and ought not be confused. Also, I will describe what I believe has been the impact of marketing on donor relations. Finally, I will outline both the pitfalls and the proper role of marketing for not-for-profit organizations, in the realms of social entrepreneurship, cause-related marketing, special events and telemarketing.

IS IT MARKETING OR DEVELOPMENT?

It is important for fund raisers to keep in mind that, while marketing can generate substantial funds for charities, it is significantly different from development. Let us begin by defining what we mean by the two terms.

Marketing is the promotion of the exchange of goods or services at a mutually agreeable price. It involves a tangible, reciprocal transaction between a seller and a buyer.

Development is the process not-for-profit organizations use to secure financial support and advance their missions. It involves a transaction between a donor and an institution that is based on intangibles, like faith and trust. By contributing to organizations, donors hope to sustain their personal values and advance their future hopes.

VISION AND MISSION REMAIN PARAMOUNT

In Jeopardy the answer would be, "vision and mission." Any veteran development professional will know the correct question: "What motivates donors to give to charity?"

The fund raiser's ability to express with clarity and passion an organization's vision and mission lies at the heart of the development process. We design and present our message to appeal to the hearts and minds of prospective donors, and the strength of our appeal determines our success.

With the rise of marketing in the not-for-profit world, development professionals have come under increasing pressure to move beyond the traditional confines of development work. The practice of marketing increases the time and attention fund raisers must give to the various methods of fund raising, and has decreased the time and attention we can focus on cultivating donors and attending to their needs. The task of connecting our organization's mission with our donors' interests has become more difficult and complex. Marketing tends to force us to keep foremost in mind the result of our efforts — money. In the process, we sometimes forget that our donors care more about what we propose to accomplish with money.

In the development process, an exchange occurs between an organization and a donor, but the exchange is difficult to value and quantify. Ultimately, it is grounded in the organization's vision and mission, and in the ways these things resonate with the donors' values and goals.

The donor's response relates directly to the development professional's ability to express an organization's vision and mission in a compelling way. The medium of exchange is the donor's belief that, by helping to finance an organization's programs, the donor's values will be given shape and voice. The quality of communication necessary to effect a significant level of trust, belief and investment becomes difficult to achieve without meaningful personal encounters. Such encounters are difficult to achieve when the time of development professionals is consumed by marketing activities.

While working to improve our business practices, not-for-profits need also to maintain and emphasize our greatest strengths: vision and mission. "Not-for-profits are generally stronger than for-profits in terms of the strength of their vision," Joseph Quigley writes, in his book Vision. "All visions and strategic plans are value-based and...values are the most fundamental element of the vision."

MARKETING HAS LEGITIMATE ROLES

Does marketing have a legitimate role in the not-for-profit world? Of course it does. Many practices are both distinct from development and legitimate sources of additional revenue for organizations with goods or services to sell. Marketing clearly is here to stay, and can do a considerable amount of good.

A growing realm of marketing in the not-for-profit world is social entrepreneurship. It has its own organization, The National Center for Social Entrepreneurs, which helps not-for-profit groups to formulate strategic marketing plans for business ventures with social purposes.

The National Center for Social Entrepreneurs believes that not-for-profits need to become less dependent upon government funds and charitable contributions as they strive to achieve financial stability while meeting community needs. It encourages organizations to build on their core competencies and earn revenue through, among other things, service fees, product sales, consulting contracts, and training and education courses.

In this context, the center maintains, it is appropriate for a not-for-profit to speak of customers and clients, to develop a marketing plan and, in general, to act like a business. It points out, however, that not-for-profit marketing efforts are driven by a dual purpose. They seek not only to tap the marketplace but also to advance a charitable mission.

Also, not-for-profits must make their customers aware that the funds they provide are critical to programs that are not self-supporting. Likewise, organizations should remind customers that it needs charitable contributions in addition to earned revenue. The organization should, in fact, consider customers as prime donor prospects.

CAUSE-RELATED MARKETING'S ROLE

Cause-related marketing is another appropriate source of additional revenue for not-for-profit organizations. Cause-related marketing links the causes of a not-for-profit to the marketing approaches of a corporation, typically one in the consumer-products industry. The practice connects charitable partners directly to corporate promotions designed to enhance brand identity and boost product sales.

A corporation chooses a charitable partner based on the strength of the organization's name identity and the size of its constituencies. Charities receive contributions based on units of a product sold or a straight fee for the privilege of using the organization's name. Occasionally, the organization's development staff is encouraged or even required to call on retailers to promote the joint marketing program, leading them to serve the corporation involved as an extended sales staff.

Not-for-profit organizations can earn a significant financial return from such activities. The organizations need to keep in mind, however, that cause-related marketing is strictly marketing. It is not development. Corporations pay their "contributions" from their marketing budgets, not their charitable budgets. In entering into these agreements, charities must realize that they are essentially allowing the use of their names for a fee.

