Archive for July, 2014

7 ways companies will change how they invest in you

According to Credit Suisse’s latest Global Wealth report, Americans’ median net worth is just $44,900 per adult, placing the U.S. in 19th place behind Japan, Canada, Australia and much of Western Europe. An interesting statistic when you consider the level of individual philanthropy in the U.S. as compared with other countries. While individual giving is king in most funding mixes, it still pays to keep an eye on the donations coming in from businesses to your organization—especially in light of recent developments.

As corporate social responsibility evolves, businesses are questioning if traditional philanthropic giving is an antiquated expense line. Today, stakeholders and investors expect more integrated methods for tying social impact to core business activities. While this Executives have started to ask how their companies can stop giving money away and getting nothing in return is a worthwhile endeavor, many companies are finding the reality of cutting ties with charitable giving easier said than done.

According to Paul Klein, founder and president of Impakt, “Executives have started to ask how their companies can stop giving money away and getting nothing in return, but putting an end to corporate philanthropy isn’t easy. The reputational risk of leaving worthy charitable organizations out in the cold is considerable, making leaders reluctant to take decisive action. However, new approaches are possible, since the end of giving for nothing may not be far away.”

It’s also worth noting the latest data from The National Philanthropic Trust: giving among U.S. corporations accounted for only five percent of total giving to charities in 2011. This underwhelming statistic seems to support the lack of enthusiasm Klein has observed in his work with corporations.

In contrast, what continues to capture the hearts, minds and bottom lines of companies are partnerships that directly connect to the business’s existing business model. What’s more, according to the 2010 Cone Cause Evolution Study, 90 percent of consumers want companies to tell them the ways they are supporting causes. Eighty-three percent of Americans wish more of the products, services and retailers they use would support causes. While the end of philanthropy may be coming, businesses recognize consumer opinion and the need to do a better job of blending profit with purpose.

Klein has developed seven strategies at Impakt to help businesses phase out philanthropy and begin to embed social impact in their core business strategies. I’ve listed Klein’s recommendations here:

1. Develop a five-year exit strategy. Almost every large corporation supports at least one large charity in a significant way. In these cases, it’s important to identify a social objective that can be achieved over five years and allocate financial and other resources towards that objective on a diminishing basis. When the social objective has been achieved, the charity will no longer require support.

2. Begin investing in social change in other ways. “Charitable organizations don’t have a monopoly on social change, and sometimes social enterprises and other businesses can achieve better results.” If social change is important to your business, you should understand the strengths and weaknesses of all the players and start to reallocate charitable dollars toward organizations that deliver the most value, regardless of their sectors.

3. Focus on opportunities that can deliver return on investment. Pure philanthropy has virtually no business value. It’s altruistic and intended to help charities in ways that can’t be measured. Corporations can start shifting philanthropic spending toward social investments that have the potential of creating ROI. That might mean, for example, making a loan to someone with little or no credit to help start a business.

4. Stop funding charitable initiatives that don’t get results. Even without conducting a formal evaluation, you likely already know which organizations aren’t performing. Stop supporting those groups in 2015. Then take a year to reduce or eliminate funding for other organizations that may be of more value but aren’t the right partners for your business. During the transition, provide funding for capacity building to help organizations become more sustainable without your support.

5. Move CSR to finance or operations. Doing so is anathema to CSR managers (most of whom report to marketing or H.R.), but it will increase accountability, ensure business programs that have social value are resourced properly, and support the strategy for exiting out of donations. The transition will be difficult but the results will be better.

6. Focus on value. Start asking how you can give or invest less while bringing about greater social change. This is a standard question for businesses but it’s rarely posed to charities. Organizations that can help you answer it will be worthy of continued support.

7. Embed social change in your business. Financial institutions should find new ways to give vulnerable people access to capital. Companies in extractive industries such as mining or oil and gas should put a high priority on adding more indigenous suppliers and employees. Car companies should focus on sustainable transportation. Pharmaceutical companies need to create new revenue models that focus on preventing illness.

