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May 18, 2012
3 Strategies To Attract Nonprofit Investors
Nonprofit FundraisingWe live in a new era where consumers, businesses, investors, employees, and service providers attach real economic value to social outcomes. An era where the "feel good" issues of yesterday—education, the environment, health care, the arts, animal rights—all have direct economic consequences and opportunities.

This represents a major shift in the world of nonprofits from basic charity to the concept of "investment". Simply being a "right and just cause" is no longer enough to generate donor revenue in 2012.

So how do you attract supporters to your cause in a demanding – and crowded – marketplace of ideas? Realize that it's hard for today's organizational donor/investor to measure or truly understand fuzzy concepts like "improve the quality of life" or "protect" animal rights/access to the arts/healthcare etc. To know if you're making a good investment, you have to have a way to measure your results. And what exactly do those phrases mean?

I believe that every nonprofit is in existence to make an impact of some type for the individuals, communities and/or the causes they serve. And yet many agencies have a hard time understanding let alone articulating the impact that they create. Today's nonprofit must capture and communicate its impact in simple, compelling terms that break through the clutter. Let's explore 3 approaches to effectively market your organization and its impact to investors.

1. ACTIVITIES (USUALLY) AREN'T ENOUGH

For years many most nonprofit organizations have promoted their activities rather than their impact to attract clients, funders, and other supporters. For example, many of the traditional brochures and websites I see even today highlight the Programs Offered or the Number of People Served.

This approach may have been fine when most people viewed their donations as gifts, and simply wanted to see where the money was going. But as noted more and more people view their philanthropic dollars as investments now, and see themselves as investors or funders rather than "donors". And investors of course like to see the benefits and true results of what their dollars have accomplished, not just where they were invested. So just sharing a list of what you do is no longer enough. People appreciate the actual work that you do, surely – but they invest in your impact on individuals and communities that you serve.

However, that being said there are exceptions to this rule. One primary exception I've seen to this rule centers on volunteering and gift-giving during the Holiday Season. Many nonprofits experience a surge at end-of-year simply because people want to be involved in some type of giving or service activity. For example, around the holidays many people and/or organizations desire to:

  • Serve meals at the local homeless shelter
  • Pay for XX number of meals for a holiday dinner
  • Adopt a local child or family for the holidays
Though these are activities people want to get involved in during the holiday season, I still suggest using this strategy sparingly; keeping in mind that the trend is for investors to want to see tangible signs of real community impact. During the rest of the year, when potential donors are less likely to participate in events or activities, you may see greater results with the next two approaches.

2. SHARE YOUR NUMBERS

So if not activities (at least most of the time) what should you communicate to potential donors/investors? To improve the success of your nonprofit's pitches, put yourself in your investor's shoes. What valued results do you think THEY are looking for? What impact garners continued or increased investment? What is the best way to show your results and impact?

 Sharing the raw numbers or data that came about from donations is a good way to speak to the investors who want to know that their money is making a real difference in your community and in the lives of your clients. And not only will their money facilitate change, but it will make more of an impact than if they had invested in the organization down the street instead. Without these numbers, potential donors may question if you are truly making a significant contribution or difference to your constituents when you use hard to quantify outcomes.

There are three types of numbers that can resonate with investors:
Change of Status - This occurs when a person, organization, or community transitions from one state or condition to another. For example, your organization may be successful at moving people from an unemployed to employed status. You may do this by providing job training to 1,000 people per year. However, most funders aren't really interested in paying for job training unless it results in the trainees actually getting jobs. Another example is GED classes so that disadvantaged people can graduate from high school, where the measurement for success when expressed as a total number or ratio of those who graduated is very simple and straightforward.

If your organization is producing these positive outcomes, share them and show that you are a good investment. Showing how individuals or communities have changed as a direct effect of donations helps create a higher sense of impact and value for your organization's work.

Return on Investment (ROI) – ROI is performance measurement used to evaluate the efficiency of an investment and to compare it with others. Used extensively in commercial businesses, nonprofits can use ROI to show investors that they are good financial stewards, and that investor dollars will have a greater impact within their organization than with competing nonprofit agencies.

It's not uncommon for many nonprofits to document a 2x, 3x or even greater return on the money invested into their organization. For example, if you can show potential investors that for every dollar they invest with your organization the community will receive $3 of benefit compared to $2 provided by an alternate provider - you look like the better investment and become more likely to receive additional donations. ROI shows your ability to fully leverage the dollars invested into your programs.

Though ROI can be quite popular with potential donors, especially those who are financially-inclined, calculating this number presents its own unique set of challenges. This number can often be ambiguous and difficult to identify. If possible it's recommended that you use an outside source or otherwise ensure that the data you use if from a reliable source, to maintain your credibility.

Systemic Change - This often occurs as a result of collaboration within large-scale community initiatives, when several providers join together to move the needle on a social issue at the community level. It's like change of status for an entire community or group of people. To create a systemic change, it is important to build partnerships that center around a community issue. Participate in the effort for change by being a good and active partner, providing leadership where you can, and promote the results you (and the collaboration) are achieving. Some examples of systemic changes may be positive trends in: poverty rate, crime rate, homelessness, school readiness, graduation rates, number of individuals in training programs, employment numbers, access to healthcare, home ownership, and many others.
 3. STORY TIME

Everyone loves a great story – the feeling of getting lost in a story and having your imagination along for the ride. When a storyteller does a good job the reader can picture the scenes, hear the voices, and experience the emotions of the characters. There are books that make you laugh, cry, change the way you think or motivate you to take action. Likewise, you've probably read books that left you uninspired and looking forward to the end.

Generating emotions and creating an experience is the effect many nonprofit marketers desire when they tell their stories. They share testimonials in hopes of inspiring and compelling people to engage with their, but unfortunately a story doesn't prove to grant makers and funders that the results are repeatable. But stories do have their place and can be valuable to your cause, so there's value in collecting them.

Put It All Together

If each approach above can be effective in engaging clients and investors, which should you choose? Ideally, you should be combining the three approaches as the most effective way to market your impact and your organization.

I recommend that you build up a "vault" of stories and testimonials and add to it on an on-going basis. Pick several stories that clearly demonstrate the change(s) you are after and then share them frequently with those connected to your organization. This will help to create organizational folklore that can be shared and celebrated with others. Then document and promote your high-impact outcomes over time. These outcomes should provide statistical support for your stories that this wasn't a one-time win. Show that our outcomes can, and have been, duplicated time and time again. And use activities, when appropriate, to engage others. This can also be used to enhance your stories or answer questions about how you produce your outcomes.

The shift from charity to investment requires that we change the way we communicate. Marketing your impact with these three approaches shows you are really making a difference. It helps you capture mind share, and as a result money share. Review your marketing materials this month to see how you're doing, and get help if you need it. Ultimately it's the change we are making that most effectively makes our case to investors. Therefore, I recommend that you determine (and share) the difference you are making, back it up with actual numbers, tell a story that shows your impact on one family or individual, while supporting your numbers with the activities that you conduct, and begin sharing all of this with current and potential investors.

Posted by Tiffany Applegate on May 18, 2012 at 2:30 PM
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Categories: Community Engagement | Fundraising | Marketing
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