Nonprofit Marketing Lecture 2

Characteristics of NPOs

What are the eight characteristics of NPOs?

• Passion for mission

• atmosphere of scarcity

• bias toward informality & consensus

• dual bottom lines: mission & financial side

What is “passion for mission”?

the institutionalized impulse to change the world leads to an output of a lot of energy + creativity

it can create:

+motivated work atmosphere, social advancements, dedication

-staff burnout, emotional conflicts, financial/operational limits or problems

What is the atmosphere of scarcity about?

NPOs have a lot of problems:

• too little funding (and very hard to acquire)

• altruistic belief that funding has to go towards the clients so organizational infrastructure is neglected

• strong focus on cost-minimizing which might weaken efficiency ·       (spending 5 hours to save 50€)

• time is often the real prize of workers, not money

What is the Bias toward Informality & Consensus about?

• +welcoming culture: less focus on strict hierarchies, =recruitment tool!

• -cost of overparticipation: everyone feels like they have to be in on every decision (management has less power) + decision paralysis: having to consider too many people for decisions, fear of damaging group harmony (no authority)

What is the Dual Bottom Lines: Mission & Financial about?

• double standard: corporate business get praised while NPOs who spend money on operational stuff don’t

• stakeholder divergence: split priorities between the stakeholders: regulators/funders care about financial efficiency, beneficiaries/community members about mission impact

• internal tension: strategic decisions always include a trade-off (deeply transformative but very expensive)

What is the paper “Program Outcomes are Difficult to Assess” about?

• objective measures are not a thing for NPOs, so measuring impacts of programs/iniatives (e.g. suicide hotline) is complex + subjective

• NPOs are not funded by direct beneficiaries but by third parties (donors, foundations), therefore there is no immediate market feedback regarding buyer satisfaction

  • lack of market feedback: strategic + cost-effective decision-making is even harder when you don’t receive good market feedback

What is the paper “Governing Board’s Dual Roles” about?

the oversight role (Governance): tasks such as budget improvement approval, legal legal/ethical compliance, guardian of the organization

the supporting role (management): lines between management and governance often blurred, staff members have to help out in other areas as well to ensure the organisation’s survival

What is the paper Mixed Skill Levels of Staff about?

• staff is often hired based on their passion and not qualifications (scarce financial resources and candidates)

• highly trained professionals (social workers, scientists) suddenly work in management positions with no business/administrative training

• low training capacity because of limited resources

What is the paper Participation of Volunteers paper about?

• service delivery, administrative support, board governance for the organisation’s survival

• volunteers are balancing, work, family and volunteering, so a lot of flexibility is needed

• tension between paid staff and volunteers: volunteers could be mad that paid staff is getting paid for what volunteers do for free, while paid staff are annoyed by volunteers lack of accountability.

What is meant by the “commercialization” of NPOs?

to ensure future success, NPOs are also adopting commercial activities (selling, consulting, merch) because of insecurity and financial instability

What risk does the commercialization of NPOs pose?

the risk (mission drift): the mission might stray away from the initial goal and prioritize financial goals, their services might be tailored to audiences who can afford to pay + away from those it initially was created to serve

What is the contingency 1: Organizational task about?

commercialization is not possible for all types of NPOs, it is suitable for NPOs with direct services (educational classes, cultural tours) but not for NPOS focused on advocacy, lobbying or raising public awareness

therefore, advocacy NPOs still rely heavily on grants and donations

What is the contingency 2: Professional Capacity about?

Commercial activities are labor intensive and need a large size of professional staff, they require specialized business expertise (advanced marketing, product development, data management) which NPOs often lack

marketing campaigns might fail!

What is the contingency 3: Organizational Origins about?

NPOS created by trade associations/corporate foundations are familiar with commercialization and entrepreneurship and think of it as a natural extension of the organization

This is in contrast to NPOs that started out as anti-capitalist or grassroots activism, using commercialization feels like a betrayal to their principles so even while struggling with money, they still won’t commercialize their services.

What are the three categories of donor behavior?

Trust in NPOs, past donation behavior, donor attitude and brand identification

What is essential for donors?

Trust in NPOs:

Very important, people only volunteer/donate to organizations they trust. They need to be reassured, that everything is handled ethically.

In return for donating, they receive trust in the NPO.

How can you establish seeming like a NPO people can trust?

 show measurable, objective impact, maintain honest dialogue, transparency

What is “Past donation behavior” about?

donating is a learned habit, past experiences during/after donating money to a NPO can reassure people (thank-you note or update on the impact)

that is why the first-time donation is so important to acquire!

What is “Donor Attitude” about?

the likelihood of a donation is dependent on strong positive attitudes toward a NPO/campaign

·       focus on hope instead of just pity

·       showing the real impact of donating

·       storytelling

What is “Brand Identification” about?

Donors prefer NPOs that have a strong brand personality that matches their own, donors try to connect with NPOs as a form of self expression

If the NPO then succeeds in their mission, the donor may feel like it’s a personal victory

Where are research trends regarding NPO literaure headed?

Research on NPOs focuses on business and sociology, about 17% of NPO academic literature overall were written by active practitioners and professionals

At first, there was more focus on individual volunteering, now it’s also on philantrophy and effective fundraising techniques. Also, the governments are often a lot more involved with NPOs.