nonprofit market research
Note: I’m heading out of the office for the next week and a half, but in my absence I want to offer a couple of blog posts from the Social Velocity archives. The one below appeared on the blog in February 2011. Enjoy!
I’m a huge believer in questions. Sometimes asking good, hard questions is the only way to get to the bottom of something, to analyze potential options, to find the right path.
So too in the nonprofit sector hard questions can play a pivotal role. It is critically important that we move away from an unwritten rule that “charities” are doing good things that shouldn’t be questioned, to a place where nonprofits are continually asking themselves whether they are making most effective use of resources and providing real solutions.
These are the 5 questions I’d like to see nonprofits asking themselves:
- Do we know if we are accomplishing anything? Because nonprofit organizations can’t simply look at a profit and loss statement to see progress, determining success is much more difficult than in the for-profit world. Yet a nonprofit organization cannot just translate community resources into activities and call it a day. Nonprofits are increasingly forced to demonstrate the change their work creates in the community. I’m not suggesting that every nonprofit must conduct large evaluation projects. Rather, I’m arguing that a nonprofit must create a solid strategy for creating change and then find a way (as cheaply and simply as possible) to determine whether they are delivering on that strategy.
- Are we adapting to our external environment? Gone are the days when a nonprofit enjoyed a core group of donors that funded delivery of the same services to the community year after year. In this ever-changing, increasingly fast-paced world, nonprofits must constantly analyze the trends in their external environment (funding, competitors, community needs) and effectively adapt to those trends in order to survive and thrive.
- Is our board helping or hurting? A board of directors can be a nonprofit’s most important asset, expanding its footprint in the community, bringing in resources, driving a bold direction, ensuring accountability and transparency. Or it can be a group of people who show up to network, meddle in minutiae, and bog the organization down. A nonprofit’s board needs to take a hard look at itself, as individual members and as a group, to determine if they are an effective governing body or not, whether they are moving the mission forward, or just getting in the way.
- Do we really need that new building? Time and again nonprofit organizations launch a capital campaign as a way to get their name out in the community, get the board motivated, bring big donors in the door, and seek significance and importance. But the result is often an organization crippled by resources draining away from the mission. Board and leadership needs to ask themselves if a new building is directly tied to achievement of mission. There are other, better ways to build your brand, rally the board and donors, and raise big dollars, like a growth or capacity capital campaign, which can actually result in more social impact and financial sustainability over the long term.
- Are we using money as a tool? Nonprofit boards often shy away from discussions about money, ignoring tools like financial reports, budget reviews and fundraising net-revenue analysis, in order to focus meetings on programs and mission. But money is an incredibly effective tool for making programs and mission happen, and nonprofits need to create and implement an integrated financial strategy that feeds into the overall organization’s plan. Money, if used strategically and effectively, can help your nonprofit do so much more.
To move forward, the nonprofit sector needs to do away with safe, routine conversations and start asking some hard questions. Indeed questions are sometimes the only route to open up possibilities, try new approaches and find a better way.
Photo Credit: Wade Rockett
Until recently, market research, or understanding the marketplace in which a nonprofit operates, had no place in the nonprofit sector. Once the sole purview of entrepreneurs and corporate brands, market research is quickly (and rightly) becoming a skill set that nonprofits must embrace. Because in an increasingly competitive landscape, if you don’t understand the needs of your clients, who else is addressing those needs, what your funders are looking for, who else they are funding, where policy makers and decision makers are moving, you are sunk. But for many nonprofit leaders market research seems nebulous, inaccessible and expensive. It doesn’t have to be.
Here’s how you can start to wrap your head around market research.
The first step is, with board and staff, to map the marketplace in which your nonprofit operates. A nonprofit is best positioned where their core competencies (those organizational assets they have that cannot be easily taken or replicated) intersect with a community need, apart from where their competitors or collaborators are strongest. Which looks like this:
The idea is that if a nonprofit organization can figure out what part of the solution to a social problem they offer and how that relates to the piece their competitors or collaborators have to offer, then the nonprofit can (for a start):
- Better articulate to funders what their nonprofit is uniquely positioned to accomplish
- Forge partnerships with organizations who supplement weaknesses the organization has
- Stop wasting resources on “doing it all” and focus on the 1-2 things they do exceptionally well
- Reduce competition for funding
- Chart a sustainable future direction
But it is not enough to simply ask board and staff where they think your nonprofit fits in this map. Once they’ve taken a stab at it, you need to get out into the marketplace and see if that assessment holds true. This is where market research comes in. You need to understand current and future trends in your competitors/collaborators and the community need you are trying to address. So you need to find the answers to questions like:
- Is the need within your client population expanding or contracting? In what areas? Why? What does the future hold?
- How else are your clients getting these needs addressed or not addressed?
- What is the future strategy of your competitors and collaborators?
- What are the core competencies of your competitors and collaborators?
- Are there new competitors/collaborators entering the space?
- How do key decision makers (policy makers, funders, etc) feel about your competitors/collaborators? What do they think your role in addressing the problem is?
So how do you go about finding these answers? You can call current funders, friends or other connections and ask them to give you a lay of the land. But you also need to pull some data. And there are lots of free resources out there. Here is a beginning list of things to try:
- Check out these free market research tools
- Ask your local reference librarian for help
- Use the many free databases available at public and university libraries
- Use SurveyMonkey (or other free/cheap survey tools) to ask clients, funders, volunteers what they think
- Ask a market research class at a local college or university to practice their new skills for free on your organization
There really is no excuse for nonprofits not to explore the market in which they operate. The information is out there, you just need to go out and get it. And if you don’t, you will be moving forward in the dark.
Photo Credit: HikingArtist.com