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Not-for-profits: Treat donors as investors

April 13, 2009

Recently, while perusing the Apple Inc. Web site, my eye settled on the link to investor relations. I clicked on the link and immediately found information on the status of the company.

The most interesting section of the Web site included letters to shareholders from CEO Steve Jobs, and a video from the last shareholder meeting.

I clicked "play" on the video to hear Jobs talk about Apple's financial strength, the challenges ahead, and the strategies the company will pursue to overcome those challenges. Then he talked about what viewers probably care about most: the cool new products Apple plans to debut. It was exciting.

As I watched this, I wondered: What can not-for-profits learn from the way Apple—or any public company—engages shareholders?

The answer is simple: Treat donors as shareholders. After all, they invest in them through their contributions. Shouldn't they be treated as investors?

Donors, think about it: When was the last time an organization you support shared real information with you—details about its financial position, strategic plan or vision for weathering economic storms—as you expect public companies to?

And, not-for-profits: When was the last time you posted a video on your Web site to inspire excitement? When was the last time you offered a frank discussion of the difficulties you face and your plan for overcoming them?

Often not-for-profits get caught in what I call "one-sided" fund raising, spinning everything into good news. For their part, too many donors happily accept such spin, looking only at past accomplishments and forgetting to inquire about what's in store.

This must change. Not-for-profits can lead this transformation with a few simple steps:

• Communicate about the organization's health.

An organization should go beyond the annual report, maintaining a page on its Web site that serves as an almost-real-time dashboard, with details about financial stability, strategic direction, impact and news.

If something dramatic happens, such as a major gift or a big problem, the organization should send an e-mail to key donors sharing the news and the plan for addressing it.

• Send quarterly letters.

Executive directors should post on their organizations' Web sites or in newsletters quarterly letters that detail the health of the organization, accomplishments, changes in strategy and obstacles. The organization should consider new media, such as a blog or online video, to deliver the message.

  • Arrange stakeholder visits with leaders.

Organizations must go beyond simple donor visits to let donors see their dollars at work. They should create opportunities at the organization's facilities for program participants to describe to donors how the organization helps them.

Leaders should visit with donors who want to discuss the organization's strategic direction, whether at a special event, in a conference call or before or after board meetings.

• Think "action," not "reaction."

Organizations can't wait for outside events to force communication; they should develop and share strategies that show vision and steadiness. And they should work with development and marketing/public relations teams to make sure donors understand key issues and how the organization will address them. Waiting until a problem becomes a crisis to communicate will inspire fear, rather than confidence, in an ongoing investment.

If not-for-profit organizations' board members and leadership incorporate these simple steps, they'll see a return in the form of stronger donor cultivation and stewardship practices.

And if donors grow to expect such practices, they'll feel more engaged in the organizations they support, more involved in their missions and, as a result, more valued as individual supporters.

And the real winners? The people and organizations that benefit from not-forprofits' work. With a stronger partnership between organizations and their donors, the organizations will be stronger, better operated and more capable of fulfilling their missions.
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Feldmann is CEO of Achieve, an Indianapolis-based consulting firm for not-for-profits.

 

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