Klein’s recommendations may be alarming if you’re a nonprofit that has a large focus on traditional corporate giving; however, his thoughts are a sound warning that your strategies must attain new levels of ROI. Joe Waters, author of Fundraising with Businesses, says asking companies to simply write a check is tired. Nonprofits need to get creative and look for ways to engage employees and customers while impacting the business’s bottom line. These partnerships will always be easy to justify and renew in the finance department where Klein recommends they be managed.

At Execute Now!, we advise clients on a myriad of financial areas relating to corporate social responsibility. We create financial scenarios for nonprofit clients interested in weighing their options among potential partnerships. We also provide forecasting for various types of funding based on their dependability. Finally, we shed light on what a business partner will be looking for in the finance/operations departments to optimize reporting.

Personally, I found Klein’s use of the phrase, “giving for nothing,” a disappointing representation of the corporate perspective he’s working with today. On the other hand, nonprofits looking for the positive note in his seven strategies should focus on how each tactic informs how charities must aspire to work with companies if they choose to keep them in the funding mix.

See also:

Fundraising with Businesses

Cash Flow Strategies

Zilch: The Power of Zero in Business

Image credits: gooddaysfromcdf.org, thegiftofgiving.com, volunteerhub.com

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Four branding authors agree: Imitation is the sincerest form of fall-flat-tery

Robert Antell and his wife, Marguerite, decided to make a break from the norm in their rural town of Perinton near the Canadian border in New York State. In 1970, the Antells built a home that most would call bizarre and others might call original. Their “Mushroom House” still stands today and is 4,200 square feet of sprouting concrete pods made to look like Queen Anne’s Lace Flower.

Modeling what already exists—in this case nature—is understandably a favorable strategy because, in most cases, it works. There are many forms of architecture that mimic nature beautifully. Depending on your taste, you might say this home is a work of art or a vision gone wrong.

In the case of nonprofits imitating corporate brand management, however, it’s not a matter of esthetics. Four authors agree it simply doesn’t work. Why? Allow me to excerpt each of their views.

Nonprofit life shouldn’t imitate the art of corporate branding

The Money-Raising Nonprofit Brand

First, author Jeff Brooks in The Money-Raising Nonprofit Brand says, “Simply applying the principles of commercial branding to nonprofit fundraising is exactly the wrong thing to do. It’s the cause of most branding accidents.” He further explains commercial branding does not work for nonprofit
organizations because it focuses on abstract ideals of products or services. Nonprofits need to show clear, emotional images to motivate and connect with their donors. There are warning signs that your brand is too commercialized and doesn’t focus on the donor: the work is not grounded in donor behavior; the brand describes your organization in a symbolic way rather than in a clear fashion that moves donors to act; or the brand is design and little else.

The Brand IDEA: Managing Nonprofit Brands with Integrity, Democracy and Affinity

Second, The Brand IDEA by Nathalie Laidler-Kylander and Julia Shepard Stenzel argues today’s brands must uphold mission impact by building trust, cohesion, capacity and impact, not necessarily qualities for which corporate brands strive. Kylander and Stenzel’s book is the result of more than two years of research and collaborative effort, supported by the Rockefeller Foundation, to examine the role of brands in the nonprofit sector and recognize that nonprofits are over-relying on corporate sector practices to oversee their brands.

The coauthors’ acronym, “IDEA,” further gives us insight into honoring the truly nonprofit brand. Integrity (the “I” in IDEA) is the “alignment between the brand identity and image and the mission, values, and strategy of the organization.” Democracy is the “extent to which an organization engages its board, staff, members, participants, volunteers, supporters, and other stakeholders in both defining and communicating the brand identity.” Brand Affinity “represents a mindset and an approach to brand management in which the focus is on shared social impact, rather than on individual internal organizational goals.” Kylander and Stenzel’s brand philosophy further brings to light that corporations often look at alignment between their image and selling a product, whereas the nonprofit brand aims to move a community and achieve social impact.

