Nonprofit Business Planning

Free is a Pricing Strategy

Price is one of the 4-5 "Ps" in a marketing strategy along with product (offering:service/product), place (distribution/access), promotion (communications) and position (where you want your org/offering to be in relationship to alternate offerings/orgs.  

Price reflects the cost of production, delivery, distribution and communications in addition to the value/positioning strategy.  Price can attract certain levels of users and reduce demand as well.   Essentially, what an individual or institution pays for an offering is the exchange given to have the offering.

So, it is with great interest that I read the Wall Street Journal article about Fractured Atlas' new FREE offering of Artful.ly, a customer tracking software for small nonprofits.  The software, called Artful.ly, "creates a profile of each fan listing past attendance, donations and other details. These can help arts groups communicate better with their patrons, boosting the chances that they will entice them back."

The exchange on the part of the receiving nonprofit: "We expect an organization to know us," said Selena Juneau-Vogel, the Artful.ly program director for Fractured Atlas. "We want to be recognized and thanked and included in an organization's thoughts."

Obviously, philanthropy is paying the costs in the short-run, but the strategy of giving away the product does have long-term revenue generating goals and as a step toward these goals, is all about getting "place of mind" by small arts groups.  

Nonprofit Branding

Positioning is the marketing decision that states how a nonprofit wants to be known and perceived by its constituents in relationship to other options (or no option).  Positioning matters particularly when there's lots of choices by the consumer, be there to use a product or service or make a contribution.

Positioning can be affected by branding.  Branding plants the seed and/or reminds your target audience about who you are which in turn becomes meaningful toward achieving a positioning goal.

If you want to understand nonprofit branding a bit more, check-out the New York Times article about an investigative reporting news organization.   

Nonprofit Business Plans: Understanding Demand Matters

When a nonprofit is developing its business plan, market demand for a product or service is a primary concern for estimating the potential for success.  Success of course includes at minimum, financial gains that can be used to cover the costs to produce an intended offering and contribute to the nonprofit mission.

The "ususal" work to understand demand includes understanding the demographics and psychographics of  the target buyer as well as the alternative choices (i.e. competition).  A new study by Cone Communications (see Chronicle of Philanthropy) indicates that consumers are increasingly buying products that are linked to charitable purposes AND that these consumers are not satisfied with just having their money linked but really expect that specific results, charitable results, will occur.  

I believe this expectation is important to understand as nonprofits increase their efforts to generate revenues to offset dependencies on philanthropy  by trying to find paying markets for their goods and services.  Based on this study, these nonprofits will position better if their promise is not simply, "your purchase will contribute to our work" but instead is, "your purchase enabled x number of folks to have y outcomes in their lives".  Great market research will in the end actually help understand exactly what outcomes matter most to the prospective consumer.

 

 

Nonprofits Should Earn Their Tax Exempt Status

Should nonprofits "earn" their tax exempt status?  This is the question that comes to my mind when reading in today's Chronicle of Philanthropy that 200,000 signed a Change.org petition to urge Congress to revoke the NFL's tax exempt status.  I used to think that nonprofits really prove their worth by demonstrating donor support.  But the NFL doesn't have to demonstrate philanthropic support to keep its status.  So, it is a positive foot forward when the "crowd" says: hey, we don't want this institution off the tax rolls.  

Of course, this is a first and long distant step from seeking a pending tax change, especially given this Congress' tendency to not take action on just about anything.