Digital not-for-profits can make more money...if they know how.

I was reading this article in the Globe and Mail. It recounts the history of a small canadian firm, TakingITGlobal which...does something involving youth and connecting them to changing the world. In the words of the founder "social networking for social change." Hmmm. Formally, "Our mission is to provide opportunities for learning, capacity-building, cross-cultural awareness and self-development through the use of Information and Communication Technologies."

I know very little about TakingITGlobal. The article is part of the G and M's "business incubator" series which examines and solicits solutions from consultants to problems faced by small businesses.

TIG, like almost all not-for-profits, would like to secure and increase their revenue streams and membership, as the majority of their funding is from government or foundation sources. I discussed the demands made on not-for-profits to secure grants this week in connection to the Wellesley Institute's report, We Can't Afford to do Business this Way.

The solutions offered to diversify revenue:

Typical not-for profit solutions:

• seek sponsorship (that hopefully won't conflict with your mandate and values). Sponsorship is often suggested as a way of underwriting not-for-profit enterprises but has great potential with TIG because of their global reach and sizeable membership. (this was mentioned)


• more government/foundation funding


• earned revenue (institutions: ancillary revenues i.e. gift shops and restaurants; cultural groups: merchandise; corporate fees; service providers: membership fees, product sales, other ancillary revenues)

Uniquely digital solutions:

• on-site advertising. I am surprised they don't have advertising on the site, as hasn't this been the major revenue stream for internet businesses? And, with an estimated 200,000 members, guaranteed clicks)


• create and collect fees for "premium" membership. But will people pay? My personal experience: I blanche at paying for content. Why pay when there is so much good content for free? I really despise when I am forced to watch a video ad before reading an article, but I will put up with it if it means not having to pay! One of the more brutal responses to the G&M article summed it up like this: "only think[sic] people pay for online is gambling, porn and ebay. how many people pay to read newspapers online?" But I know Nerve and Salon have gone this way.


• rebrand in order to attract new members (which would involve redoing parts of the site, I assume). I personally find the site has no point of entry for new users. I'm 26. Am I considered youth or not? Is the site for me or not? It's hard to tell. Confused at the point of entry, I do not waste time going further.


• also to attract new members: use other social networking sites, ie. Facebook. I found out about this wonderful micro-lending organization through Facebook. Funnily enough, my friend whose page it was on wasn't even a lender, but now I am.

The wonderful thing about these (ok, run of the mill) solutions is that they are applicable to any organization that is moving towards a primarily digital offering like....the Canadian Music Centre (with whom we met today!) They are in the process of putting a whole wack of digital music online...

Last comment on the article: I was suprised at the vitriole directed at the organization in the comments section. They can't see why the organization exists at all and generally see it as a charity that sucks money away from 'real' cash-stricken charities. I have found that that is a constant and legitimate question about not-for-profits whose primary role is to direct people or information or funds to/about other not-for-profits.

The problem with grants

I was having a conversation with my brother who works with Big Brothers Big Sisters, a mentoring program in Toronto. Oh, and by the way, if you are a visible minority male-- he is always looking for more mentors. Apparently they have no problems finding women mentors for girls. But I digress. He also works with a number of other not-for-profits and the conversation turned to grants. He told me about a report called "We Can't Afford to Do Business This Way" (Officially, "A Study of the Administrative Burden Resulting From Funder Accountability and Compliance Practices"). If you work with a non-profit at the organizational level and have been responsible for grant writing, this report won't tell you much that you haven't already experienced first hand, and the data collection was not in the area for the arts. It is still an eye-opener and I recommend it highly.



Download the report here.



Three findings that could be applied to arts/culture generating organizations:



The cumulative administrative burden on agencies is all consuming. The agencies respectivelycompleted 182, 48, and 94 major funder reports a year. Each funder and/or program had its ownreport requirements and formats. Securing and reporting on grants is the priority activity for thesurvival of organizations and their programs, pushing aside other organizational priorities suchas overall agency budgeting and strategic planning, community relations, staff development, and program management.

Funders are slow to approve/reject grants, and the slow response time causes “gap”problems for service delivery [here, substitute "arts programming or planning" for "service delivery"]. Agencies often found themselves with “nine months” to deliver“12 months” of service. If an agency guesses wrong and retains staff during the “gap” and thendoes not receive the grant, it incurs significant debt. If it lets staff go, program delivery and continuitysuffer. Response time for 73% of grants was four to five months or longer from the time the proposalwas submitted to the time the funder made a decision.

