What is the difference between a nonprofit and a for-profit organization?

It is a deceptively straightforward question... but before responding with the obvious answer, consider the following.

• Regardless of tax status, all businesses need money—regularly, consistently, usually in increasing quantities over their lives.

• Both nonprofits and for-profits will often provide goods or services in exchange for that money, whether through an entertainment-centered fundraiser, or through providing entertainment media.

• Both want desperately to retain whoever gives them money and encourage donations again in the future.

• Both live or die by convincing people—groups, other organizations, individuals, etc.—to give them money, through marketing.

Ultimately, the difference is that nonprofits don't keep whatever is left over; for-profit companies try to maximize the leftovers to distribute among owners.

Given all that they have in common, then crafting a successful nonprofit business strategy should end up looking an awful lot like crafting a for-profit business strategy, incorporating...

  • Well-defined goals with a clear, unifying mission
  • An honest, critical self-assessment
  • A set of tools, measures, and standards for conducting future/ongoing assessments
  • Identifying and understanding the competition
  • A target audience or market from whom to solicit business/contributions
  • A quality marketing strategy, which integrates and supports all the foundational elements of the overall business plan

Despite the many shared features, nonprofits frequently eschew the successful, proven strategies of the for-profit sector to develop a marketing plan from scratch. That misses some great opportunities to learn, copy, and adapt for-profit lessons to achieve non-profit goals.

The Customer Comes First

If Wal-Mart tried to gain your business by telling you how much its shareholders would like a bump in profits, do you think you would be more or less likely to shop there?

It is tempting as a nonprofit to advertise the beneficiaries ahead of everything else—they are, after all, the whole reason the organization exists. But even though at-risk youths, the chronically ill, or even rescued puppies are all more likely to inspire empathy and interest than a company's shareholders, leading with them in marketing materials makes the same mistake as the Wal-Mart example: always put your customers first.

You don't necessarily need to rewrite your mission or abandon your principles as a nonprofit, but it does mean that your marketing message could benefit from focusing on the people spending their money, rather than the people or projects receiving it.

Get Feedback

Customer feedback is huge in for-profit businesses. Customer service depends on data to personalize everything that customers are going to see, and bring value to the experience. Why don't more nonprofits incorporate feedback?

Rather than telling their audience members how they should feel, nonprofits would do better to ask how they do feel—about everything from logos to donor prizes to the best time of year to get donations.

Nonprofits would do well to ask, "Why do our donors contribute to our organization? How can we market directly to that impulse?"

Corporations learned a long time ago that listening to customers is the only way to really know what customers want and don't want, like and don't like. Likewise, nonprofits need to put more energy into their feedback collection (or in some cases, just start it) to better serve donors.

Retention is usually cheaper than acquisition; keeping donors is as important as finding new ones. Getting feedback from existing donors—then listening carefully and finding an actionable way to implement that feedback—should be as much of a priority for marketing as counting donations is for the company itself.

Brand Identity

Brand loyalty is as much about good experiences as it is about buying identity, and people are just as happy to purchase identity from a nonprofit as from Disney. Everyone is his or her own little marketing team, with everything from clothes, to cars, to musical preferences acting as little advertisements for the individual's personality.

Brand engagement goes beyond customer loyalty when a brand contributes to an individual's image. People are voluntarily advertising their favorite brands and products as a matter of self-expression. If the only identity a nonprofit offers is based on the gratuity of the benefiting group, that offers little for donors to incorporate and rebrand as their own.

Athletic companies pay untold millions to get the biggest names in sports to endorse shoes and equipment—their customers aren't just athletes, they are winners. Disney doesn't just sell cartoons to children, it manufactures nostalgia.

So, who are your customers or donors? How are you contributing to their identities through your brand image?

Give your brand an identity that donors can proudly claim as part of their own, and they will happily spread your message for you.

Service With Purpose

With online social media and information sharing reaching new saturation levels, something called Corporate Social Responsibility (CSR) is more prevalent and important than ever. By contributing to a cause or creating charitable divisions, major companies are adding socially meaningful purpose to their existing customer-oriented missions.

As more and more companies are finding ways to incorporate CSR ideals into their brand image, customers are relying on CSR initiatives to choose where they spend their money.

CSR means that corporations and non-profits are officially in competition with one another.

Nonprofits, once the only destination for consumers looking to make a positive difference, must now do more than tout their mission of charity to distinguish themselves.

To stay on consumers' radar, nonprofits need to tout credentials that the bigger corporations and chains can't touch. A great way to do this is by engaging more locally, and promoting the familiar, intimate image people already associate with all things "local." Being the community nonprofit opens up avenues to join forces with every other small and local business trying to target the local market. Sharing resources can be a huge win for cash-strapped nonprofits.

If You Can't Beat Them, Study Them

The mission of for-profits is not to earn as much as possible; that is just how those businesses measure their success. Despite popular characterization, the missions of for-profit businesses are just about as socially oriented as non-profits.

Providing the best selection at the best price, keeping families connected, giving consumers more choices in entertainment are not just platitudes. They are the services that consumers pay for and how companies present themselves in all marketing materials.

Against the power of that imaging, combined with a superior customer-service engine and renewed emphasis on CSR, nonprofits can feel at a significant disadvantage.

So instead of shortchanging your company, take a closer look at the competition and see how you can incorporate—or, better yet, improve upon—its marketing strategies for your own nonprofit.

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Nonprofits, Start Acting and Thinking Like For-Profits

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image of Edgar Wilson

Edgar Wilson is a freelance writer and marketing consultant, splitting his time between his home in the Pacific Northwest and New England.

Twitter: @edgartwilson

Facebook: Edgar Wilson