Brandraising: How Nonprofits Raise Visibility and Money Through Smart Communications

Third, author Sarah Durham’s philosophy is built upon branding that is grounded in the nonprofit mission. Specifically, “brandraising” is the process of developing a clear, cohesive organizational identity and communications system that supports raising money and increasing visibility. Additionally, brandraising makes it easier to express your organization’s mission effectively and consistently. Durham claims brandraising is a holistic approach to communications that involves everyone within the organization—board, staff leadership, volunteers, program staff and donors. Brandraising is ultimately measured by how the mission is advanced.

As you read each author’s viewpoint on how a brand must uphold the mission, you may have also noticed these authors agree on the brand’s role as champion of visibility and revenue. Follow other high-performing nonprofits and their pursuit of brands created with a nonprofit lens rather than a corporate one; otherwise, your corporate imitation will be the sincerest form of fall-flat-tery.

See also:

Breakthrough Nonprofit Branding

Married to the Brand

Marketing Series Volume I: 4 summaries in one bundle

Image credit: ixdaily.com, ipoem.co.uk

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Put donors and prospects at ease by honing the fine art of small talk

Working in the nonprofit sector means attending many business-related social events, especially fundraisers. And a big part of a nonprofit executive’s job is talking to others about the organization’s mission and programs. However, despite the fact that nonprofit executives know their organization inside and out, and feel passionate about their mission and programs, some still have trouble conveying that passion to others, simply because they lack strong conversational skills.

Contrary to popular belief, the ability to talk easily with others is a learned skill, not a personality trait. And acquiring this skill will help you develop rapport with people and leave a positive impression that lasts longer than an exchange of business cards. Here are a few tips nonprofit executives can use to improve their small-talk skills:

Be the first to say hello. If you wait for others to approach you, you may wait all night. Also, when you say hello first,you determine what the conversation will be about, making it easier to talk about things you know and about which you feel comfortable.

Introduce yourself. Act as if you’re the host and introduce new arrivals to your conversational partner or partners.

Smile first and always shake hands when you meet anyone. This puts others at ease and makes you appear confident.

Take your time during introductions. Make an extra effort to remember names, and use them frequently in the conversation.

Maintain eye contact. Many people in a group of three or more people look around in the hope that others will maintain eye contact on your behalf. But people don’t feel listened to if you’re not looking at them.

Get somebody to talk about why they’re attending the event, and you are on your way to engaging them in conversation.

Show an interest in every person. The more interest you show, the wiser and more attractive you become to others.

Listen carefully for information that can keep the conversation going.

Remember: People want to be with people who make them feel special, not people who are “special.” Take responsibility in helping people you talk to feel as if they’re the only person in the room.

Play the conversation game. When someone asks, “How’s business?” and “What’s going on?”, answer with more than “Pretty good”or “Not much.” Tell more about yourself so that others can learn more about you.

Be cautious when asking business and personal questions.Don’t open a conversation with “How’s your job going at _____?” What if that person just got fired or laid off? Questions like “What do you do?”, “Are you married?”, “Do you have children?” and “Where are you from?” lead to dead-end conversations. Be careful when you’re asking about an acquaintance’s spouse or special friend—you could regret it.

Be aware of body language. Nervous or ill-at-ease people make others uncomfortable. Act confident and comfortable, even when you’re not.

Be prepared. Spend a few minutes before an anticipated event preparing to talk easily about three topics. They will come in handy when you find yourself in the middle of an awkward moment—or while seated at a table of eight where everyone is playing with their food.

Show an interest in conversational partner’s opinion, too.You’re not the only person who has opinions about funding the space program or what will happen to the stock market.

Stop conversation monopolists in their tracks. If possible,wait for the person to take a breath or to pause, then break in with a comment about their topic. Immediately redirect the conversation in the direction you wish it to go.

Be prepared with exit lines. You need to move around and meet others.

Don’t melt from conversations. Make a positive impression by shaking hands and saying goodbye as you leave.

With practice, you can learn how to make the most of meetings, fundraisers and other networking events. You’ll learn to appreciate, rather than dread, networking events.

