Building a Nonprofit as a Business—5 Scale-Up Strategies That Matter
As some industries deal with revenue challenges, giving rates for early 2018 also reflect a slow start to the year. First quarter giving marks the mildest year-over-year growth rate since 2012. While it’s too early to predict annual giving trends, nonprofits should take time to evaluate their growth strategies now.
Introducing scale-up practices from the for-profit world can help you scale your nonprofit for years to come. Nonprofits can model business strategies to increase both top and bottom line growth. Having worked through a business transformation at OneCause, I can offer five proven tips every nonprofit can use to scale up successfully.
1. Affirm the Mission—
Your nonprofit functions like any business. Understanding the “why“ behind the mission creates a strategic foundation. Just as a corporation has a vision of what it wants to accomplish, nonprofits need a clearly articulated mission. Make it a priority to sit down with key stakeholders to answer the “why” questions for your nonprofit:
- Why does this nonprofit exist? What are our one, five and 10-year goals?
- What’s the need we fulfill? Who do we serve?
- Why do we come to work? What principles drive us?
Together, nonprofit leaders and stakeholders can “vision-cast” and affirm the guiding principles for long-term success.
2. Embrace Strategic Planning—
The next step to scaling is a strategic plan. Strategic plans align business goals with the charitable mission. The plan is a road map that with the mission creates a path to success. Nonprofits should define their future state by looking at:
- How are we going to achieve our goals?
- What steps do we need to meet our goals in, five and 10 years?
- How do we address our top priorities? What do we need that we don’t have now?
Building a comprehensive plan includes drawing up a SWOT analysis, gathering stakeholder input, updating business tactics, and outlining key growth areas.
3. Connect Customers to Products—
Next align programs with donor personas. Take time to define what the average donor looks like (e.g. socioeconomic and demographic data), what programs they give to and what motivates them. To understand donor preferences and ensure there are enough offerings to support long-term planning, answer the following:
- What are our revenue goals? Do personas align with goals?
- Do we have programs, engagement strategies and fundraising channels to attract each?
- How often do we engage donors? Where do we capture them? Why do they support us?
- What programs and fundraising channels do we need in one, five, and 10 years to support growth?
Just like for-profit businesses, it is also important to define the donor journey, mapping out the path that donors take when they engage with your charity. Nonprofits must understand the donor journey that personas prefer and align them to your offerings.
4. Leverage Marketing Now—
Marketing is an integral part of any business. Go-to-market strategies and messaging influence top line revenue. In nonprofits, marketing often takes a back seat to fundraising and operations. To scale, nonprofits need to look at marketing through a business lens. To do this:
- Build a marketing plan. This includes identifying which channels reach donors based on analytics. From email to social to direct mail, promotion channels need to show engagement.
- Review marketing efforts. This means understanding how promotion statistics impact the bottom line, includingemail open rates, click through rates, and conversions (i.e., donations).
- Use these insights to influence the marketing and strategic plans.
5. Create Donor Acquisition & Retention Strategies—
Lastly, nonprofits need a scalable donor acquisition strategy. Nonprofits lose 50 percent of their existing donors every year. Retaining donors while engaging new supporters is critical to any scale-up. To ensure churn doesn’t cancel out new revenue, evaluate:
- New Segments: which new areas or demographics should we engage? Do they fit into events, recurring gifts, annual contributions or major gift categories?
- Acquisition Plans: Do these new segments align with our fundraising plan? Do we have outreach, marketing, and programs to acquire, engage, and sustain new donors?
- Retention Plans: Review retention and churn statistics on both an annual and quarterly basis. Don’t wait until Q4 to realize you’ve lost a chunk of your donor base. Conduct lost donor outreach to uncover what disappoints and motivates your donors, then update your personas.
- Take Action: Finally, train your staff to recognize donor frustration or fatigue as early as possible. This will help reduce donor
There are more than 1.5 million nonprofit organizations in the United States, which makes it increasingly difficult for a cause to stand out. Operating a nonprofit with a business framework can help elevate organizations from other nonprofits and increase donor share of wallet—even in the hyper-competitive nonprofit space.
Steve Johns is CEO of OneCause (formerly BidPal), developers of user-friendly fundraising software that helps nonprofits engage donors year-round, raise more money and save valuable time and resources.