1)      Best Practices lead to copying

2)      Copying is a race to look the same

3)      When everything looks the same it is a commoditized market

4)      A commoditized market is very price sensitive

5)      A price sensitive offering can only improve margin through cost management

6)      By only focusing on cost management the innovation dies

7)      When the innovation dies and everything looks the same there is no competitive advantage

8)      There is also no brand

9)      When there is no brand to differentiate or create competitive advantage there is churn

10)   Churn is the antithesis of retention

11)   Retention is the only path to sustainable growth

12)   Sustainable growth is the only path to mission success

We admittedly cranked this list out in a matter of minutes, largely out of a short-term burst of frustration.  The longer term frustration and point we really wanted to focus on (though we’d suggest the 12 above have merit) is the highly commoditized, unbranded world that is the non-profit sector.

To state it in only slightly hyperbolic terms; the non-profit sector, as a whole, is to the commercial sector what the store brand laundry detergent is to Tide.

Consider this (true) story.  Organization A does a direct mail test by adding their brand – i.e. their logo – to the outer envelope.  The result: (come on…you know the answer) That’s right, it suppressed response.   This is not an isolated example.

Think about it, if McDonalds or J-Crew or Starbucks found out they could get more folks in the door and sell more product if they took their name off the door would this not seem crazy and a harbinger of crisis?

To continue and probably over-burden our metaphor, the non-profit world is analogous to coffee shops, clothing stores and burger joints.  There is no Starbucks or Caribou coffee, no McDonalds or Burger King or Wendy’s and no Banana Republic or J-Crew, just a commoditized offering that perversely DOES BETTER than when slapping a logo on the front.

At this point in the post we can hear folks saying , “well our fundraising is definitely better with our brand/logo very prominently displayed”.   This is certainly true for many organizations but this should not be taken to mean the organizational brand is strong; far from it in the vast majority of cases.  Our research across a cross-section of non-profit sectors suggests most organizations, from the donor’s perspective, are far more like their competitive set than different.

To understand why we return to our best practices rant.  Copycatting the presumed market leader is not new nor is it endemic to only the non-profit sector – most of the commercial sector falls prey to the same disease.

Copy-catting is nevertheless, the antithesis of a well thought out strategic positioning and brand.  The nickel package (you know the one) does well at Org A and like lemmings, Org B, C, D…..Z churn out their nickel package to try and move from .08 to 1% response rate.

Don’t get us wrong, we understand that an incremental improvement in response is worth chasing.

However, the problem is twofold with the current “best practices”:

1)      The only metrics that are EVER paid attention to are the short-term ones of response rate and average gift.

2)      Rarely is the copy-cat strategy proposed ever evaluated on the basis of whether it is consistent with and supportive of the organizational and brand positioning.

In reverse order, the reason for the 2^nd point is simple (albeit painful):  The sector simply does not pay attention to, understand or appreciate strategic positioning and by extension, brand.  The term “brand” has been hijacked to mean tagline and logo and the fundraisers rightly dismiss it out of hand as fluff.

The reason for the first point is that non-profit Boards and Senior Management, who also suffer from zero understanding of strategic positioning, do not insist or demand that long-term metrics like retention and life-time value be of equal or greater importance to short term metrics.

Consider another commercial sector comparison; most non-profits, financially speaking, run EXACTLY the same as many of the worst run publicly traded companies who slavishly focus on the quarterly number to please Wall Street, beat the expectations game, avoid getting fired, grab as much bonus as possible and get out before anybody notices there has been little to no improvement in the growth of the business.   Not a flattering comparison we know but since the non-profit sector has failed to grab a single point of market share from the commercial world (based on real data showing NO improvement in the charitable base since the 70s) AND has negative growth in year over year revenue and donor count it is, unfortunately, fair.

We are frankly emotionally exhausted at this point in the post.  We do care about the sector, we do believe it can and should demand more of itself and those serving it.  There is a better way because the cold hard truth and maybe the point we wanted to make all along is this,

The way that fundraising is being done – via “best practices” – is KILLING your brand and lack of brand is KILLING the financial viability of the non-profit sector.