See also:

The Fine Art of Small Talk

The Fine Art of Big Talk

It’s Not Just Who You Know: Transform Your Life (and Your Organization) by Turning Colleagues and Contacts Into Lasting, Genuine Relationships

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Don’t let your fundraising suffer from “brandjacking”

Are you familiar with the game show “Are You Smarter Than a Fifth Grader?” Sometimes I feel like I’m living that game show every day with my own fifth-grade son. He’s currently reading a book called Chew on This: Everything You Don’t Want to Know about Fast Food and shared a fact I didn’t know: Our world’s population more readily recognizes McDonald’s Golden Arches than it does a cross. In spite of the numerous global religions our societies celebrate and defend, the Golden Arches is a more familiar symbol. Wow. Talk about a powerful brand.

Nonprofit brands connect the donor with action

Can you imagine fundraising in an environment where everyone knows what your organization is and what it does? What a luxury, right? Our latest addition to the CausePlanet summary library focuses on this exact idea. Jeff Brooks, author of The Money-Raising Nonprofit Brand, argues that a nonprofit brand must genuinely cultivate donor action.

Nonprofit leaders who follow the corporate sector’s lead on how to build a brand should follow no more. “Simply applying the principles of commercial branding to nonprofit fundraising is exactly the wrong thing to do. It’s the cause of most branding accidents,” says Brooks. He argues with an abundance of experience that a brand should inspire donors to give rather than convey abstract ideas or visuals that leave donors feeling as if they’re not needed. Brooks also guides you on how to avoid the most common pitfalls associated with branding efforts and to maintain the donor-focused approach that will ensure long-term fundraising success.

Why commercial branding doesn’t work

Namely, commercial branding focuses on abstract ideals of products or services. A nonprofit brand needs to show donors a problem in a realistic way and give them a way to combat it. It needs to show clear, emotional images to motivate and connect with its donors. It needs to know its donors and their preferences.

Don’t get “brandjacked”

According to Brooks, nonprofits must avoid “brandjacking” (“when ‘Brand Experts’ remake a nonprofit brand and render it ineffective for fundraising”). The warning signs include:

1) The new brand is not aimed at your donors.

2) The new brand requires you to abandon your donors to seek new, possibly fictitious ones, instead of expanding your base.

3) The work is not grounded in donor behavior (what donors do instead of what they say about your organization or understand in focus groups).

4) The new brand describes your cause in a symbolic way, instead of in a clear, realistic fashion to move donors to act.

5) The new brand requires absolute consistency, not leaving room for creativity or varying the messages for changing circumstances or relationships with donors.

6) The new brand is design—and little else.

We asked Jeff Brooks about “brandjacking” and his book in our author interview contained in the Page to Practice™ book summary. Here’s an excerpt:

CausePlanet: What is the most common form of “brandjacking” you observe in your client work today?

Brooks: Most common: a nonprofit hires someone from the corporate world and gives him/her carte blanche to transform the organization. That person has little or no understanding of the charity economy, and that lack of understanding plays out in branding and marketing activities that drive away donors. It typically takes two years or more for the organization to realize the size of its mistake, and by that time the marketing expert is ready to move on anyway. Then a bunch of staff gets fired or laid off, assuring there will be no organizational memory of how the brandjacking happened.

CausePlanet: What do you hope readers do with their brands after completing this book?

Brooks: I hope they’ll feel confident and equipped to build a donor-focused organization that loves and respects donors. I hope they’ll create amazing calls to action that empower donors to change the world. I hope they’ll start marketing to donors instead of organizational insiders. I regularly see organizations go through this kind of transformation, and not only does fundraising revenue skyrocket, but people in the organization start to love their work a lot more.

A widely known brand is a very tempting goal for nonprofit organizations, yet Jeff Brooks would caution you not to let slick corporate examples lead you away from a brand that genuinely connects donors to a call to action.  “The mistake many nonprofits make in fundraising is to think when it comes to talking about the cause, ‘bigger is better.’ They believe the philosophical underpinnings of the cause are more important than its specific activities,” adds Brooks. Think less about the Golden Arches and more about how your donor can help.

