Have you heard this statement before? In 2010, who believes that organizations can succeed without marketing?
Well, let me share who says this statement a lot – nonprofit professionals. And do you know why? If you have ever made a donation to a charity or volunteered for a nonprofit, you’ll want to hear what author and Harvard Business Review blogger Dan Pallotta has to say. I heard him speak recently and he turns this sector on its heels.
Based on his book, Uncharitable:How Restraints on Nonprofits Undermine Their Potential, Pallotta said his research has uncovered the history of nonprofit organizations to “Puritan notions of charity and self-denial.”
Pallotta’s company, Pallotta TeamWorks, was the for-profit brainchild behind several campaigns to raise funds for breast cancer and AIDS research and awareness, creating several nationwide, marathon-like events that raised millions. But its founder came under attack for violating the sacred premises of charitable organizations: low profile, low budget, and little or no profit.
Pallotta questions the assumption that charity and capitalism should be divided. He asks, “Don’t charitable causes deserve the same kind of competitive forces that work to get results in the for-profit sector? Wouldn’t social causes be better served if charitable organizations were headed by the kind of bright, aggressive executives that work in the for-profit sector?”
I absolutely concur! I’ve worked on the “inside” of the nonprofit sector at the national and regional levels, and found it frustrating that people thought we were only effective if we didn’t spend more than 10-15% of “overhead” on administrative costs and fundraising. So, where did they place marketing expenses in the budget? On the program side. Sad.
What are your thoughts? Do you think that a for-profit, capitalistic approach can help us solve more of our society’s problems?
Tags: charity, Dan Pallotta, fundraising, Marketing, nonprofit marketing, social causes
I couldn’t agree more with this article. Great job, Elaine!
In my opinion, the only big difference in a non-profit and a for-profit is where the money is coming from. In the end, a non-profit is still a business, with expenses and budgets, etc. The money just comes from membership or fundraising efforts.
There’s a stigma around the “non” that makes everyone automatically want to draw the purse strings a little too tight. The main non-profits that people think of are the ones with high visibility (Red Cross, Goodwill, WFF). While not blowing us away with marketing plans, at least they understand the importance of getting their name out to maximize their fundraising efforts.
Just because you’re actively promoting in a broader spotlight doesn’t mean you’re losing the integrity of the company. That’s something that non-profits need to realize immediately.
Thanks, Joe. You’re right that the prefix, “non” has a connotation of being the opposite of profit making. Making money is a good thing in the nonprofit sector. The difference is what you do with the net revenue and how it solves our society’s problems.
There’s a real learning curve here – I’ve heard from other non-profit professionals that they think if they’re doing good work it will raise their profile and they’ll get picked up in news stories, and that will do the marketing for them. There’s also a tendency to equate marketing with advertising, which makes people think of expensive TV ads. Marketing doesn’t have to cost a lot, but it does cost something.
All companies want to make the biggest impact for the smallest amount, and it’s not always the case that the biggest amount gets the biggest impact. But it’s pretty clear that no amount gets no impact, and there are so many really talented people who know how to use both traditional and new methods of marketing, PR, and community engagement to benefit non-profits, and they want to help… but they also have to pay the rent.
I agree with Pallotta, too, but as someone who is bright, aggressive, and burned out from the stress of long hours and a consistently low balance in my checking account, I’d say that the problem is two-fold: learning about marketing enough to invest in it and investing in the staff to carry it out. But then, I could say that about all of our departments.
Jennifer, I call that a right of entitlement on the part of nonprofits that still believe that notion. Nothing can be further from the truth. Getting noticed takes effort – even if all you have to work with is a shoestring marketing budget. It CAN be done.
And yes, consultants and experts in nonprofit marketing do have to make a living. You don’t need to convince me of that!
This is a great post, thanks Elaine. I’ve forwarded it to several of my clients and friends in the non-profit world. Talk about timing, after reading this someone I was talking to brought up a complaint I’ve been hearing a lot lately. People are criticizing the Red Cross’ use of the text fund raising campaign. They say, yes, they raised money but how much did they pay for the texting system!
