You’ve probably heard the terms “For-profits” and “Nonprofits,” but a debate exists on how much they actually differ. There are intricacies in what qualifies a company to be a nonprofit, how its revenue sources affect branding priorities, and how the marketing strategies used for nonprofits differ from those used for for-profit organizations.
The Basics
A nonprofit is a company that can make a profit, but all profit gets reinvested in the company to further a mission rather than going to owners and shareholders. While CEOs and Executives might still be paid handsomely, their salaries are dictated by board approval, not profits. Organizations like this qualify as 501(c)(3) organizations, meaning they are tax-exempt.
To qualify as a nonprofit, an organization must:
- Be a charity, religious organization, or private foundation.
- The organization must exist for the benefit of the public, and should either be one of the above categories or serve a purpose such as science or education, supporting human or animal rights and wellbeing, a library, etc.
- Must have a board of directors
Additionally, they must adhere to certain requirements:
- Founders, shareholders, and the board of directors cannot receive any excess revenue – it must be reinvested in the company.
- May not engage in political lobbying or campaigning
- May not have substantial Unrelated Business Income (UBI)
- Must report their financial operations (Religious organizations are an exception to this rule)
If a company follows these rules, it can register as a nonprofit.
Marketing
Compared to for-profit companies, how does marketing differ when working with nonprofits? The relationship between for-profit organizations and consumers is inherently transactional, in that they are trying to sell you something, but nonprofit organizations are trying to further a mission to benefit the people. They are not looking for consumers, but rather volunteers, partners, donors, and people in need of their services. How, then, do nonprofits need to present themselves to meet the community and achieve their goals?
The Fundamentals are the Same
No matter the organization, the mechanics of marketing remain the same. Following the Marketing Mix, creating a detailed marketing strategy, and telling a story are all still vital to a successful marketing strategy.
The Goals are Different
Unlike for-profit companies, a nonprofit organization does not exist to make money, and profit should not be its primary metric of success (though it is still important). Instead, nonprofits must gauge their success through different metrics, such as:
- How many people have been impacted by the organization?
- How many volunteers have you recruited, and how many have you retained?
- How many new donors have you retained?
Through metrics and KPIs like those above, a nonprofit can track how effective it is at performing its duties.
Not All Nonprofits Work the Same
Nonprofits vary greatly in scale and mission, so it goes without saying that effective strategies differ as well. A celebrity endorsement may work for a nonprofit like the ASCPA, but a library likely wouldn’t find the same success. The scale, mission, and needs of a nonprofit should determine what tactics you use to garner support.
Strategies
When it comes to marketing, nonprofits are in a tough spot. They typically have smaller marketing budgets than their for-profit counterparts, and their audience isn’t going to receive any material or financial compensation for helping them, so it’s a harder sell. Here are some tips and strategies for marketing a nonprofit.
Appeal to Multiple Audiences with Multiple Channels.
Nonprofits, unlike for-profits, have multiple audiences, so it’s vital to use multi-channel marketing strategies to find volunteers and donors. For example, older generations respond more to email and phone, while younger generations respond more to text and social media. The way a nonprofit markets to these demographics differs as well. They must also network, host events, form proposals, and build relationships with philanthropists, private foundations, corporations, and government programs willing to support them.
Interact With Your Audience(s)
A nonprofit is working to benefit the public, so it needs to connect with the people. Since they’re not giving anything to donors in return, the connection they build with audience members needs to feel genuine. Nonprofits should engage with their audience, such as responding to questions and comments on social media or hosting events and Q&As. Talking to their audience and forming connections with them will rally them to your cause.
Personalize
Personalization is a good strategy for for-profit organizations, but is indispensable for nonprofits. Since donors and volunteers aren’t necessarily receiving compensation of any kind for their contributions, a nonprofit should strive to make them feel that their contributions, no matter how small, are appreciated. A study by Experian showed that even a mere personalized subject line in email marketing increased the opening rate by 26%. But why stop there? Change the copy of the email if this person has donated or volunteered before to thank them or show what they’ve contributed to.
The Power of Smaller Influencers
Small-to-mid-size influencers are viewed as more trustworthy than larger influencers and celebrities, because, unlike the bigger influencers and celebrities, they feel more relatable and authentic, and take more time to interact with their followers. Choosing which influencers to partner with is a complex task. One must consider if an influencer’s audience is a demographic you are seeking, whether they can influence the scale of your mission, and what you can do for the influencer in return, be it payment in money or goods/services.
