In December 2014 I wrote an article for Forbes Magazine titled
The original Top 5 from Forbes includes:
#1. A Nonprofit Is a Company
A nonprofit is a company, and must be run as such. It has staff, operating expenses, contractual agreements and a host of things it must do to stay in business.
Running a philanthropic entity with a business mentality is critical for its long-term survival. That means the nonprofit must have a clear mission, a vision and operating standards, and must produce periodic reports, just as the American Red Cross does every year.
#2. Operating Effectiveness Is Essential
Operating effectiveness means a nonprofit allocates resources properly, from the way it hires people to how much it pays them, campaigns it runs, and contracts it signs.
The bottom line is that a nonprofit must show a good “bottom line,” meaning its revenue must exceed its expenses. In business jargon, you call that “profit,” but even if we can’t mention profit in a nonprofit context, you still need to operate with excess cash if your nonprofit must survive.
A great way to show operational effectiveness is by getting a nonprofit CRM to help with the day to day management of the organization.
#3. Donors Are (Really) Customers
Donors are customers, plain and simple. They need to be found, courted, convinced and retained, just like in a normal business operation.
In a social context in which people’s attention span is shrinking by the day and multiple causes are vying for the same pie, a nonprofit must formulate and deploy an effective strategy to retain donors.
As social media expert Ritu Sharma once wrote in the Nonprofit Quarterly, effective nonprofits consider donors as customers and use social media to engage with their communities.
#4. Good Publicity Can Boost Donations
A strong promotional effort is needed to draw people’s attention, whether they are customers or donors.
Even if your charity has a noble cause, you still need to make it known to potential donors because you might not be the only organization doing something good in that particular philanthropic niche.
#5. A Nonprofit Has Competitors
Continuing on what we just said earlier, a nonprofit has competitors.
Say, for example, that you run a cancer-focused charity somewhere in Chicago. You can bet there are at least 10 or 20 other organizations doing the same thing, advocating the same cause, or occupying the same or related philanthropic niche in the country.
We consider these organizations your competitors because they vie for the same donor money you seek, whether it is government subsidies, grants, cash donations or estate bequests.
These are the addition to the previous 5 elements.
#6. Social Media Engagement Is Important
Think like an entrepreneur when you establish your nonprofit’s social media promotion strategy. Create pages on Facebook, Twitter and LinkedIn, among others, and keep your fans updated. Remember that happy fans can translate easily into generous donors.
The good thing about social media is you can engage your fans and receive instant feedback, which you can use to improve things and adapt to what your followers really want.
Plus, you can tailor the engagement before, during or after a campaign. For example, say you run a literacy youth camp somewhere in Teaneck, NJ. Before your next event, you can do a quick Facebook survey to find out what your followers’ priorities are and what projects they are willing to support financially.
That way, you know in advance where to focus your operational attention and resources, as well as how much funding you can expect to get approximately.
#7. Expanding the (Domestic) Donor Base Is Vital
A nonprofit must expand its donor base, that is, its funding source. Here the idea is to broaden the source of domestic money, from estate bequests to federal grants, cash from private donors, and subsidies from other organizations.
Just as in a business, a charitable entity must constantly find new financial avenues if it wants to survive in the long term.
#8. Good Causes Mean Repeat “Business”
We said it earlier: happy donors will donate again.
Now, this one is also important: Good causes mean repeat “business,” that is, repeat donations. A good cause is one that takes your donors’ priorities into account, adds value to the lives of those it targets, provides periodic reports to donors, and operates in full transparency.
Simply said, donors want to make sure you have a good “product” (the cause) and can execute well on anything your nonprofit says it will do.
#9. Global Expansion Can Be a Good Thing
We live in a global economy, and so should a nonprofit. A charity that can adeptly expand overseas can gradually broaden its appeal and donor base.
The goal is not only to get money from foreign donors but to also run campaigns in other countries and improve the lives of local residents.
By doing so, the charity can export its operational expertise, find new partners and increase its reach.
#10. Partnering With Others Can Be Effective
A partnership is an effective way to boost a nonprofit’s donor base. Some projects require multiple philanthropies because of the size, complexity or geographic expanse of the target audience.
So it is conducive to find allies in the same philanthropic niche, and partner up.
Everyone in the business of nonprofit management know that “not-for-profit” organizations cannot earn profits for their founders and that all of the proceeds earned must be acquired by way of donations, grants, fundraising, endowments, membership and program fees and services. But regardless of what appears to be vast differences between for-profit and nonprofit models, a properly run charity should generally follow the same operational criteria that successful entrepreneurs follow.
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