Seriously? (and I have no idea what they paid or if it was donated…that’s not the point) Is it wrong to raise millions of dollars if you have to spend a little to be able to do it. It reminds me of people who say not to donate money to an organization that uses telemarketers because only a percentage goes to the charity itself. But think of it this way, if those people didn’t call me I would not have thought to donate in the first place. Yes, I think the split needs to be a bit more even but those providing the exposure and service should be paid and the organization should not be vilified for marketing their cause.
Thanks, Traci! Hear, hear! It amazes me that some people expect results without investing anything in marketing. What an oxymoron. As they say in the fundraising world, “It takes money to raise money.”
If the public could understand Pallotta’s premise and see his charts and figures, they’d see how ludicrous it is to expect the nonprofit sector to succeed without investing in its infrastructure, staffing, and marketing. How else can we solve these huge problems?
Thanks again.
I completely agree with the principle. In practice, I can see how it may get a little dicey both from the organization’s perspective as well as the donor’s. Execution matters. Some things that are acceptable and even endearing for commercial enterprises would really be inappropriate for a nonprofit.
(Can you imagine the a style of anthropomorphic ads — like Apple’s “I’m a Mac” campaign — being run by, say, the Red Cross, where the lovable but clueless antagonist was Goodwill?)
The other side of it is that marketed too heavily or too often in the wrong way could CONCEIVABLY turn people off to donating at all (“Gosh, Jill! This is the 16th solicitation I’ve gotten for money this week!”).
So, yes. Marketing is not a dirty word for nonprofits. It can be effective, but has its limits. Which suggests strongly that there good reasons to hire specialists in this area.
Thanks for your comment, Cam! You’re right that marketing styles differ in the nonprofit sector, although they don’t always have to be serious and mundane. I once produced TV spots with actor, Leslie Nielsen, using slapstick humor to raise awareness for a charity serving people with physical disabilities. There are many attention-grabbing creative ideas that nonprofits can employ.
And “too frequent” can turn off supporters, too, I agree. Yet in the direct mail world, studies show that increased frequency works. The direct marketing specialists have this down to a science based on sound research.
Pallotta’s entire approach includes a marketing paradigm shift, complemented by those in finances and fundraising.
As the Owner and Founder of Peninsula Shops and Board Member of both Hometown Peninsula and the Redwood City Art Center I get an upfront and close look at how local businesses and non-profits struggle to keep themselves relevant in our community. Usually lack of planning or direction are the root of all that tends to fail.
There is no doubt that a non-profit should be utilizing more resources and a capitalistic approach to communicating about their cause or effort. With that said, I think local businesses should be connecting with local non-profits (or vice versa). Extending services or product to one another in turn hels both parties associate and familiarize themselves with what it is we all trying to achieve; enjoyable livelihood.
Challenge: Show me a community that doesn’t shop at or use a local service that is directly tuned into a local cause!
Jason, I commend your community involvement. I agree that cause marketing partnerships with small and mid-sized businesses can work exceptionally well. Companies don’t need to be corporate to get involved in mutually beneficial relationships. Thanks for your comment.
I’ve heard the we-can’t-afford-marketing line from both nonprofits and for-profits, particularly smaller ones. I closed a recent post of mine with: “Telling me you don’t have a budget for marketing? Yes, that too is marketing.”
(I invite you to view the full post here: http://www.semiosiscommunications.com/preventing-marketing-budget-famine/ )
An old boss of mine at a nonprofit used to say that “not for profit” shouldn’t mean “for loss”. The world needs more Dan Pallottas who would challenge the status quo. I agree with his outlook and hope he succeeds.
Part of the problem why nonprofits seem to think they operate outside of the market is the concept of nonprofit rates. As service providers, we share the blame; it took me a while to recognize that and accept my share of the responsibility. As a marketing professional, I no longer have nonprofit rates.
(Here are my reasons in full: http://www.semiosiscommunications.com/tyranny-of-nonprofit-rates/ )
Thanks for bringing these issues to light, please keep it up! Would you consider guest posting on this topic on blogs for nonprofits?
Peter, thanks for the good line you mention in your first paragraph. I love it!