See more:

The Brand IDEA
Brandraising

Breakthrough Nonprofit Branding

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Leverage the “power of three” for effective communications

The nonprofit market has become increasingly tight, making it more important than ever to shine when communicating with donors and prospects. Your mailings or website are very often the first impression an individual or corporation receives of your organization. By applying the “power of three” in your marketing design, you can improve your chances that prospective donors will read your message.

The “power of three” is a design theory that, simply stated, says that when people are presented with items in groups of three, they are more attracted to that group than with groups with more or less items in it. For example, three colors in a brochure are more effective than two or four because they are easier and more pleasant for our brains to process.

As marketers who develop a wide variety of advertising and marketing campaigns for all types of industries and clients, we found that when the power of three is applied to a communication message, that message resonates better with an audience. With this theory in mind, we designed three messaging components that we incorporate into everything we do: emotional, intellectual and functional.

Functional Component

This component communicates the functional benefits, attributes and features of your program or service. The functional component provides information about what business or service you are in, such as children’s health services, arts education or providing shelters for the homeless, in addition to where you are located or how many offices you have. This is the easiest component for many marketers to communicate, but it rarely gets the reader to act. Simply providing this factual information will cause most prospects to just file the information away and do nothing. Unless your organization is the only one in the city, country or world that offers this service and, therefore, is in high-demand, your communications need more information to be effective.

Intellectual Component

This component provides the opportunity to differentiate and separate your organization from the competition. This includes elements such as perceived quality and perceived value. The trick here for all marketers is to provide information that is relevant and important for their audience. How does your audience perceive quality and value in relation to your program or service? Do you have any significant intellectual properties for quality and value comparison that are of importance to your audience? If so, be sure they are included early on in your communications piece. Don’t hide these messages–they are important and can move a reader to consider action.

Emotional Component

This is the most powerful aspect of any communication piece and often the one that gets the least amount of attention from organization leaders who, ultimately, have to approve communications and their budgets.
Most organizations tend to associate good marketing with communications that focus on the factual and intellectual aspects of their companies. This makes sense since, after all, they are responsible for running an organization and need to focus on non-emotional business aspects to be successful. But, when it comes to being successful in communications messages, particularly those aimed at prospects, emotional components pack the action punch organizations are looking for.

Emotional components include features such as compelling photography and effective, beautifully written copy (in headlines and body copy). The reason emotional aspects work so hard in communications is that they connect the message on a personal level which, in turn, makes it more interesting and important to listen to.

The communication becomes less about your organization fighting to get the reader’s attention to teach something to the reader wanting to learn more about your organization to become part of it, experience it or obtain what you are providing. When your communications can affect someone to do something, you get results—and that is when your marketing funds are well spent.

Using the functional and intellectual components of your message helps to inform and educate your readers, giving them reasons to believe your organization is important for them to know about. But, be sure to pack a punch with an emotional hook to get them to believe in your organization as an important part of their lives that deserves their donations, purchase or other action of support.

See also:

Brandraising

Nonprofit Marketing Guide

Content Marketing for Nonprofits

Image credits: infairhaven.com, thethrivingsmallbusiness.com, foodnavigator.asia.com, utexas.edu

 

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Lost your responsiveness to change? Apply some World Cup logic.

If you’re watching any World Cup soccer this year, you know the Netherlands recently won a match against Costa Rica in overtime thanks to “super sub” Tim Krul on the Netherlands’ team. Krul specializes in defending the goal against penalty kicks and was put in specifically for this reason at the end of the game shoot-out.  As a result, Krul blocked a crucial kick.

Change management guru and bestselling author, John Kotter, would have liked this match because Tim Krul personifies his latest strategy to help organizations adapt quickly to change. In Kotter’s new model, which I explain below, “the network” is put into play rather than repeatedly relying on upper management, those with the most seniority (the starting goalie) or hierarchy to seize opportunities or accommodate changes.

But first, why is adapting to change so important? We are experiencing exponentially growing change—change for which we are not prepared unless we adopt new ways of anticipating and responding to our fast-paced environment. Kotter’s book, Accelerate, “is about how to handle strategic challenges fast enough, with agility and creativity, to take advantage of windows of opportunity which open and shut more quickly today.”

