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Seven Reasons Why Nonprofits Won’t Spend Money on Marketing

   /   Dec 11th, 2013Opinion

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The nonprofit industry is filled to the brim with efficient, effective, highly impressive organizations that many people have never heard of. It’s tragic, but no real surprise; many nonprofits do a poor job marketing themselves, even if they do a great job serving their communities. But the underlying reasons for the state of the industry are more complicated than a layperson might expect.

The most obvious explanation for the lack of marketing is simply the expense of it. It takes a long time for a marketing director to pay for himself, and a new staff member is a huge risk for a smaller nonprofit to take. For smaller groups run by one or two employees, or organizations operating under a “crisis budget,” they’re simply acknowledging their practical realities – they can’t pay staff with money they don’t have, and every dime goes towards keeping their doors open.

However, nonprofits that may be willing to make long term investments in their organization in the form of property or staff training still balk at spending money on marketing. A director may feel that any form of marketing for a cause-based organization cheapens the work they do, turning the nonprofit’s impact into a product to be sold, rather than a service to the community. And why should she spend money marketing their work when everyone that’s heard of her organization loves it?

Many times, nonprofit staff have a hard time escaping their tunnel vision. It’s true that everyone they interact with knows of their organization because she’s probably told them repeatedly – all of her family members, her neighbors, her friends, her friends of friends… However, that circle may comprise a vast majority of people who have ever heard of the organization. The director’s work is such a big part of her life that she may forget that many members of the community have probably never heard of her nonprofit. In this scenario (and this is not hyperbole – it happens all the time) it’s possible that not even people directly served by the organization have heard of it. They may know the work, but not who’s doing it!

Then, there are the charity watchdogs. The three largest charity rating organizations, Guidestar, Charity Navigator, and the Better Business Bureau Wise Giving Alliance, rate charities on a number of factors related mostly to financial accounting and transparency. The system of ratings can get a little complicated to someone that’s not an accountant or nonprofit finance professional, but the most important thing to know is that none of them actually rate results. They measure aspects of nonprofit financial health and transparency, all of which are important, but which may not be what the average donor cares about. This becomes very important: to achieve a top score, nonprofits need to spend 15 percent or less of their total costs on administrative overhead, and less than 10 cents of every dollar on fundraising.

The use of overhead spending ratio as a primary marker of a charity’s value has been widely maligned (even, at times, by the watchdogs themselves), but that’s done little to quell panic among non-profit managers. Nor should it: Charity Navigator claims to influence billions of dollars per year worth of giving, both from private donors and foundations, who may be unaware that the number of stars assigned is based on accounting.

The pressure then becomes heavy on nonprofits to cut overhead spending wherever possible. And “overhead” encompasses nearly everything an organization needs to stay healthy, including rent, computer equipment, staff benefits, and even administrative personnel like office managers. The more pressure nonprofits feel to devote as much money as possible to programming, the more organizations neglect what they need for their long term health, stability, and community outreach (read: marketing).

At most organizations, the very first overhead cost to get cut out of the annual budget is marketing. Typically only the largest organizations have full time staff devoted to communications, so the vast majority of smaller nonprofits hire enough to cover program time and the bare minimum of administration, then hope they’ll figure out a way to fit in marketing eventually.

At many nonprofits, non-programming staff members are hired for a broad range of tasks, one of which (so goes the plan) will be marketing. Then, as the organization’s needs change and grow and the existing staff is expected to pick up the slack, time carved out for marketing is instead devoted to other more “pressing” needs. While the effects of old computers and discount office space may stay hidden for years, lackluster marketing is highly visible. Press releases riddled with typos, poorly functioning websites, and “Twitter graveyards” are some of the hallmarks of cuts to communications budgets.

It’s difficult to convince nonprofit leaders to change their thinking, especially when it comes to a hot button topic like marketing. After all, in the short term, the system does work: nonprofits are able to reduce budgets by quite a bit, decreasing the portion that goes to overhead services. But in the long term, a lack of effective marketing means reduced name recognition, limited exposure to the general public, and, ultimately, fewer donations and volunteers. It falls to nonprofits to make sure they continually increase their audience and then convince these people to support them in tangible ways.

Clare Shepherd is a consultant at Loken Creative, a marketing agency for cause-based organizations. To find out more about Loken Creative, watch this animated video.

Photo courtesy of OpenSource (Flickr).

6 Responses

  1. [...] do many nonprofits do such a poor job marketing themselves, even if they do a great job serving their [...]

  2. Jill Ritchie says:

    I agree. Thank you for excellent article. I have encountered a reluctance to invest in marketing in over 90% of organizations I have come across in 22 countries… A global problem.

  3. [...] do many nonprofits do such a poor job marketing themselves, even if they do a great job serving their [...]

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  5. Margie (Marguerite) McCurry, Ph.D.

    Experienced fundraiser, public relations pro, writer & proofreader in NM & Central CA areas

    Kudos to you, Heidi, and to Clare Shepherd for this excellent article! It speaks so directly to my continuing, simple mantra: “They won’t give if they don’t know who you are!” Most cause-related agencies can’t afford a marketing director….but please consider a knowledgeable, local marketing consultant to help out…maybe even on a monthly retainer…and see the results in 6-12 months!

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