When money is tight, the competition is keen. The competitive advantage goes to the agency that can best meet the donor’s goals while serving its own mission.
Who are your competitors? The answer depends on which chair you are sitting in. The executive director of a food bank sees other sources of food and distributors of food as competitors. However, this blog is about fundraising. We should look at competitors from the office of the director of development.
From the development director’s point of view, anyone who has access to one of the organization’s sources of revenue is a competitor. When the economy is down the competition for money is up. We need a broad look at the sources in times like these because everyone is hungry.
The primary sources of revenue are government grants, foundation grants, corporations, individuals, and fee for services. We all know that government grants are highly competitive. When the economy is down more people look to the federal government. The best way to compete in this environment is to sharpen the application process by anticipating what the competitors are likely to say about their needs and build a better case.
Foundations are another highly sought after source. When the economy is down foundations often see an increase in requests from nonprofits trying to establish a first time relationship. In addition, some individuals have lost their jobs and decided to start a nonprofit with the expectation of doing good and restoring income for their family. Some of the new comers have interesting ideas or novel approaches that will catch the eye of a foundation. The only way to compete in this environment is to sharpen the application process by anticipating what the competitors are likely to say about their needs and build a better case.
Corporations have a moral obligation to their employees, customers, and the community (taxes and employment) to remain healthy. In addition, they have a financial obligation to their investors to remain healthy. The competitors for money are vendors, payroll, government (taxes and fees), customers (price cuts, free delivery, coupons, discounts, etc.), lower price competitors (foreign or new entrants into the market), inflation, and investors (dividends). In addition, lower corporate profits reduce the flow of funds to their foundation when the increased competition for foundation grants is up. Therefore, donations to nonprofits must be one of the first areas to suffer.
The primary opportunity to compete for money from corporations is through their marketing department. Now is a time when corporations want new or increased sales. It is marketing’s job to find new customers and increase sales. How can you help them be successful?
How do the demographics of your individual donors and volunteers match the demographics of their customer base? It is unlikely that a baby closet will attract a sponsorship from a company that makes racing tires. Regardless of your service area there are corporations who share an interests with your donor and volunteer base.
How many donors and volunteers do you have? With a large number of volunteers who share a common interest with the corporation, a corporate sponsorship is a possibility. As an example, if you are mobilizing 5,000 people to cleanup the shoreline, a beverage company might be willing to underwrite the event. Thirsty ecologists will remember who gave them a drink. This is even more attractive if the beverage company draws its water from the lake or stream. It is good publicity, protects their source of a critical raw material (water), and has the potential to create goodwill with critics.
This leaves us with individuals. They give in two ways. One is through bequests. This is a trust relationship. They must believe that the agency will be strong when it is time to collect the gift and will use the gift for the mission rather than survival. Because bequests are private matters, one never knows what discussions are taking place behind closed doors. The best competitive strategy is to provide constant communication that reassures everyone that the agency is strong and committed to the mission.
The second source of individual giving is direct, immediate gifts. The competitors here are other nonprofits for sure. In addition, there are the family needs, vacation plans, new cars, new TVs, etc. The best competitive practice is to emphasize the mission and the benefits to the service recipients.
The common theme is the mission and its uniqueness. Uniqueness implies one of a kind. Geographic uniqueness is seldom compelling. Being the only food bank in a 1-mile radius suggests that a larger more efficient food bank could locate across the street. They would capture the donors by serving more people at a lower cost.
The government, foundations, corporations, and individuals must feel that the agency is the only way to reach the goals that are important to them. Their goals may be different from the agency’s goals. The competitive advantage goes to the agency that can best meet the donor’s goals while serving its own mission.
Next Step:
Evaluate your agency from the perspective of each donor group
Decide what you are doing that is most attractive to the donor group
Change the programming to increase the attractiveness without diluting or distracting from the mission
Approach the donor like a partner, with the goal of working together to achieve mutually beneficial objectives
Improving your competitive posture is the best way to ensure that 2010 is better than 2009.
As always, contact us if you want help.
Mission Enablers
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