For-Profit Marketing Strategies for Nonprofit Organizations
Research Turns Up Surprising Findings about Relationships with Donors
By John B. Ford

My interest in researching nonprofit organizations came out of a visiting professorship at Henley Management College in Henley-on-Thames, England, in 1998. Prior to that time I had been focused primarily on international advertising theory and practices, and in particular on women’s depictions in advertisements. While at Henley, a colleague asked for my input on a funding proposal for a research project in which we would look at the perceptual determinants of donor giving behavior in a cross-cultural study of the top charities in the United States and United Kingdom. I am interested in cross-cultural research, and the possibility of developing and testing donor choice models in the two-country setting was too interesting to pass up.

The Aspen Institute found our proposal sufficiently worthwhile and funded our project with a grant of $50,000. I had experience with focus groups and in-depth interviews, and I ran a series of focus groups in Henley probing the various driving forces behind charitable giving. This led to a series of successful quantitative studies that had interesting ramifications for charitable organizations.

We found that donor giving was driven first by feelings of trust that were established in the mind of the donor. This trust was driven by: 1) how well the donor believed that the charity had performed its mission to address the cause in question and 2) the quality and frequency of communications that they had received from the charity. What we also found, contrary to the expectations of a number of the charities that we were working with, was that donors did not build trust in the charity by having the charity at their beck and call.

My own practical experience with charities in the Hampton Roads region of Virginia had convinced me that these charities felt that making donors feel important and responding to their every whim was important in building a meaningful relationship, but we found that telling the donor how their donation had made a difference in a personal letter with a thank-you was far more important to them. We also found that trust plays an important part in building commitment to the charity. If donors believed that the organization was having an impact on the cause and was regularly communicating with them, they would then develop a commitment to that charity. The commitment was driven by: 1) the emotional benefits (feeling good for helping someone in need, etc.) associated with giving and 2) the family benefits connected to giving (parent affected by the cause in question). Again, my experience with local charities suggested that donors needed to have some tangible benefits from giving such as social status and community recognition, but this was not found in our study. These benefits were not able to build donor commitment to charity giving.

Why Do Donors Keep Giving?
Another important question that we researched involved why people might come back and make another donation to the same charity. In our studies we found that donors would give to the same charity again if: 1) they believed that the charity would continue to have a significant impact on the cause in question and 2) they believed that the charity would continue to perform its duties in a professional manner. A related question dealt with what it would take to get donors to increase their pledges to the charitable organization, and we found that this would depend upon: 1) the donor’s trust that the organization would try to alleviate the problem that they were addressing, 2) the donor’s belief that their donation was making a significant difference to the charity, and 3) the donor’s perception that they had built a meaningful relationship with that charity.

I have subsequently been involved in a number of additional studies involving nonprofits, which have addressed such issues as image and brand personality, strategic planning, the use of retailing operations in association with nonprofits, internal competition faced by charities, the role of government funding, the role of competition (simultaneous cooperation and competition within certain forms of nonprofits) when funds are scarce and the use of nostalgia as a tool for triggering donations. What started as a single study with British colleagues has affected my entire research agenda.

Since 1998 I have worked with a number of different colleagues on nonprofit research, and I have mentored three Ph.D. students who have focused their research interests in the nonprofit sector. I could never have imagined all of the time and effort that I would end up investing in this area of research, but I am very glad that I was asked for my input for that initial study. It changed my life. These studies have helped to build an array of important strategic implications for nonprofit managers in an increasingly competitive time when competing for the share of the donor’s contribution allotments.

Following the 80-20 Rule
So how can nonprofits improve their donations and meet their strategic goals? First of all, nonprofits must build meaningful relationships with their donors. Since the 80-20 rule seems to apply for nonprofits as readily as it does for for-profit organizations, this would suggest that 80 percent of donations would come from roughly 20 percent of givers. This begs for charities to tier their donor bases just as services do these days to nurture and assess donor lifetime value. Big donors need to be nurtured rather than treated as givens, but nurturing should not be thought of being available at all times for them. Nonprofits must strategically keep these donors in the communications loop. This would suggest that charities should consider employing the skills of a relationship manager. In keeping with other findings in our research, it should be noted that while nonprofits can put big donors on their boards, the key decisions of board makeup should ensure fit with the values and the mission of the organization. It is also healthy for boards to be restructured every so often since periodic re-energizing is a strategic necessity.

Charitable organizations should also take the time and effort to develop meaningful mission statements and remember that these statements declare not only what they are, but also what they are not. They should avoid trying to be all things to all donors and focus their efforts on target donors. This also requires the organization to truly buy into its stated mission and embrace a guiding set of important organizational values. Without this, donors, as well as employees of the organization, will be confused.

Volunteers Need Adequate Training
These sets of values should be adhered to by everyone in the organization, from the executive director and the board to the lower levels of employees and volunteers. Persuading charities that volunteers need to be carefully managed can be a difficult “sell.” Professionals hired to do the work usually feel a higher level of accountability and are less likely to have the attitude of, “You are lucky to have me, so you can deal with me on my terms!” This kind of well-meaning help can be disastrous, especially when these volunteers have not been properly trained to do their particular jobs. Often professional management appears to be a luxury for this type of organization, but so many are now finding that their long-term survival and success in affecting the cause in question depends on the use of these professionals.

Strategic planning is as important for nonprofits as it is for their for-profit counterparts. Without clear goals and strategies driven by the mission statement and driving values, the charity will constantly be running into new obstacles and problems. This will force management to repeatedly fall into crisis mode—stepping back and taking corrective actions, while at the same time sending mixed signals to donors. Proactivity is far more effective than reactivity. But the new initiatives that are undertaken should be driven by consistency with the mission and driving values of the organization. Trying new things just for the sake of new initiatives can backfire. This would also pertain to consistency of the image of the organization and its connected brand name, where coordinated integrated marketing communications strategies should be carefully followed. All communications from advertisements to employee e-mails and donor thank-you letters should be consistent with the image of the organization. This requires charity managers to take stock in what their important publics think that they stand for and act accordingly. Inconsistency causes confusion!!

Finally, an important practical marketing issue for nonprofits deals with brand positioning. The name of the charity will be associated with a variety of attributes, and charity management should be careful to assess this name and company image on a periodic basis. Our research has shown that most nonprofits use the same types of attributes to position themselves, and that all of these deal with such descriptors as caring and nurturing and compassionate. Our research has shown that if everyone uses these descriptors, then no one is standing out as distinct from the others. It is similar to saying that both General Motors and Ford stand for quality. Then neither really gets distinctively identified with this attribute. Our research suggests that charities that utilize such traits as bold, courageous, fun and exciting can trigger distinctive potential bonds with donors.

Nonprofit organizations are an interesting subject for marketing strategy research. There is so much more that needs to be done to understand donors and how to effectively attract and nurture them. What is clear to me is that the strategies for success are far more similar to those of their for-profit counterparts than would have been expected.