Is "Run It Like A Business" overrated?

Recently there is a boom on social media about the Flint water crisis. The town saved over $5 million with this bid; however, the problem does not seem to be the money at all. 

(Read the wrap-up story about the Flint water crisis here)

A few blog articles I've read regarding this very matter pointed the root cause of the crisis is the government was trying to run it like a business. In nonprofits as well, I like to think that many nonprofits should adopt business models to be able to sustain in this environment. This including my nonprofit marketing agency for nonprofit organizations idea posted earlier as well. I believe, many have missed the point!

Run It Like Business?

This does not mean "become" business. It is true for us, nonprofits, our goals and objectives are often subjective, which make it hard for us to measure... really, anything. Numbers are easier in every way to determine the effectiveness of our operation.

NEVER FORGET WHERE WE CAME FROM AND WHY WE ARE HERE

In educational institutions, if you had a chance to take a business program. They teach you, the ultimate goal of all businesses is "to generate shareholders' wealth". This got in my ears for years, and I always have the question, why? Until today, I cannot really figure it out why... of course for more investors, business growth, retain earnings, etc. but why? Yes, many people think I'm naive, maybe I am, but have you ever asked yourself why you do anything you do apart from just knowing "that's how things work".

Credit: Clker

All in all, I'm trying to say that, use business tools to improve your organization but never use business mindset to run your charity. If you don't get it, see this in an extreme way, you use a hammer smashing a nail into wood boards. Great! you are using a tool to make things more efficient. But you don't think to become a hammer, a nail, or wood boards. Of course, that's stupid and it's impossible, well, look at this, I believe we are trying to say, be yourself, use business tools that's it. Don't try to be a business person to use the tools.


A little note I'd like to add. If you are running a business, try to consider your business to run like a charity as well. How? I'll come back to that later.

"Shaping the Future of Business"

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The Big Idea for Nonprofits Marketing

Each and every year charities in Canada receive less financial supports from the government sector. If this pattern keeps going where would the charities end up? In my prediction, we will see more and more of larger charities 'acquire' the smaller charities forming a larger organization with boarder scope of work. There is no certainty of the circumstances if it happens. “If they are doing exactly the same thing (eg. breast cancer related charities), wouldn’t it be better off to have a single organization to handle the subject?” I do not know the answer to that; what I know is that larger organizations require lots more processes and procedures before one action can take place, smaller organizations have much flexibility to act upon needs. For this reason, I believe the combination of both large and small(er) organizations would be more effective for social needs.

I’m all for the small to medium size nonprofits, not because I do not like the big guys, but I believe thousands of small guys can make a great impact no lesser than a big guy, beyond that, much faster (if integrated well). The idea here is how to make the small guys sustain themselves in this competitive and blood-sucking environment? I say, marketing, market your impact, market your cause, and ma[r]ke[t] the difference. Above other important things needed in the organization, you need marketing.

What Am I Saying?

Here’s the click, marketing is so expensive! Oh, yes, it is. What if there is a nonprofit organization professional in marketing that works for nonprofit organizations? That’s the idea. I am an apprentice in marketing/public relations and I can see this is possible.

How?

By connecting small businesses those depends their revenue from communities with charities those are the centre of communities. Charities have much to learn from the business perspectives and vice versa. That’s the basic concept; however, it will get lots more complicated in term of how the organization runs: revenue model, managements, board governance, etc.

If this is a nonprofit organization, does it mean, it cannot make profit? No, it doesn't mean that it cannot generate profit. Many people misunderstand that a charity cannot make profit. The difference is that charity does not pay dividend (nor have shareholders in this regards). The income is used and the profit is return into the organization. The excess income will be used to train and educate the other nonprofit organizations for self-sustaining as well as to expand. 

I believe the goal of all nonprofit organizations is to solve the social imperfections and cease to exist due to their services are no longer required (very unlikely, but that’s the goal). Once the small guys have the skills to maintain or even better, grow itself with minimum support from the government sector; then, the organization achieve its objective.

I am currently an MBA student working on a research project on effective nonprofits management, partially to find the best way that would make this type of organization works. If you are interested in further detail of the organization I am planning, let me know, maybe we can make an important change for the charities in Vancouver, and perhaps, Canada.

"Shaping the Future of Business"

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Is Marketing Important For a Charity? If not, What is?

Is marketing important for a charity? When I was in class I learned that many organizations (particularly nonprofit organizations), marketing department is a prey for annual budget cuts - so no, it's not important...? Many do not have an in-house marketer at all. The mindset is like, anyone can do it or we cannot afford it; and everyone in the organization sort of contribute in a marketing campaign... How many messages would a public receive then?

Out sourcing sounds very tempting, but again, that would incurs big amount of dollar and it won't look good for our annual report. What next? What are the options? How can get public trust and create positive reputation without spending that much? Let's go on social media.