You also made me think about the reduced nonprofit rate that consultants and suppliers often offer to charitable organizations. It’s a bit of a Catch 22. Offering a discount rate helps organizations spend less on operating costs, but at the same time, sends a message that they are entitled to it all the time. Small businesses also need to make a living, and I’ve heard this complaint from many nonprofit vendors.
For some reason, your links were 404. Please contact me offline and we can discuss guest posting. Thanks!
On-target post! The real mantra should be “we can’t not afford marketing.” (Sounds like a tongue-twister.)
Truth is, I think many nonprofits are afraid to market themselves. In addition to their fiscal restraints (externally or internally imposed), they also straddle the line of not wanting to appear too commercial, or publishing the wrong message. In essence, there’s a lot of “we won’t say anything so therefore we won’t get ourselves in trouble.”
In some ways, Pallotta erred on the exact opposite of this equation. He was a banner waver. He got attention — for himself as well as his chosen causes. At times, he was truly inspirational. Other times, he seemed callous or selfish.
Nonprofits don’t want to (and can’t afford to) take the chance that they could be viewed in antithesis to their mission.
I participated in three of Pallotta’s events — though, to me, they were “our” events. The notions of belonging and just rewards are where his for-profit company’s desire to make money diverged from participants’, donors’, and recipients’ needs to further a specific cause. The goals were not sufficiently in line, and PR/marketing wasn’t prepared to deal with that.
I do think there’s a place where the twain shall meet, but it can’t be a purely commercial — or purely nonprofit — model. Above all, it has to be honest, educated, and aligned.
Bill, you’re 100% right. They can’t afford NOT to market. Perhaps the fear issue is also related to donor/public misperceptions that charities shouldn’t advertise or spend any money, except on the mission. But, how would people know to support the cause unless they know about the mission to begin with? What a paradox!
Nonprofits don’t take risks for fear of being shunned or deemed controversial. That’s one of Pallotta’s points. In my opinion, if they don’t take ANY risks, they become mundane (i.e. safe), making it even harder to garner attention.
I also agree that there needs to be some hybrid solution. Thanks for weighing in.
A hybrid solution does exist, albeit from the commercial end, and is spreading throughout the U.S.: L3C, “a new form of limited liability company which combines the best features of a for-profit LLC with the socially beneficial aspects of a nonprofit. It is the for-profit with a nonprofit soul.”
http://americansforcommunitydevelopment.org/
Thanks for sharing this, Peter. I hadn’t heard of it before now. I will definitely check it out. Looks intriguing!
Is it true that charitable nonprofits with the largest revenues are also the ones with generous marketing budgets? I wouldn’t it expect to be an exact corellation but I’m guessing there’s some relation.
Charities, like so many industries, operate in a competitive marketplace, and branding can help break through the clutter. With so many competing charities, donors rely heavily on brand recognition to some extent, and this brand recognition is a result of a concerted marketing effort. (But the service/product/organization has to be wonderful in the first place, or marketing is just fluff.)
Perhaps nonprofits need to take the extra step and asses the monetary value of their brands, as Coke does. For example, how do brand and reputation influence both current dollars collected and the probability of collecting future dollars? If nonprofits could assess that value, then the argument for a marketing budget could be that much stronger.
Laura, you’re spot on. Many nonprofits have amazing brand equity, but don’t measure it – likely because they may not understand its value, and… because it would take research dollars. And frankly, what would be the advantage? You can’t re-sell a nonprofit as one can do in the corporate world. The brand equity can be calculated as part of a company’s value when it’s on the market or in a takeover situation.
You entire second paragraph is gospel to me! Thanks.
I have worked for both non-profits and for-profits in PR/marketing. You’d be surprised how many companies do not value marketing/PR. I was the ONLY PR professional at a construction company when I was laid off. The company had no PR person on staff who could help when a major bridge accident (with deaths) happened. It seems that one of the first departments cut during tough times is often marketing/PR/communications.
Sadly, you’re right, Michelle. Too many organizations – both profit and nonprofit – are myopic when it comes to marketing. We know it’s not a business luxury. So, how do we convince others of its necessity for growth and success?
