There was a time when all a nonprofit needed was a cause, a simple campaign, some volunteers, a desk – and a lot of passion. Limited resources didn’t necessarily impede an organization from reaching its target audience, promoting its mission and raising money. Oh, how things have changed. Today’s nonprofit marketplace is saturated, competitive, and organizations are struggling to survive, thus forcing them to walk a fine line. On the one hand, in order to stand out from the crowd, they need to spend money on things like marketing, special events, staff, and infrastructure. On the other, they must live up to the public’s expectations that dollars are spent wisely. And this constant balancing act is a tough one for most organizations.
The evolution of expectations
“Donors are changing and their expectations of an organization’s role are changing,” states , senior vice president of KCI, a Toronto-based consultancy dedicated to helping nonprofits succeed in their missions. “It’s not the same kind of donor loyalty like in the past, and the level of scrutiny and accountability is much higher.” Whether because of increased competition or the recent publicity over inappropriate spending by a few, the bottom line is that organizations need to adapt to the changing playing field.
That adaptation is a worthy proposition for many. According to , campaign director for Better Environmentally Sound Transportation (BEST), nonprofits must live up to society’s expectations because they have chosen to take on a role that comes with a greater sense of obligation and loyalty. “I think the sector is placed in a position of trust and we need to work hard to ensure that we are deserving of that trust,” she says. Derek Martin, director of development and marketing for the Abilities Foundation of Nova Scotia agrees. “People trust that your organization has the integrity to do what it says it will do and that the money you raise will make a difference.” Of course, the logical consequence, says Hartley-Folz, is the perception that nonprofits can do things for less. “And in most cases I believe that’s correct.”
Stretching the dollars to the limit
Subscribing to that viewpoint, BEST is extra cautious about working within its means. As such, it turns to partnering, sponsorships of in-kind material and media rather than buying ad space. The organization’s commitment to maximizing the value of each dollar spent was apparent during a recent fundraising campaign. Working with Andrea Seale of Blueprint Fundraising and Communications, they were able to remain dynamic and energetic, while still sticking to a tight budget. They decided to forego the costly printing of a marketing document in favour of distributing it electronically using high quality graphic files and printing individual pieces only when necessary. Because they are an environmental group, this financial decision had strategic implications as well.
Similarly, Samantha Nutt, executive director of War Child Canada, keeps the cost of running her humanitarian organization low. “Charities are charities, they are not businesses. As such you have a moral duty to ensure you spend the greatest proportion of your revenues on your charitable works.” Toward that end, in the six years since its inception, the organization has never paid for advertising – its ad agency, John Street, and all of their print and TV campaigns have been pro bono. Other partners help them with the graphic design and their computer and administrative needs.
“We mostly rely on the kindness of strangers,” says Nutt, adding “anything we can get donated, we get donated.” Another part of their strategy is establishing relationships with the music industry, which led to a number of artists donating their time to the War Child cause. Despite their shoestring budget and approach, the organization has created a well-known brand. And though she sometimes worries their limited funds will compromise their efforts, Nutt says, “we are optimistic that our donors respect and appreciate this about us and as a result might dig a little deeper so that we can continue our good work.”
Less is not always more
But can every organization survive as effectively without spending more money? And if not, will they risk losing the support they cherish if they appear to be expending more than necessary? “In many instances,” explains Nutt, “the public’s perceptions and expectations are paradoxical.” It’s a common understanding, she says, that a charitable organization will be frugal, that the maximum percentage of donated funds will be applied directly to your cause and not invested in overhead. “And yet,” she adds, “this breeds inefficiencies in the charitable sector that can also undermine public confidence.” For example, it costs money to issue automatic e-receipts for online donations, to get annual reports out on time, and to print and distribute them. It also costs money to run newspaper ads. For many organizations, this paradox can be quite frustrating. “You do your best to stretch every dollar,” says Nutt, “only to watch your humanitarian programs get left behind as those who invest heavily in advertising and overhead grow their annual budgets in leaps and bounds.”
Nevertheless, Nutt doesn’t believe the popular corporate adage of needing to ‘spend money to make money’ has any place in the charitable sector. “People rightly trust you to make their money count in the lives of those who need it more.” While Logue agrees with the sentiment, he feels the saying rings true in any environment – corporate or nonprofit. “I think more and more CEOs and board members are recognizing that you need to make a financial investment,” he says. Nonprofits need to ascertain their cost per dollar raised. And in so doing, they need to focus on their image, their internal and external culture, and who their audience is. Once those questions are answered, they can then tailor their communications material accordingly. “It’s a case by case basis, but overall I think that organizations are recognizing that they have to build their profile if they’re going to look at getting more money.”
Seale concurs that higher expenditures are often necessary in order to sustain an organization’s image and objective. “It will very much depend on your supporters and their sensitivities,” she says. Environmental organizations, as an example, must print on recycled paper despite the added cost involved. “Your supporters will expect a consistency with your mission and will be watching for it.” For Martin, that means running the Abilities Foundation much like other respected for-profit businesses, providing first-class events and programs. Nevertheless, the organization works hard to ensure that expenses are kept at a minimum. “It is a continuing balancing act but we believe in delivering a professional product and will do everything within reason to achieve that.”
Sometimes, however, meeting the public’s expectations can be accomplished by an investment of a different kind. Imagine Canada‘s Ethical Code is a good example. By using the Code and its companion trustmark on marketing material and web sites, a nonprofit can demonstrate it manages donations responsibly. Martin claims that adopting the Ethical Code gives his nonprofit a significant level of assurance. “In a competitive marketplace we would be remiss not to promote our designation every chance we get because it’s one more reason for donors to choose our organization as the recipient of their hard-earned money.”
Is image everything?
While the Ethical Code can help a nonprofit portray a certain image, some organizations adopt the appearance of neediness to help them attract funders. And though Logue admits that the strategy can be effective at times, it can also backfire. “No donor wants to give to an organization that looks like they’re falling apart at the seams,” he offers. “People don’t want to support a sinking ship.” Moreover, adds Seale, organizations need to remember that there’s a difference between looking frugal and looking unprofessional. In their attempt to look needy, a nonprofit can appear amateurish and won’t inspire the confidence necessary to gain financial support. Rather than relying on inexpensive-looking materials, Seale recommends projecting neediness through an articulate and effective communications strategy.
“My advice would be to think like an entrepreneur,” states Martin. Too often, nonprofits use their designation as an excuse to produce a below-standard product, he says. But there is no reason why an organization can’t provide a level of professionalism that would rival any other company in the marketplace. Comparing donors to customers, he says, “if you are creative and resourceful, you can find a way to give them what they want – just make sure to do it ethically and watch that budget.”
Elisa Birnbaum is a freelance print and broadcast journalist living in Toronto.