Kotter shows you how people in leading innovative organizations are maintaining their competitive edge, managing turmoil, and coping with unanticipated challenges while executing short-term objectives, all without exhausting the staff in the process.

So what’s behind Kotter’s curtain this time?

A dual operating system. It sounds excessive but, in reality, it’s not. Kotter argues this framework doesn’t require you to eliminate your current hierarchy but, rather, augment it with a more nimble companion that enables you to respond quickly and adeptly to the rapidly changing landscape around you.

The result is the best of both worlds—a reliable structure for core operations and its flexible equal that is responsive to urgency and innovation.

What does a dual operating system look like?

The actual features of a dual operating system are your traditional hierarchy on one side and “a network” on the other. The dual structure is dynamic: Initiatives coalesce and disband as needed. Since a management hierarchy is well-known in the nonprofit sector, Kotter focuses on how the network side works. It is similar to a start-up in that all people are working together toward a goal and with urgency. Kotter explains the network in this way: “Populated with a diagonal slice of employees from all across the organization and up and down its ranks, the network liberates information from silos and hierarchical layers and enables it to flow with far greater freedom and at accelerated speed.”

Who can best leverage this kind of dual system?

Kotter’s dual system helps mid-sized to large organizations get back to their early, nimble roots. Virtually all organizations begin with a network-like structure where founders are at the center and others operate at different nodes working on various initiatives. Individuals work quickly, responding to and seeking opportunity. Over time the organization evolves with the installation of managerial processes. This more mature organization is reliable and well-designed to produce results. However, one limit of this system is that it keeps going back to the same people to move key initiatives forward. In today’s demanding environment, this solution isn’t sustainable. That’s why the network is ideal for organizations that have traditional hierarchies and still want the benefits of a network-like structure. Similarly in World Cup matches, teams don’t go to the same players every time; they put in different specialists depending on what the situation demands.

If you think this is a glorified task force, Kotter answers why it’s not.

Question: We already use something like this sort of structure in the form of interdepartmental task forces, “tiger teams,” “self-managed work teams,” or the like. This is basically the same, right?

Kotter: These kinds of teams and task forces have some characteristics in common with a dual operating system, but overall the two are very different. Interdepartmental task forces and the like are controlled by, and work within, a single-system hierarchy. They are meant to supplement the 20th century organizational form to help it develop and execute new strategic and other initiatives in today’s environment.

The people who do the work on these teams are appointed (although sometimes the word “volunteer” is used, the reality is more like “volun-told”). Often they are directed by a project or program manager who is also appointed. Such teams rarely involve more than a few dozen people. They almost always go away after a set period of time. They usually use the standard management processes: creating plans and measurements, defining accountability, setting timelines, reporting progress on all plans and milestones regularly to those higher up in the hierarchy.

Under the right circumstances, these vehicles can be very useful. But in terms of the sheer energy and alignment needed to help you stay ahead of fierce competition in a turbulent world, there is no comparison between them and a dual system.

If you find yourself in a larger nonprofit that’s lost its ability to adapt or respond quickly to change, consider looking at Kotter’s book Accelerate. He not only explains how to build the framework without taxing the staff, but he also presents eight “Accelerators” that keep the network producing for you. Experiment with John Kotter’s dual operating system; you’ll have a fit and responsive team supporting your hierarchy in the field and playing as super subs when the competition gets tough. You don’t have to depend on the same people every time to get a variety of projects or initiatives done. Instead you can assemble a network that wins the match for you.

Read more:

A Sense of Urgency

Buy-In: Saving Your Good Ideas from Getting Shot Down

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Six myths of corporate sponsorships debunked

More and more nonprofit organizations are using corporate sponsorships to bring in additional income. And for good reason: According to IEG’s  latest annual industry forecast, spending on sponsorship by North American companies was projected to increase by 5.5 percent in 2013 and globally by 4.2 percent–the equivalent of a projected $53 billion spent by companies worldwide.

