Nonprofits Are All the Same (and Other Totally, Definitely True Things)

A few years ago, I was working with an organization which was having trouble with messaging, and I brought in a few communications firms to pitch a rebranding campaign. At the end of one such pitch, I asked what type of research they proposed doing. They responded with, “Well, we’ve worked with many nonprofits, so we have a good idea of what we’re dealing with.”

I thanked them, walked them out, and we never spoke again.

Just like every for profit business is different, every nonprofit business is different. And every strategy you implement should be tailored to your nonprofit’s specific needs.

This week, one of my favorite nonprofit bloggers, Vu Le, wrote about whether or not individual donations strategies work for communities of color (spoiler alert: by and large, they don’t). His post cites the ever-popular stat that 72% of nonprofit financial support comes from individuals, as opposed to foundations or corporations (note that this statistic does NOT include government funding). That one number, just like all keystone statistics that are used to make sweeping arguments, can be misleading when it comes to nonprofits in communities of color.

This is a common problem. Nonprofit professionals want to benchmark, so they look for data. But a lot of the easy-to-grab data points are not applicable to most nonprofits. For example, let’s talk about national charitable giving statistics.

One: they are skewed towards large institutions such as hospitals or universities.

Two: they are primarily gleaned from 990s, which only tell part of the story.

Take a look at America’s top donors from 2014 from the Chronicle of Philanthropy: almost every single donation is to a school or hospital and the smallest donation listed is $1 million.

So if you’re a small arts nonprofit in East Providence, Rhode Island, how similar do you think your community is to those of Harvard or Dana Farber Research Institute? Probably not very.

Second, the 990 itself gives better data (which means more reporting) for larger institutions. For organizations whose revenue is < $500,000, the 990-EZ form combines all contributions together (so foundation grants and donations are lumped together). This means the very data we’re referring to is inherently less applicable to smaller organizations. And do you know how the percentage of nonprofits which have less than $500,000 in gross receipts? The vast majority- 66.4%. And a full 30% of nonprofits report less than $100,000 in gross receipts.

Image from: The Urban Institute

So even though most nonprofits are small, 86.5% of all expenses are for nonprofit with more than $10 million in revenue. That big grey bar is making up for the largest majority of those data points. And that, my nonprofit friends, is going to massively skew all of the donation data we see when it comes to national averages.*

But people still need answers, so what do they do? If you can’t rely on national statistics, how do you find data that is applicable to your nonprofit? Well, you won’t like the answer.

Research. No smart decision is made in communications or fundraising without it.

As much as it pains me to say, your nonprofit is its own special snowflake. Yes, you may have things in common with other organizations, but your audience is your audience and your service is your service. So unless someone has extensive experience in your exact community, cause, and staff, they will need to do research to figure out exactly which strategies to pursue

So how do you do that with a small budget? If you already have a consultant, make sure you ask them what research they are doing. How do they know who your audience is? How do they know what funding strategy is best? Have they worked with organizations of similar size and in similar fields? Ask them the hard questions. It is their job to give a good answer.

If you don’t have a consultant, try some of these free research tools:

Pew Research Center– I love this tool for opinion or population data. It can also be incredibly useful if your nonprofit works closely with the Hispanic community.

National Center for Charitable Statistics– This is a project by The Urban Institute which does all types of research on nonprofits. This can be a great place to do a deep dive into specifics.

National Council on Nonprofits– This is a collection of reports, sometimes on a state-by-state basis, on nonprofits in the United States.

The Census– The census is amazing. This can give you, on a block-by-block basis, the demographics if your community. I highly recommend learning this tool and using it frequently.

How America Gives– This tool, by the Chronicle of Philanthropy, is an interactive map where you can zoom in to see your community specifically. This can be useful when identifying individual funding strategies.

Or consider making a peer group of similar organizations. Take 5-10 similar organizations in a similar geographic or demographic area and create a comparison to their 990. Or, even better, contact them and develop a partnership where you can talk to them about their data. Everyone wins!

I always find research somewhat tiresome, but ultimately the reward is worth the effort. Once you’ve found key insights from the research, you’ll develop smarter strategies tailored to the needs of your organization. Chances are that it will be more applicable and more accurate than anything based on national data.

Now, the tools I mentioned about are just the ones I use most frequently. Did I miss any great ones that I should include? Mention it in the comments!

*Note: $114 billion of the $358 billion donated in 2014 went to religious causes, which adds an additional complication.

Second note: Thank you to my good friend Dan Owens for helping me write this. You’re the best.