Last week was an especially brutal one for journalism.

Gannett, publisher of USA Today and nearly 100 other daily newspapers and close to 1000 weeklies began slashing journalist jobs.  This in a cost-cutting move anticipating that a hedge-fund company was planning to buy the company.

Some analysts were blunt in their assessment that the cutbacks are designed to favor quick Wall Street profits rather than the critical product Gannett should be advancing – journalism.

Of course, Gannett is not alone. For years we’ve witnessed the squeezing and shuttering of newspapers and magazines –an essential lifeblood of our democracy. We all should be both sad and frightened.

But I’ll leave the grieving and fear for another day.

News of the Gannett decimation got me wondering.  Are there similarities—and lessons to be learned– over the decline and uncertain future of newspaper and media companies like Gannett and our own nonprofit sector.  I think so.

Here are some of the  similarities—and warning signs– that come to mind.  Hopefully, you can think of more.

• Failure to understand, listen to and heed the changing needs of the audience.

For decade after decade most newspapers held a monopoly or duopoly position in the markets they served. A position of dominance like this leads to monopolistic thinking and failure to even bother taking seriously the needs of the subscribers/audience – until it’s too late.

For many nonprofits—especially large, established national organizations—this same mindset—we’re the big guys, so obciouslythe status quo is the future—is far too prevalent. I can count on my fingers and toes the organizations that engage in serious efforts aimed at seeking donor feedback, understanding donors’ needs and preferences, and then actually changing their donor experience practices to meet those needs.

• Failure to Understand the Importance and Complexity of the Internet

As Prof. Jeremy Littau, an analyst of the media business put it, “The accidental brilliance of the newspaper business model is it commoditized all those information needs to an audience that, pre-internet, had no other choice. You want a weather report? The newspaper had it. Looking for a job? The newspaper had it. Newspapers owned their readership, which had many needs but few choices. Advertisers showed up in droves to capitalize on this holy grail—a captive audience that could be reliably delivered in a defined space.

“The internet changed everything. The weather became a website, then an app. TV guides went online and became interactive and customizable. Classifieds became searchable and interconnected across regions, then states, and eventually the nation.”

The result was the breakup of the newspapers’ monopoly and loss of its captured audience.

I see the same thing happening in the nonprofit sector albeit in a slightly different way.  Our sector did indeed recognize the importance of the internet. And virtually every organization, regardless of size is online today.

Therein lies the problem. “Online” in the view of far too many organizations simply means having the ability to produce and deliver blizzards of “inexpensive or free” email.  And post endless and often encyclopedic web pages of organization-centric digital content with little or no thought to what is desired or useful to visitors and donors. All produced with little or no understanding of how easy or difficult it is for the donor (or prospect, or public) to easily make donations or other transactions.

• Failure to Heed the Warning of Clear Trends

There’s the common belief that the internet killed the newspaper.  Not so.

As Prof. Littau points out, “Readership for newspapers has been declining since the early 1970s. By the 1980s, Gen Xers growing up in newspaper-reading households were increasingly shunning the format, year over year. For a smart newspaper company, the internet presented an opportunity to capture young readers who hadn’t formed the newspaper habits of their parents.”

In our nonprofit sector –most notably the direct response part of it –the warning signs were on the wall long before the internet. Decade after decade witnessed the sheer number of nonprofits competing for donor dollars skyrocket from approx. 400,000 in 1970 to 1.4 million today.

At the same time the total number of donors has not only failed to increase in a commensurate fashion but has actually declined in recent years.  In short, more and more nonprofits chasing fewer and fewer donors for a share of roughly the same-sized pie.

For at least the last decade the donor retention rate has declined year over year. Today, on average, for every 100 newly acquired donors, 75 will not give in year two.

Add to that a potpourri of new giving channels and methods—crowdsourcing, Facebook, giving portals, in-store point-of-sale solicitation, and online gaming to name a few. This increasingly complex landscape demands we focus on anything but the status quo.

What should be clear to everyone interested in our sector’s future—just as it should have been clear to the newspaper media company decades ago– is that it’s time to challenge the received wisdom reflected in the status quo.

Given the proliferation of organizations, the change in technology and the addition of a multitude of giving channels we are at the point where it may be easier to get people who care about our missions to donate than it is to get people who donate to care about our missions.

AND…there’s at least one additional—and major—failure we must deal with.

• Failure to Invest in Understanding, Innovation and Change.

Newspapers wasted the opportunity of the internet by responding with too little, too late. Why?   Because, before their fall most newspapers were enormously profitable. Almost all newspaper chains like Gannett were publicly traded companies that had conditioned investors to expect high profit margins, often in excess of 30 percent.

A company that wanted to prepare itself for a digital future should have been spending most or all of those profits on R&D—understanding their audience’s changing needs and innovating to meet those needs.  Instead they chose instead to meet investor expectations and need by making subtle cuts to newsrooms, freezing positions and leaving openings unfilled. Little or no R&D other than some of the more foresighted companies like the New York Time, The Washington Post, and The Wall Street Journal that took the leap into greater innovation and change.  A leap that appears to be paying off.

In our sector we face the same dilemma of failure to properly invest to meet the changes we face.  Our failure does not involve investor expectations.  Rather we are faced with the equally serious curses of “fundraising costs and overhead” … the ignorance and short-sightedness of boards…and a general drive to “meet this year’s numbers”.

Insignificant investment in understanding our donors’ needs and doing the hard work to meet those needs both online and offline makes a loud and clear statement: The future be damed.

It’s way past time we recognize and say out loud, over and over what far too few are saying these days:  The change in the environment for both the acquisition of donors and the retention of donors requires that we not just improve within our current strategies, but that we create and invest in new strategies.

The easy money is gone.  It’s time to start investing some smart money.

Roger

P.S. In the next series of post we’ll recommend some solid strategies and investments for a brighter future.