Five Things NFPs Must Do Now To Survive
3 November 2016 at 8:23 am
The need for a shift to greater commercialisation is meeting resistance among many not-for-profit organisations, writes business strategist and Meals On Wheels executive John Carroll, who offers his top tips for NFP survival.
We Aussies have long prided ourselves on taking care of those in need. But our traditional thinking and old-fashioned attitudes towards giving could force many charities and human service providers to close their doors.
The world is fast-changing for not for profits. With government funding being pulled out from under them, they’re being put under pressure to develop commercial acumen and marketing prowess in order to survive.
But how will NFPs fund and fight a competitive battle for customers and donors when profit is still a dirty word in the sector?
The need for a shift to greater commercialisation is meeting resistance among many NFPs, and certainly isn’t yet accepted in the public mind. People are simply not comfortable giving to organisations with relatively high administration costs. They shudder at the thought of their donations going anywhere other than directly to the needy.
But how can any organisation survive, let alone grow, in a competitive marketplace without
allocating resources to client acquisition?
Gone are the days of being able to run a sustainable human service organisation on the back of a few community-minded volunteers and the secure revenue stream of block funding from the government.
Consumer control and choice in a competitive environment, as per the NDIS, is becoming the order of the day. If service providers don’t become business and marketing savvy they are unlikely to be able to win and keep customers. With the block-funding rug pulled from under them, that will sound their death knell.
Some NFP managers still labour under the misapprehension that the term “not for profit” means
you’re prohibited from making a profit. Untrue. It simply means that any profits must be used to
further the organisation’s purpose.
In NFPs want to survive here are five things they need to do now:
- Invest in top class talent: NFPs need to place a major emphasis on attracting the right talent. This will undoubtedly mean an investment in competitive salaries, perhaps poaching from the commercial sector. But it’s an investment worth making; attracting and keeping good strategic-thinking and top-class marketing talent could literally mean the difference between success and failure.
- Invest in advertising and marketing: A consistently strong brand image and effective calls to action across diverse market segments will be imperative to gain cut through. How will each market segment best be reached? For example, the baby boomers who are now starting to enter the aged care market will want to research and purchase services and products online, an area many human service providers have yet to tackle. The development of digital marketing and ecommerce platforms will be key issues for any aged care provider wanting to get their attention and their dollars.
- Market segmentation: Without the luxury of an uncompetitive environment in which markets were allocated by funding agreements, learning to select, segment and fully understand key target markets will be a crucial step. NFPs must consider both the client acquisition and retention perspective, as well as the fundraising and donations perspective, of the markets they choose to operate in. They need to understand all segments well so they can develop media choices and message content appropriately for each and tailor their spend proportionately. That takes ongoing market research and analysis.
- Product differentiation: Trundling out the same old services, even with all the kindness and caring in the world, simply won’t cut it in this competitive marketplace. Unfortunately good service is seldom, if ever, a differentiating factor. It’s a vital element in gaining market share, but it’s an expected part of any offering these days. Your products and services have to stand out and to do so, they must change in line with – or even ahead of – constantly changing market demands.
- Think big: In order to innovate, NFPs need to think outside of the box. Traditionally, fear of failure has inhibited NFPs from taking risks on large-scale, new fundraising and social enterprise ventures. But in order to attract attention and grow their businesses so they can tackle large-scale social problems, a new mindset is required.
About the author: John Carroll is a leadership, brand and business strategist. He is also CEO of Meals on Wheels Mid-North Coast and joint CEO of Omnicare Alliance, where he is leading both organisations through a series of major changes in the human services environment.