Top 10 Business Truisms Nonprofits Should Consider in Priority Setting – Part 1

I recently came across a real goody: A blog post by Scott Gillum, contributing author to the Forbes network, offering wisdom collected over 20 years of work with some of the best, and worst, companies in the world. He found certain consistent themes regardless of company, industry or geography.  It got me thinking about how these themes might guide nonprofits in setting priorities.  Here they are (in 2 parts), with some of my own observations.

The TOP 10 Truisms – 1 through 5

Truer words were never spoken.  Working within a culture, we have two choices:  swim with or against the tide. In the most black and white terms, if we can’t swim with our CEO we’re probably in the wrong pool.  Swimming against the tide is really exhausting; it may be best to simply get out.  This is a difficult lesson to learn.  Remember when our moms used to tell us it was time to come out of the water?  We all want to stay in the pool. 

One way to stay in the pool is to find your comfort area. Maybe you just want to stay in the shallow end.  Or just hang out by the diving board. It’s okay to do your own thing, as long as you understand you’re still in the pool, swimming with the current. Dan Oswald writes about this in his Insights on Business and Leadership. If you must swim against the tide, you need to develop a lot of strength.  If you’re willing to invest in developing that strength, you sometimes can turn the tide.  But only sometimes.  And you have to be very skilled and very patient. It mostly works with a less than effective CEO, and a corporate culture that is not optimally contributing to the ultimate success of your organization.  In that case, you have a chance to help reconceptualize the organization’s goals and assist people within the organization to work together to achieve these goals.  Generally, however, you still need a CEO, or other top leadership, that truly wants to change.  

True. Equally important, if your constituents cannot trust you then you are dead in the water.  And for them to trust you, you must know what they value and deliver value back to them.  This is known as delivering on your brand promise.  And today, doing this well requires activating the power of social media.  The world is no longer centered on internal stakeholders. We can’t keeping looking in a mirror and admiring ourselves (and how much we trust one another). It’s much more about looking out the window, engaging our constituents in a dialogue, getting them commenting on the impact of our work, and getting them sharing their values with others. Today more than ever, our brand is the sum of our constituents’ perceptions of us. When we’re successful at giving both our internal and external constituents a true voice, and thereby building trust with our base, then we will develop a truly credible brand.  

While this may be a nifty guideline that is true “in principle,” we sometimes apply it incorrectly by adopting tunnel vision.  Which customers are we looking at?  Do we mean those who give us the most money today?  Those who give us money consistently over time?  Those who have potential to give us the most money in the future?  Those who are super connected and influential in areas critical to our mission?    It’s essential to give some thought to defining “top 20% of customers.” We often get so caught up in the here and now that we neglect the future.&nbs
p; This is a disservice to future generations, and to staff who will come after us.  We can’t just pick the fruit from the top; we must plant the seeds among our larger constituency as well.

This consideration is more important than ever given the digital revolution that is fundamentally changing the way we do business. The reality is that most organizations have not had true donor pyramids in a long time.  Yet many nonprofits still cater to the 1% (or 10-20%) to the detriment of 99% (or 80 – 90%) of their base.  As noted in a recent post, I confess that I was a proponent of this strategy for many years. But that was then, before we had a mechanism for communicating and engaging so effectively with more of our base, and before the competition for the top few percent was so fiercely competitive.

I wouldn’t say no new customers; yet the importance of renewing and upgrading existing supporters cannot be overstated. We’ve known for a long time that many charities lose 50% of donors between the first gift and the second solicitation; then up to two-thirds of donors within two years of receiving their first gift.  We spend a lot of time and resources to acquire these donors; then we bury them in the database and neglect to steward them effectively. The groundbreaking research of Penelope Burk tells us that a simple 10% improvement in loyalty can yield up to a 200% increase in the projected value of a donor base, as significantly more donors upgrade their giving, give in multiple ways, recommend others and ultimately perhaps, pledge a legacy/bequest. All donors really want is for charities to (1) be honest in their business practices; (2) use gifts only as they said they would, and (3) not treat them rudely. The latter extends to a desire to receive a prompt, personal acknowledgement, and some sort of information about the impact of their donation before they receive their next solicitation. The quality of service we provide to our existing customers matters, and it matters a lot. 

This is a good reminder that most of our revenues will come from existing supporters, and a reality check that we do have to engage a broad base. It’s easy to think we can eschew social media marketing channels because the bulk of the money is not there. The latest research shows only 11% of today’s online giving comes through social media. Yet it is rapidly evolving, and is also the largest driver of online giving growth. Through social media we can now communicate with existing and potential constituents simultaneously – in real time. And as we engage potential new supporters, we also drive ongoing donor commitment in the same manner.  And commitment – a genuine desire to maintain a relationship into the future — is a key to loyalty. If we encourage our supporters to share their vision of the world they want to see, and then we share back how we are delivering on that vision, our supporters will become a great deal more committed to us.