#3: 5 solutions for SMALL nonprofits
I recently moved to Denver from Chicago. I’m actually back about 5 blocks away from where I used to live in 2010 before heading to the windy city to get my MBA, and since then this neighborhood has developed a LOT with locally owned stores and restaurants.
One of these is this shop that caught my eye called eXtraOrdinary (XO) Gift Co. The store lives up to its name, and if you’re ever visiting Denver I recommend you visit it. It has an amazingly curated selection of handmade or small, local business made gift items, many of which reflect this region.
Now picture this: I walk into the store one day and the owner and founder of the store is in there. I ask him or her how the store curates its goods so well from local artisans for people like me. The owner tells me it’s simple.
“I just spent a lot of time studying what Wal Mart, Walgreens, and others do and do my best to keep up!”
This would never happen. For a million reasons, it makes incredibly little sense for this owner to do anything remotely similar to big box retailers. Sure, maaaayybe there may be a smidge of inspiration somewhere from those stores, but they’re obviously not models for XO Gift Co. to replicate. And in fact, by not replicating these stores models, this store (and many others like it) is able to earn premium revenue for items I could probably get cheaper versions of at the big box guys – but I'll pay it – just like funders and donors will be more likely to give big to smaller nonprofits who have carved out a very specialized and specific niche.
So why do small and often highly localized nonprofits try to emulate the big 501c3 behemoths of our world? Well, probably because these big guys are often a lot more publicly visible. But that’s no reason to think their strategy is relevant to smaller players. Just because both have the same tax incorporation and even similar missions doesn’t mean they should have the same strategy.
Let’s take a look at this in context of each of my 5 Signature Social Impact Solutions.
Solution #1: Social Impact Brand (and $)
Major nonprofits make it their mission to eradicate (or be part of eradicating) an entire social issue at a national or international level. Smaller and more localized nonprofits should position themselves as either eradicating this issue at a much more local level or they should drastically narrow the scope of the issue itself. This, in turn, is what's going to be magnetic for the funders and donors who care about absolutely nothing else aside from this little space the small nonprofit has carved out! If the smaller nonprofit remains generic, it's going to be competing with the big guys for funds.
Solution #2: Theory of Change
When I build a Theory of Change for my clients, I link resources to activities to outputs to outcomes. While both larger nonprofits and smaller players may be shooting for similar global outcomes, the other three components are going to look really different – especially when it comes to activities. Generally, there’s little reason for smaller nonprofits to do the exact same activities as larger ones (or claim they are doing these better by some arbitrary scale). Instead, smaller nonprofits should differentiate their activities by being the best and most specific fit possible for the narrower markets they are serving – a branding luxury the larger nonprofits don’t have. This is going to attract the funders and donors who are passionate about those smaller markets.
Solution #3: Impact Business Model
Pro tip: The Business Model Canvas is your new BFF, especially in impact because it'll make you stand out – most nonprofits I work with have not yet adapted this yet (although they should). For those not familiar with the Business Model Canvas, it’s a tool that lays out each aspect of a business model – and yes, nonprofits all have business models – on a single page. I didn’t develop the model; it’s widely used and adapted by consultants. I did however customize an approach to completing it for small nonprofits and social enterprises. With their narrowed target market and scope, the costs, revenue streams, and value propositions on this canvas are all going to be much narrower as well than those of the larger players. For example, while larger nonprofits may host a road race to increase awareness and raise funds, that may not be the most effective cost for smaller players to accomplish the same goals of increasing awareness and raising funds. Smaller nonprofits should complete this canvas in a way that highlights their unique, smaller niche – and then share it! Showing funders or new board members on a single page how an organization works is priceless.
Solution #4: Impact Data Systems
Large nonprofits, because they are large, have a ton of data. There are statistical methods of analyzing that data or partnering with research institutions that make sense for them. Smaller players, however, often don’t serve enough end users to have significant data, yet I often find them attempting similar analytics or independent research studies! Data gathering should be deliberate and designed to answer a specific question or small set of questions; otherwise, organizations are just collecting data for the sake of collecting data. While researchers can certainly help facilitate this data collection and methodology, rarely do larger studies outsourced to them make sense given the size and scope of smaller nonprofits.
Solution #5: Review & Reporting Strategy
Yes, twenty page annual reports are shiny. The have that new paper smell. But they also cost a ton of money to design, print, and distribute and I’m not convinced anybody holds on to them. While paper is often nice, periodic reporting is something smaller nonprofits can’t afford to spend a ton of money on only to see it in the trash a week later. These assets need to be continuously deployable in the organization’s campaigns and marketing – they need to be online and drive the audience toward action – much like the information and (very brief) personal message I have on my Results page.
That's all! I'm curious what YOU do to work uniquely as the small but mighty nonprofit you are!