Cause-related marketing should enable an organization to achieve an increase in public awareness of its goals and mission. Before signing a marketing agreement, not-for-profit organizations should stipulate that corporations include a tag line or brief phrase that communicates its mission every time the organization's name is printed, broadcast or otherwise used in promotions.

Usually cause-related marketing programs involve television and radio broadcasts, public events, press kits and the like. Organizations should obtain the right to include information about their missions and programs in these venues.

The increases in public awareness produced by cause-related marketing efforts do not always translate into higher contributions to an organization. They do provide fund raisers with an opportunity to make the most of follow-up development activities.

SPECIAL EVENTS CREATE VISIBILITY

The distinctions between marketing and development are often blurred around special events.

Donors attending special events are essentially consumers. An exchange occurs between sponsors and attendees at such events, with a value that people can readily ascertain. The Internal Revenue Service has specific regulations regarding the valuation and deductibility of attendance at special events.

Special events create visibility for an organization and enhance its image. Typically, however, they do not increase the donor base. Post-event appeals by mail or telephone generally are unproductive.

The reason is that few people who attend special events are truly engaged with the sponsoring organization's vision and mission. A runner enters a charity race because she wants to stay fit. A consumer attends a hospital resale shop's "next-to-new sale" because he wants to find bargains. The attendees are pursuing their own interests, with little concern for the sponsoring organization's objectives.

Corporate sponsorships further complicate the issue. Often the budget for such activities lies within the domain not of a corporation's foundation but of its public relations, community affairs or marketing departments. Even so, many corporations view event sponsorships as gifts to charity, whatever their public relations or marketing value.

Too often, only a small portion of the cost of sponsorship accrues to the benefit of a not-for-profit organization. In fact, the costs of an event on average consume between 35 and 50 percent of gross proceeds.

Special events are popular with volunteers, for two reasons. First, the "fund-raising aspect" of special events "legitimates the entertainments themselves," according to Prince and File in The Seven Faces of Philanthropy. "The process of putting on a large event provides [volunteers] with the means to develop an extensive support and social network of like-minded people, which can be tapped again and again to further philanthropic and social goals." Many who attend special events do not have close relationships to the organization's mission. They come to enjoy the dinner and the other trappings of a gala, and to rub elbows with a select group of people.

Other volunteers, consciously or unconsciously, advocate special events as a way to avoid the hard work of fund raising. "We can raise money through a special event without ever having to ask anyone for a gift" — so the thinking goes. When such thinking really takes over, an organization focuses on concessions, ticket and T-shirt sales, exhibition fees, sponsorships and the like, and neglects to develop donor relationships. Such an organization expends tremendous effort on raising funds from many people who for the most part have no relationship with the organization and no interest in its mission.

Fund raisers should view most special events as marketing activities. As such, they have obvious advantages. Through a special event related to its mission — such as a book sale benefiting a library or an art auction to endow a museum's acquisition fund — an organization makes new connections and broadens its constituency. Many consumers at these affairs may already be donors; all should be regarded as prospective donors.

With any special event, we should take every opportunity to inform donors of the organization's mission and programs. Every speaker, advertisement, printed program and ancillary support of the event should promote the mission in a compelling way, one that leaves a lasting impression that can have an impact on later development efforts.

Special events also can be used effectively to recognize people who have made major contributions, financial and otherwise, to the organization. They also can present effective opportunities to acquaint prospective donors with the organization's mission and to cultivate personal relationships. In these contexts, the focus is on developing donor relationships, with a secondary emphasis on raising funds.

COULD WE HAVE A MOMENT OF YOUR TIME?

Some development professionals do not like to use the term telemarketing to describe raising funds for organizations by telephone. It is the term donors use, however, and we might as well use it, too.

Many volunteers hate telemarketing. Personally, they do not appreciate receiving solicitation calls at home; they view them almost as invasions of privacy. They have no wish to become a caller themselves; it puts them uncomfortably close to asking a real, live person for a gift. If they promote telemarketing at all, they favor hiring students or professionals.

Telemarketing, however, can be an effective tool for not-for-profit organizations. It often achieves good results with current and lapsed donors, and with others who have had experiences with an organization, such as university alumni or former hospital patients.

More personal than a letter, a call gives a not-for-profit organization an opportunity to initiate or strengthen donor relationships. A conversation also gives constituents an opportunity to give responses.

Telemarketing works especially well when the prospective donor is alerted to the impending call, and when the caller is both personally involved with the not-for-profit organization and enthusiastic about its programs.

Telemarketing can be either a marketing technique or a development method. Three telemarketing techniques place it firmly in the marketing arena: cold calling, rigid conformance by the caller to a script, and offers of premiums. In contrast, the telephone becomes an instrument of professional fund raising when it is used to further relationships, to advance the organization's ideals and programs, and to express a genuine interest in donors' evaluations of the organization's services, image and mission.

DO WE NOW UNDERSTAND THE DIFFERENCE?