Several factors account for this strong forecast, including an increase in nontraditional sponsorship opportunities and the consistent revenue growth companies and organizations that use sponsorships have seen from year to year. Despite this explosion in sponsorships, many executive directors, development staff and well-meaning board members still have an unrealistic understanding of what corporate sponsorship is and what it takes to attract those dollars. Too many think that sponsorship fees are similar to corporate contributions, but with a few more deliverables. In fact, from the perspective of the corporate decision-maker, there are few similarities between the two.

Here are six common myths about sponsorships that may be interfering with your organization’s efforts to secure corporate funding:

1. Sponsorship sales is fundraising.

Fundraising is about making the case for philanthropic support for your mission or cause; sponsorship is about marketing. In other words, sponsorship is about a company reaching and impacting potential customers through your organization and its constituents to achieve its marketing and communications goals. If you don’t intend to provide tangible rights and benefits to a sponsor (for example, on-site exhibits, use of mailing lists or ads in your event program), don’t go after sponsorships.

2. Sponsorship fees should equal the cost or expense of the asset.

Many nonprofits set the “fee” they are seeking based upon a fundraising goal or the cost to fund a particular program. However, with sponsorships, there is no correlation between the fee and the expense of the program being sponsored. Indeed, in most cases, the sponsorship fee is worth much more than the cost of the program. Instead, the fee should be based upon the value of the sponsorship rights and benefits package.

Generally, there are two valuations that go into determining a sponsorship fee: tangible and intangible values. The tangible value includes all benefits that can be quantified (e.g., advertising, mailing lists, event tickets). The intangible value is the worth to the corporation of being associated with your organization or event (e.g., prestige of organization, media interest, networking opportunities). Together, the two determine what a sponsorship opportunity is worth.

3. Sponsors are primarily interested in exposure.

Many nonprofits assume that the difference between fundraising and sponsorship is a banner—in other words, the corporate sponsor is really just looking for recognition. While recognition may be one of their objectives, the reasons for sponsorships are far more diverse. According to a recent sponsor survey conducted by IEG, a sponsorship consulting and research firm, the most common reasons for sponsorship are that companies want to:

Have a closer, personal impact on their customers/clients, as well as the opportunity for two-way communications;

Increase visibility;

Shape attitudes;

Communicate their commitment to a particular profession or lifestyle;

Differentiate their product from the competitor’s;

Entertain clients;

Showcase product attributes;

Combat the larger ad budgets of competitors; and

Increase sales.

4. Category exclusivity is generally not that important.

The issue of category exclusivity is where many nonprofits get stuck with sponsorships. Category exclusivity is the right to be the only company within its product or service category associated with the sponsored organization. Simply stated, if Coke is a sponsor, Pepsi is not allowed to be involved.

Sponsors demand category exclusivity because they want a marketplace free from “competitor noise.” Having more than one company from the same sponsorship category will greatly diminish the value of sponsorship and decrease the attractiveness of your event to a potential corporate sponsor.

5. Gold, silver and bronze are popular sponsor levels with corporations.

Contrary to popular belief, using sponsorship levels like gold, silver and bronze do not attract big sponsorships. As soon as a corporate sponsor sees a proposal with a precious metal designation, it assumes the request is just another fundraising appeal. Instead, the terms used for true sponsorship designations are “Title,” “Presenting,” “Associate” or “Official Supplier.”

6. Sponsorship sales is a loathsome responsibility.

Few really enjoy soliciting corporate sponsorships. The main reason is because oftentimes nonprofits don’t have a clear understanding of why a company would want to sponsor their program or event, or they simply don’t have the tools to effectively represent their organization.

Sponsorship sales is not rocket science. Know what you have to offer. Identify who you think might have an interest or need in what you have. Approach them about their needs, not yours. Present a clear, concise opportunity that is appropriately valued and priced. And once they say yes, take good care of them.

See also:

Fundraising with Businesses: 40 New and Improved Ideas for Nonprofits

Cause Marketing for Nonprofits: Partner for Purpose, Passion and Profits

Leveraging Good Will

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Is pay for performance right for your organization?