This is a great topic, and as someone that’s had the great fortune to work with several non profits in my position, it’s disappointing to see them not have the resources or the will to effectively market. Even those that I’ve seen that have the resources and backing from management, often don’t do it effectively. Obviously if they did have the talent that was required for the position, along with the resources, they could generate huge windfalls and awareness.
You want to see them succeed, and as someone who has partnered with them and then had to see the campaigns not succeed as they might have, it’s disappointing. You want to suggest things that might work or help, but oftentimes the separation causes pull back and hesitancy. But the truth is that unless you’re actively promoting anything, awareness is hard to come by, so non profits should take the for profit model and adapt where and when they can. The results would be dramatic.
Jay, can you imagine how many societal problems we could solve if nonprofits were valued by supporters and the public? Investing in top talent – at the CEO level and marketing/fundraising – could produce such greater results. The challenge is that the public wants 90% or more of their donor dollars to go directly to programs and services. Can you imagine setting that restriction on a start-up business? Ya, right!
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Great push-back on the traditional relationship between NPO’s and marketing. IMO a specific area where NPO’s need to be world-class marketers is in closing the inbound supporters to capture their interest, passion, or $$ before their energy or attention wanes. How many organizations solicited you for supporting their efforts in Haiti lately? Which one (probably only one!) did you decide to support and why? Most likely because that org has done the most to understand and cultivate your interests.
So yeah, they need to be good at outbound marketing, but closing is the key!
Darren
Good point, Darren. The org that has built the relationship long before a disaster, is going to come out on top for trust and credibility in stewarding donation money.
We work with a lot of non-profits and spend a great deal of time trying to help them apply lessons learned from successful multi-channel programs in the B2C world to their work. Often we will see them nix a direct mail piece that can get the attention of potential new donors with relevant content because they think potential donors will be mad that they spent money to drive donations. Yet, they will spend unbelievable amounts of money on invitations to events that their loyal constituents would have attended had they been simple black ink on a panel card. These are great organizations with worthy missions but many are loath to do anything different from what they have always done.
Oh, Kate, you are singing a song I know! Nonprofits have to walk a fine line between wanting to be more creative and spending money and the fear of reprisal from donors and supporters. That’s what Dan talks about – how we need to change that paradigm.
Shall we stop working because making money is evil? You envy and loathe those that are successful and have money because of their marketing and branding; and you continue to lust and bemoan, depressed, on and on, or – you make a decision as to whether you want your charity to survive or not – and not least your beneficiaries.
It is not the idea or concept of marketing that is the issue, it is the ethics behind every technique used to round up your support. That can be worked out without necessarily compromising your values when you creatively reach and meaningfully connect with those who share the same values, and will then gradually support your cause. Unless you ‘market’ what you do, they will never know about you and they will spend their money elsewhere. It’s a simple, and consequential, as that.
You’re right, Phillippe. It’s not just marketing that is at the root of this issue. It is an overall philosophy that charities shouldn’t spend donor dollars investing in themselves. Marketing is but one area this attitude affects. Now, be a good chap and influence the Brits about this!
Elaine, Thank you for writing this post and getting the discussion going! I have mainly been involved with small business marketing but hear this phrase too, as a few commenters mention. The real disconcerting thing for me is that I’m offering free marketing services to a local nonprofit and there doesn’t seem to be any takers! (See my website.) There’s no cost involved, just completion of a short online form. Baffling to me! So, perhaps budget is not the only barrier to a nonprofit taking on marketing efforts? I think the Puritan influence is on-target but also perhaps there’s more education needed overall? I think this is what Jennifer is referring to as a learning curve. Nonprofits and small companies alike would benefit from a better understanding of the importance of marketing efforts (and potential gains) and tools to engage their target audiences (such as their websites).
Thanks for adding your experience to the discussion, Tracy. Maybe the nonprofits think there’s a “catch” involved in your offer. They are typically cautious when they aren’t familiar with the individual or company making the offer. There have been many negative stories that nonprofits can tell, so this doesn’t surprise me.