The Art Of Marketing, 2014

Social media in my opinion, are awesome tools... "tools". I said this to everyone, if you don't know how to utilize a tool, someone is going to get hurts. I talked to my old friend who is currently working on a social media campaign. After I listened to her, there is a pattern of social mediagaphoning. "Social mediagaphoning" (Adj.) - yes, I made it up - is the action of shouting information on the social world regardless of the listeners. Well, we got the information out but... who is listening? Is this what we want? How loud should we shout until someone notice?

My point today is, marketing is an investment. An investment contain risks, and risks can be minimized. Everyone can get into stock market, but how many make fortune out of it? Same thing. You required knowledge, experience, and guts to invest in marketing. Perhaps, risks were always the reason why small charities choose to avoid (similar to someone with small budget trying to buy a stock).

But! this is not our last hope. We can turn this around. I had this idea for 3 years now; unfortunately, my situation did not allow me to move on with the idea. I think it is time to share it to everyone; in case someone can start or share with me the viability of the idea. I will share this idea in my next post because I think you have enough today. Let's close the page and we will continue later.

"Shaping the Future of Business"

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[Part 1] Micro-Econonprofit 101

[Continued: Issues OR Opportunities?]

Merry Christmas! I hope everyone has had a great time with love ones and safe journey. Once again, lots of great things were done over Christmas this year.

Previous post I touched on three major focuses I've found when I was volunteering, working, and studying about nonprofit organizations in BC, particularly Lower Mainland BC. In this post, I would like to expand on the first focus, "Lack of Financial Supports".

There are several ways a nonprofit organization can obtain financial income: donations, sponsors, grants, product or service fees, etc. Many organizations I am aware of, spend lots of time on seeking donations, sponsors, and grant writings; but not many seek to improve its services or products and focus on sustainable income from its own operation. It is true that many organizations are serving to the target with limited income; thus, charging the clients for sustainability would not be feasible, but that does not mean the organization cannot have additional services to generate funds, or even a social enterprise.

The question is probably how to create such thing as social enterprise or provide services that high income population can enjoy because of the perception toward nonprofit organizations' services (eg. private fitness facility versus YMCA).

As many nonprofit organizations will hate me for this, but it is true that we need to operate as if we are a business. This does not mean that we need to pursue maximization of shareholder's wealth. It means, we need to have a organizational (business) plan for both short and long term (click here if you are not sure what is business plan looks like).

Do we really need a organizational plan for a not-for-profit organization? I say yes, because business plan organizes all aspects within an organization and the detailed organizational plan would create a clear single path for staff to follow. Which will likely lead the organizations to the successful result.

Lastly, having products and services that allow organizational sustainability will generate constant cash flow rather than relying on single-time donation. Several organizations is now pursuing sustainability plan by using monthly sign-up which in my opinion, is not sustainable (even though the results proved otherwise).

Next I will discuss about the second topic, "Lack of skilled labors". Generally, it is one of the important reasons preventing nonprofit organizations to grow. Find out in my next post.

"Shaping the Future of Business"

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Issues OR Opportunities? [The Introduction]

It sounds bad as it is but we need to face the truth that nonprofit sector is becoming competitive. I had conversations with a few of local nonprofit organizations, all of them were seeing other nonprofit organizations that are offering the same services/products, locating in the same area, targeting the same people, having the same value(s), as partners. My question was "How is the idea treating your organization?"

The results I found in those nonprofit organizations can be categorized into three main focuses, (i) lack of financial supports, (ii) lack of skilled labors, and (iii) lack of public awareness. I will briefly describe each of the issue in this posting.

As an MBA student and marketing apprentice, seeing the competitors as partners will not only limit the organization to differentiate itself from competitors due to lack of competitiveness, but also discourage the clients and donors to support the organization because they cannot distinguish the organization with the rest; hence, they tend to support those organizations they are familiar with or had been using the services or products.

Second issue is most likely to limit only to some nonprofit organizations, lack of skilled labors. My experience volunteering and working for nonprofit organizations, this seems to be one of the most important issue because without skilled labors, the organizations grow slowly, if lucky. In fact, not many nonprofit organizations see the importance of or cannot afford a professional marketing personnel or agency. Some perceive marketing activities as unnecessary expenses. Again, how is that idea treating your nonprofit organization?

Most nonprofit organizations I've been with did not have any issue regarding number of clients because they serve to the local communities where they are located and to a small portion of the communities. But that does not imply that the organizations have solid public awareness because the amount of donations received in the community is relatively small considering size and income of the people living in the area.

I will leave it here for this post as I am planning to write several chapters on these concerns. Although I mentioned these as issues or problems, I do not mean that they cannot be seen as opportunities. I will expand on those in the following postings.

Credit: Striatic

"Shaping The Future of Business"

Follow up with this topic on next Saturday 27th November, 2014

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