Today’s nonprofits face several challenges that are forcing them to operate more and more like their business counterparts. Competition for dollars coupled with demands for accountability has caused nonprofits to reevaluate the way they do business. As nonprofits struggle to pay their executive directors more, one of the business practices they are being asked to consider is a pay-for-performance program.

Simply put, a pay-for-performance program—also known as merit pay— is one in which an employee’s pay is based on work performance and demonstrated results. Employees who contribute more receive a higher salary or “merit” increase. This system assumes that job performance can be observed and measured accurately.

The theory behind pay-for-performance is that rewards and bonuses motivate employees to do their jobs better. While there are several advantages to pay-for-performance systems–including acknowledging, with dollars, exceptional employees—there are also many pitfalls.

In theory, the idea sounds perfect: Employees will work harder and more efficiently if they are given more money or other rewards for hitting certain goals. Employees also like the idea of being able to demonstrate their abilities and reach, if not surpass, their goals. In practice, however, the process of connecting pay to performance is trickier than it seems.

Leading writer on the subject of money as a motivator, Alfie Kohn’s Punished by Rewards (Houghton Mifflin) says that rewards may actually damage quality and productivity and cause employees to lose interest in their jobs. Why? Among other reasons, Kohn says, rewards create competitiveness among
employees and undermine collaboration and teamwork. In addition, rewards reduce risk taking, creativity and innovation, because employees will be less likely to think outside the box if doing so jeopardizes their chances for a reward.

If you are considering a pay-for–performance system, here are some questions to consider:

What is your compensation philosophy?

What does your organization value in terms of what and how it wants to pay employees? Your philosophy should support and be compatible with the organization’s specific pay objectives, long-term strategy and overall mission.

Many nonprofits pay below market wages, meaning that an employee performing the same tasks and with the same amount of experience could potentially earn more in the same job in the for-profit sector. Nonprofits usually balance this with more generous leave packages and the chance to work in a mission-rich environment. In some nonprofits, linking certain performance objectives and pay increases to such measurables as the number of constituents served or to the financial health of the organization may give a boost to the executive director’s base salary level, thus equalizing his or her pay to the market.

What message do you want to send?

Pay-for-performance programs usually reward individual performance. However, the organization of many nonprofits is an open, collaborative environment where work gets done through a group effort. Instituting a system that rewards individuals rather than the whole may be a hard sell—and may work against the organizational spirit. If you link pay to performance, make sure that individual job duties are assessed with pay linked to those tasks.

Can you really do this?

An organization contemplating moving to a pay-for-performance system should think through a couple of issues.

First and foremost is the organization’s ability to pay. In general, eight to 10 percent of the budget salary line should be set aside for merit increases. Can your organization afford to do this?

Next, your organization must identify those job duties that can be observed and measured and which are of enough value to build into the merit increase. Measurables can include such goals as increasing dues-paying clients or services and products offered, or reducing customer complaints and errors. Harder to measure is how passionate employees are about the organization or how much they live the organization’s vision and mission. Finally, look at the structure of your organization—pay-for-performance systems work well in hierarchical organizations where each role builds to the job above it.

What rewards do you offer besides money?

There are other ways to reward those employees whose work you value besides giving them more money. Good compensation packages include superior leave options, including vacation and sick leave, as well as health and medical coverage that is as generous as the budget allows. Incentives can also include resources to support the executive director to attend professional conferences or to sit on national boards. And a bonus at the end of a financially successful year is always a strong motivator.

No matter what choice is made on how to pay employees, especially the executive director, make sure that those doing their jobs know what is expected of them. Clearly state job expectations and set realistic performance goals to accomplish those tasks. If an employee isn’t performing as expected, give feedback and give it immediately. If an employee is performing, celebrate that employee’s success.

See also:

Fired Up or Burned Out

Nine Minutes on Monday

Zilch: The Power of Zero in Business

Image credits: bigeducationape.com, fcw.com, punishedbyrewards.com, newsystemthinking.com

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