During the last decade, competition between charitable
nonprofits for diminishing financial resources has inspired them
to embrace new skills that will improve their fundraising ability
while also serving their constituents better.
Although fundraising results are tied to the capacity to
communicate to donors and persuade them to give, they are also
tied strongly to functions that occur much earlier than the
actual request for funds. In particular, they are tied to the
level of satisfaction with the organization's services that is
expressed by its primary constituents, i.e. those served by the
organization's mission. A philanthropy positions itself best to
compete for all kinds of support, including funds, by
doing the following:
- carefully defining who its constituents are
- measuring the needs of its constituents
- designing programs to suit those needs
- measuring the constituents' satisfaction with those
programs
- using those results to fine tune its services regularly
- communicating the above to potential donors (and others)
clearly and simply
This process is easily recognizable in the commercial business
setting; it is called marketing. Transferral of marketing
principles to the nonprofit community happened about 1975 when
business marketing genius Philip Kotler wrote Marketing for NonProfit Organizations
Definition
Kotler defines marketing as the analysis, planning,
implementation, and control of a charitable
nonprofit's programs, which have been carefully designed to bring
about voluntary exchanges of values with target markets
for the purpose of achieving organizational objectives.
Application to Operations
Management
Analysis, planning, implementation,and control
are managerial functions performed by the board and staff
(usually through a strategic planning process) for a term of
years. The group first measures the needs of its primary
constituents (clients, users, etc.) and then designs (or
redesigns, or reaffirms) services to suit those needs. Asking
focus groups of constituents regularly to review programs and
react to them is the charitable nonprofit world's version of
market testing. It is a variation of what happens when you walk
through a shopping mall and someone asks to you drink a sample of
orange juice and react to the taste, color, consistency, and
smell of the product. The ability of a charitable nonprofit
organization continually to adjust its services to suit client
need is key to ensuring the organization's survival and its
financial support. Tip: The existence of
a Market Evaluation Committee within the board is a sure sign
that the organization is seeking a maximum fit between programs
and constituent need. Potential funders look for that sign.
Exchange
The organization and the constituent each seek something from
each other. The constituent needs specific services. The
charitable nonprofit has two needs: (1) maximum use of its
service so as to justify its existence; (2) financial resources.
Each voluntarily seeks a response from the other, and when those
responses happen, it is called an exchange of values, or a market
exchange.
So there are really two kinds of market exchanges that
result from the aforementioned management processes: (1) enhanced
appreciation and use of programs and (2) financial support.
To focus on the second exchange, financial support, let us
acknowledge that there are really two sources of financial
support: (a) donations from those who actually use the
programs, and (b) contributions from others who approve of
the programs and who want to facilitate that exchange with their
own money on behalf of the constituents.
The first (a) is easy to understand. A hospital patient who is
happy with the services he got during his stay is likely to
respond to the annual fundraising appeal from the hospital with a
generous donation. He has also paid his hospital bill, thereby
providing the hospital with another kind of exchange fees. So the
patient has used the program and paid fees and a
donation to the organization. He has made two market exchanges
with the hospital.
The second source (b), the non-constituent who wants to help,
is more complex in motivation. Here is where many organizations
make a serious mistake. They fail to recognize who the
potential donor represents. That donor really is paying the bill
on behalf of the indigent hospital patient. Yet, when the
hospital approaches a foundation, corporation, or individual
donor for contributions, it usually couches its request in terms
of money for the hospital, not the indigent patient. In some
respect then, funders are surrogates for primary constituents,
and they usually indicate which populations they represent in
their guidelines. When a donor gives money to an organization for
the benefit of a third party, the donor and the organization have
entered a partnership which results in a market exchange.
Target Markets
Some charitable nonprofits stop at defining their primary
constituency, i.e., that target market for which their programs
are designed. For example, a crisis nursery would define young
children as their primary constituency. As organizations begin to
see the connections between their needs (community support,
technical skills, money, etc.) and the groups which could supply
those needs, the organizations begin to define and prioritize a
secondary constituency. That list can include board, staff,
advisory committees, special friends of the organization, former
board members, policy-makers, government agencies, regulatory
agencies, professional associations, mass media, competitors,
suppliers, and the whole gamut of financial contributors. It
catalogs any population of people that can influence or be
influenced by the charitable nonprofit. The list of target
markets is often sub-divided between those for program
development and potential funders. It is not unusual for the same
targets to appear on both lists. Theoretically, when the two
lists become identical, the organization has maximized its
potential for fundraising and program development.
Each market is cultivated by the organization for a specific
purpose. Those assignments start within the board and involve
staff support. The orchestration of those exchanges is done by a
marketer (board or staff or both as a team), who designs and
manages the exchanges.
The board member who chairs the Marketing Committee usually
earns a living in marketing; the staff member who partners with
that board member is the Director of Development. Tip: We
begin to see that "development" means more than
fundraising; it includes market planning and finance as well.
A Broader Use of Marketing by Charitable Nonprofits
The charitable nonprofit which tests the acceptance of its
programs by its constituencies often derives a second benefit
from that test...an assessment of its image with a wide variety
of target markets. An attempt to determine the strengths and
weaknesses of the organization in the mind of the constituent(s)
may uncover a false impression, or an unmet need. The
organization then can take steps to send targeted communications
back into the community to correct the organization's image or to
design a new service component. Many a group has been grateful to
learn of such problems before they reach the media, or before
beginning a fundraising campaign that might otherwise fail.
What Marketing is NOT
Marketing is not public relations or publicity. Those
are communications techniques to establish and circulate an
image. Marketing is not sales. The sale is the exchange
between the organization and the constituent or the organization
and the donor. Marketing is not forcing a constituency to
accept a pre-designed program.
Instead, marketing is the assessment of constituent need
and the management of the response process to achieve best
utilization of programs and optimal financial support. Board and
staff work as a team to achieve this goal. The primary
manifestation of that teamwork is the strategic
organizational market plan. Marketing for NonProfit Organizations Philip
Kotler, 1982, Prentice Hall.
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Beverly R. Hoffmann has
taught nonprofit management and fundraising at The New School for
Social Research, Seton Hall University, Princeton, Rutgers,
George Washington University and the Foundation Center of
Washington, DC.
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