Clearly, I believe that marketing has earned its place in the not-for-profit arena. It can be an effective tool in raising funds that are critical to our organizations and their programs.

As far as possible, however, we fund raisers need to keep the focus of our efforts on advancing our organization's vision and mission among its donor constituencies — and that is the primary work of development.

For the last time, let us not confuse marketing and development. Marketing is all about an exchange process — a quid pro quo — goods or services for money. Development is all about relationships. It is not about money.

Seven Major Marketing Pitfalls

Staff and volunteers of not-for-profit organizations need to realize that special events, cause-related marketing and telemarketing have several built-in pitfalls. These marketing activities often create habits and attitudes that spill over into traditional development functions, causing problems.

Here are seven of the most common marketing pitfalls — discussed in terms of their root causes, resulting effects and potential solutions.

Pitfall Number 1: We focus on our organization's short-term needs, giving short shrift to its long-term vision.

The cause. A concentration of effort on marketing mechanics without appropriate regard for organizational or donor interests.

The result: By failing to develop sustained relationships with donors, we lose opportunities for significant financial contributions — the kind that can have a major, lasting impact on our organization and the people it serves. Volunteers and staff never get off the marketing merry-go-round. Often, they end up "burning out."

The solution: When planning events and other marketing activities, keep your decision-making focused on your organization's mission and vision. Educate volunteers to understand the potential of securing significant financial support by developing authentic donor relationships.

Pitfall Number 2: In our zeal for special events, cause-related marketing and telemarketing, we lost sight of our mission.

The cause: The sheer size of our marketing efforts overshadows and ultimately preempts development functions.

The result: Our message and mission are muddled.

The solution: Take steps to keep message and mission foremost in the minds of volunteers. Hold a retreat to review them. Use them as the basis for creating an annual development plan. Start each meeting with the mission statement. Include the statement in all communications with donors and volunteers.

Pitfall Number 3: We apply the principles of mass marketing to our development efforts.

The cause: Thinking of fund raising as a democratic process — usually as a result of inexperience.

The result: We buy into the commonly believed fallacy, "To reach a goal of $100,000, just get 1,000 people to give $100.

The solution: Analyze your donor and constituent base. Determine the potential to raise funds through development methods only. Explain to volunteers that effective development efforts invariably produce about 90 percent of contributions from about 10 percent of donors. In short, reeducate your staff, volunteers and other constituencies on the primacy of development.

Pitfall Number 4: Our staff and board "experience a disconnect" over marketing.

The cause: Staff pressures on the board to volunteer for marketing labors.

The result: Board members resent the pressure, seeing marketing work as an inappropriate use of their talents. In time, the board allows the staff to take over development work as well as marketing tasks.

The solution: Once board members relinquish personal responsibility for fund raising, changing their attitudes and practices is immensely difficult. You will need to do whatever it takes to make the change. Begin by assessing each board member's individual attributes, time availability and access to potential donors. Use an outside expert to facilitate a board retreat. Before the retreat, conduct a confidential survey of board members. (It will often reveal dissatisfaction with current roles and results.) Work continuously with board members to build on their fund-raising strengths.

Pitfall Number 5: We raise the bulk of our funds through marketing activities.

The cause: Too much time and attention devoted to marketing, leaving insufficient resources for traditional development functions.

The result: Our development program stalls, never progressing to major giving and planned giving. Donations from board members and other volunteers drop. The organization is shortchanged; and the staff, board and donors never experience the real reward of giving — the satisfaction experienced by both giver and recipient.

The solution: Get back to the development basics. Work with the board to establish a major gifts committee. Select new board members who can inspire and contribute major gifts. Help board members to identify a handful of major-gift prospects. Develop and communicate cultivation strategies. Arrange for an outside consultant to explain to the board its fiduciary responsibility to secure financial support for the organization at an appropriate expense-to-benefit ratio.

Pitfall Number 6: We spend too much money on marketing.

The cause: Marketing is expensive. Effective marketing efforts commonly consume 35 to 50 percent of gross proceeds (a percentage that balloons without rigorous management).

The result: The organization's overall fund-raising costs escalate. In time, we put our credibility with our constituencies at risk.

The solution: Establish (or reestablish) strict expense and revenue budgets for the fund-raising operation. Budget expenses at 25 percent or less of contributions. Apply these standards to marketing as well as traditional development endeavors.

Pitfall Number 7: The effort to manage volunteers overwhelms staff resources.

The cause: Marketing efforts are "volunteer intensive."

The result: Our staff spends the bulk of its time recruiting, training and supporting volunteers, diverting resources that might have been invested more productively in traditional development endeavors.

Solution: Redeploy your volunteers to the annual fund and other customary fund-raising activities. Not all marketing volunteers will be interested in or suited for development work, but the volunteers you successfully retrain will produce greater results and a more committed donor base.

Michael R. Maude, ACFRE, FAHP
President
Partners In Philanthropy

 

 
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