Grant applications and reporting, and addressing the challenges posed by funder practices andrestrictions, dominated the attention of senior management [...]. Senior managers are very aware and worried that they cannot replace themselves.Senior managers reported that frontline staff are reluctant to take on management jobs.Moreover, the agencies do not have the administrative capacity to train the next generation ofsenior managers. The reluctance of funders to compensate senior managers adequately iscompounding succession-planning. Grant management, of necessity, takes priority over other management responsibilities.

Scary, isn't it.

Looking for Love in All the Wrong Places

The following text is adapted from a lecture Managing Director and Senior Consultant Doug Simpson gave at ANDPVA (Association for Native Development in the Performing and Visual Arts) on how to (and not to) develop audiences and members in non-profit organizations. I am going to post it two parts.



LOOKING FOR LOVE IN ALL THE WRONG PLACES – PART 1

I'm old enough to remember when small arts organizations burned up volunteer resources running bingo instead of building membership support. When bingo ceased to be a big money-maker, a lot of organizations started running Nevada tickets. Raffles and lotteries seemed like failsafe money-makers for a while, until there were so many of them they fell out of favour.

I also remember when I was running a theatre company in Peterborough so long ago that our big annual raffle featured two new inventions: the VCR and the wind surfer. The Board failed to sell enough tickets, and the Board Chair walked off with both first and second prize. It took me a week of guilt tripping to get him to give them back. But it wasn't just a small market phenomenon. At about the same time, the Canadian Opera Company, with one of the wealthiest memberships in the country, was losing big money raffling off Mercedes sedans and fabulous trips. The whole herd of non-profit fund raisers had to move on and find a new technique for getting money out the community.

But I want to step back from techniques for raising money, and focus on the good old honest practice of audience and membership development. What could be more simple and straightforward than accepting admission money from people who want to experience what you offer, or then to invite them into a deeper relationship with the organization through membership, and in return, giving them a more profound understanding and appreciation of the thing they love?

There's no trickery or salesmanship at root here. It's not about techniques that you can swap with other organizations. It's about establishing and cultivating a unique relationship between your organization and those in the community who appreciate what it does. Underneath all the marketing jargon and sly, seductive direct mail techniques is the genuinely powerful connection between what you do for the community and those in the community who really care about it.

Relationships. That's what we're really talking about. Lasting supportive relationships. Not one night stands, but relationships that have a better than average chance of enduring and becoming stronger.

When I talk in this simplistic way, people get uncomfortable because it sounds too much like a TV ad for an online dating service, not the tricky and important business of membership and audience development. But let me ask you, honestly, what lasting relationship starts with borrowed techniques? How many movies or plays have you seen where some lovesick swain asks his womanizer friend to help seduce the woman of his dreams? Will Smith's, Hitch, is the latest example. Cyrano de Bergerac might be the most famous one. In fiction, as in real life, it works so badly, it's funny.

My contention is that we should let the unique essence of our relationship to members and audiences determine what fund raising and marketing techniques we use, rather than the reverse.

Too often, out of habit or desperation, we employ techniques that fail to present us in our best light, or that attract people who aren't right for us. When that happens, when we don't get the results we want, it's tempting to try harder.

For example, if we budgeted for a 3% response rate to a mass mailing and we only get 1.5%, it's easier to rationalize sending twice as many letters than it is to back up a step and consider whether or not we're sending the right message to the right people, or whether or not we're using the wrong medium altogether.

Seriously think about how many non-profit organizations try to expand their support base by buying mailing lists from other organizations! Yes, you may find a few more prospects, and convert a few of those into new supporters, but the cost is high relative to an approach that is focused on the unique relationship you're seeking and on the need to motivate your future member to become involved with you. It’s worth doing for the 800 pound gorillas in our field, but not for the vast majority of small cultural organizations.

Here's the most fundamental thing I can tell you, and I think it puts everything else into perspective. The currency of membership and audience development, as for all kinds of marketing, is not dollars, not number of impressions, nor privileges, benefits, or services; it is emotion.

Anytime you get someone to get out of their easy chair to start a transaction with you, you first have to convince them that they feel like doing something about what you've offered them. You then also have to convince them to choose your offering over everything else available to them at that moment. And finally, given that it is a non-profit offering in which they are donating to or buying something of uncertain dollar value, you have to leave them with a good feeling: a feeling of pride, of pleasure, and a desire to do it again - donate monthly by credit card instead of once by cheque, for example, or to buy a series subscription instead of a single ticket. By analogy to online dating, this is the true "love connection."

Underneath it all, the currency of the transaction is emotion. Everything else is a secondary consideration that comes into play only AFTER the right feelings are stimulated.

How do we know who to approach and how should we approach them to arouse the right feelings? Let me give you some examples that you might be able to relate to, and think about how your organization behaves when it's looking for love, when it's trying to build lasting support relationships.

Part II - Tomorrow - Concrete examples of successful membership developement and some common pitfalls.