Market Disruptions and Nonprofits

The good news is I hear the words "business model" in conversations with nonprofit leaders at an increasingly frequent rate.  Early in my career this throw-away comment by a panelist changed my perspective on my work: "'Nonprofit is a tax status, not a business model."  While I do hear the term "business model" more often, there is still a deficit of nonprofits with the knowledge and experience to be able to fully articulate their business model in a construct that encourages disruption thinking.

Although I continually cycle through risks and threats to the nonprofit I run, until starting business school I didn't have all the tools I needed (along with the business vocabulary) to (1) identify disruptions, (2) compare business models, and (3) make the type of refinement and positioning decisions to survive disruption.

A disruption could be due to a new entrant to the market, a new value expectation of consumers, disruptive innovation, or disruptive technology. Many old guard nonprofits have been entirely supplanted due to disruptions.  Examples of technology disruptions in the nonprofit sector:

• The internet and social media changing traditional donor relations
• Nonprofits with a core service of gathering information and making connections (volunteer centers, resource centers, associations); services that can now be completed by individuals using the internet
• Advocacy membership organizations struggling to communicate the value-add of membership

As Community Shares begins a new phase of strategic planning, I am strongly advocating we focus on disruptions and our ability to compete.  Some examples of disruptions torpedoing Community Shares:

• Corporate philanthropy being displaced by cause marketing
• The internet is a disruptive innovation on several levels - most importantly making it easier for small nonprofits to be able to accept a high volume of small donations
• The entrance of for profit companies reframing philanthropy as contests, initiatives, and one-time events
• Most devastating, the misleading message of "free" in the sector - the equivalent of offering a similar product at a lower price

Although the "culture of free" refers to the movement to make creative content free, I believe the culture of free (free information, free download, free shipping, fee-free) is a crippling disruption to the nonprofit sector.  For Community Shares, there is a growing value expectation that there should be no fees associated with charitable gifts.  High profile campaigns trumpeting "no fees" (e.g., GivingFirst.org, Whole Planet Foundation) access to far superior resources (foundation corpus, corporate profits) and have inadvertently made it harder for nonprofits to justify necessary fundraising costs.

For years, Community Shares' greatest market competitor was United Way.  Now our greatest disruptive force is the rapidly changing value expectation of our donors for our services.  How will Community Shares compete with free?

You can download a free copy of the Harvard Business review article Surviving Disruption at Innosight.

How well is your nonprofit positioned to survive disruption?

$40 Trillion Wealth Shift

$40 Trillion Wealth Transfer

A certain segment of Gen X Millennials are anticipated to inherit $40 trillion dollars between now an 2050. Some project 15% of that wealth will be distributed philanthropically. What does that mean for community-based nonprofits?

 

Alyssa's parents will be be transferring a priceless wealth of memories, a topic rarely covered at planned giving roundtables

 

First, let's take a look at the type of younger donor typically surveyed about this shift. For the report, "Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy" survey respondents had to meet at least one of the following criteria:

• Personal net worth of at least $500,000
• Personal income of $100,000 or more
• Endowed family philanthropic assets of $500,000 or more
• Annual personal giving of at least $5,000
• Annual family giving of at least $10,000

Now that you are aware why you haven't been surveyed on this topic, let's take a look at what the young and wealthy value. Here's where small nonprofits have some opportunities. What jumped out to me was this concept:  

"These donors want to get in the trenches and want to be seen as more than just a checkbook. They want to know the organizations they’re supporting, the staff, board and constituents."

Read the full The Nonprofit Times Article

 

This led me to ask two questions: (1) Do we have opportunities for a donor or potential donor to meaningfully engage in our work? When they leave can they tell our story? (2) Do our donors know us?Recently I made a note to myself regarding our approach to e-community: "More personal. More of us. Are we their friend?" When we are planning our communication pieces we look for opportunities to add the faces of our staff, board, clients, and donors. Is there a person who could tell this story better than an anonymous editor? If so, make the abstract (in our case democratizing philanthropy) concrete by showing the faces of our philanthropists.

 

This is a time for building two-way relationships with donors so they see themselves (not just their dollars) as an essential part of your work. As personal values begin to eclipse family values in philanthropy, small nonprofits can focus on creating cost-effective, replicable opportunities to spend more time working alongside our donors. Instead of being more work, it can be a different way to approach your work. At every opportunity, let you donors get to know you - not just your work - in a more personal way.

SOCIAL MEDIA POLL RESULTS - WHERE SHOULD NONPROFITS CONNECT WITH THEIR SUPPORTERS?

STICK WITH FACEBOOK!

Click here to see the results of our social media poll.

Alyssa is Pinterested

Alyssa is Pinterested

We've added a new section to Tuesday Talk (our member e-newsletter) highlighting news, resources, and items of interest in the nonprofit sector. This section is curated by Alyssa and optional to read but we hope you'll find a few things that make you think, make you laugh, and make you look forward to (and always open and read) Tuesday Talk! If you come across articles you'd like to share, send them to media@cshares.org.

Social Media - Pinterest and Tumblr Review

I am always curious about social media and try to think creatively about the tools Community Shares can use to connect with our friends and allies. Those of you who have been to our training, "Social Media in 10 Minutes a Day", know we useFacebook, Twitter, LinkedIn, and YouTube at Community Shares of Colorado. Generally, I recommend you concentrate on doing one thing well - Facebook - rather than become overwhelmed with a handful of social media tools. However, people often ask me about whether they should take the time to learn about and use other tools so here is my quick take on Pinterest and Tumblr.

Pinterest

I have a personal Pinterest account I use, well, next to never.  Pinterest is an online scrapbook of your favorite images from the web. It works great for people who work in industries with a strong visual component - fashion, cooking, architecture, design, DIY, etc.  For those of us who don't make things look good for a living, Pinterest may seem superfluous. (Much like the word, "superfluous".) If your nonprofit addresses issues that are often highlighted with strong images, you can create a compelling presence on Pinterest.  (Arts, Environment, Animal Welfare, etc.)  Here are some examples of nonprofits using Pinterest to educate followers and drive people back to their site:

10 Nonprofits Leveraging Pinterest for Social Good

Tumblr

I had a hard time thinking of something to write besides, "Don't use Tumbler." Let's put it this way, I have 678 very, very, very close friends on Facebook - many of whom work in nonprofit organizations - and two of them have Tumblr accounts. If you have a super blogger on staff who can churn out content, here is an article from The Nonprofit Times with some information about using the site to connect with donors:

Consumers, i.e., Donors, Starting To Like Tumblr

Help us focus our social media outreach by completing a poll designed to find out where friends of Community Shares spend their time online.  We'll share our results in the next Tuesday Talk.

SOCIAL MEDIA POLL - WHERE SHOULD NONPROFITS CONNECT WITH THEIR SUPPORTERS?

Click here to take our five second social media poll.