5 Best Practices for Running a Nonprofit

You may think that nonprofit charities operate differently than private companies. But when you examine them closely, you’ll see that many of their pain points, priorities and processes are familiar to all organizations, regardless of their industry.

Whatever we call organizations in the nonprofit sector — charities, foundations, social enterprises, and so on — the point is that their paths to growth and success are based on strategies similar to those used by for-profit companies. Like these companies, nonprofits and charities require strong leadership, vision, and innovation, along with the right people and tools, to give their causes the visibility they deserve.

Here, we’ll examine some of the key strategies that nonprofits can use in order to garner support and increase their impact.

1. Know your donors

The most successful charities truly know their donors. In the corporate world, this principle is called “knowing your customer.” But whether you’re referring to customers or donors, the underlying message is that it’s important to look beyond the numbers and learn more about what attracts individuals to your organization.

A forward-thinking nonprofit will always stay focused on the things their donors care about, where their preferences lie, and how much they’ve given in the past. Sophisticated organizations can even use this information to predict (with surprising accuracy) how much those donors will give in the future. This is a huge advantage, as it takes a lot of the risk out of strategic planning.

How do these organizations do it? It’s a combination of the right instincts, the right tools, and the right processes. Interact with your supporters at any opportunity, invest in a comprehensive donor management solution, and make market research an ongoing part of your operations. You’ll be amazed at what you can achieve when you have a better understanding of your audience.

2. Personalize every connection

When it comes to effective donor management, you cannot overestimate the importance of building relationships and personalizing every communication. The people who are giving to your charity need to know that they’re making a difference. They also need to feel that their efforts are acknowledged and appreciated.

Hold on. But they’re giving for the cause, not for themselves, right?

Of course, that’s a nice thought, and it may be true for some donors. But overall, that’s not how the business of nonprofit management works. Ask any successful for-profit business about the importance of personal relationships. They’ll tell you that building and maintaining those relationships is crucial to their success.  

The same thing applies here. In fact, in the nonprofit world, creating these meaningful relationships is even more important, because the donor is giving you their money without receiving a product or service in return.  

To maximize donor retention, treat each donor like they’re your biggest supporter. Every email, outreach and check-in call should be personalized and informed by their previous interactions with your nonprofit, their giving history, and the things they care about.

3. Leverage digital tools

Your donors are online and digitally active. For many younger supporters, it’s the best way they know of to learn about your nonprofit, see the work you’re doing, and plan their future giving.

Just as for-profit companies use technology to strengthen their brand, connect with potential buyers and manage customer relationships, your organization should do the same. At a minimum, this means you should have a well-maintained website and a strong social media presence.

From an internal perspective, cloud-based apps are great for providing your team with a shared workspace, a centralized dataset, and mobile access to essential information. For instance, nonprofits can leverage donor management software to:

  • Send out personalized email communications
  • Organize large-scale marketing campaigns
  • Manage interactions with donor leads — and more.

4. Centralize your administration

Many nonprofit organizations consist of a network of local branches across the country, each operating as its own entity. Each one of those local entities has administrative expenses for supplies, technology, and staffing — and those expenses add up quickly. This arrangement is a recipe for duplication and inefficiencies.

There’s a real opportunity for centralization here. For example, the umbrella organization or head office can buy supplies in bulk for cost savings. A shared software solution can also be used to assist individual branches with standardizing administrative tasks. When each branch of a nationwide nonprofit is using the same programs, it promotes consistency in data management, campaign development, and donor communications.

5. Get the right data

Robert McNamara, former Ford Motor Company executive and former US Secretary of Defense, had a set of maxims for leading large organizations. One of them was “get the data.” Indeed, McNamara was one of the first advocates of data-driven management.

Just like private sector businesses, charities need metrics to assess their performance. These key performance indicators (KPIs) help paint a picture of how your campaigns are working and how engaged your supporters are. Important KPIs for nonprofits might include:

  • Month-over-month and year-over-year financials  
  • Donor acquisition cost: How much do you have to spend to acquire a new donor?
  • Retention rate: What percentage of donors who gave last year gave again this year?
  • Donor lifetime value: How much value do you obtain from a donor’s lifetime involvement with your organization?

When it comes to strategic planning, the scene at a nonprofit shouldn’t look that different from that at a private company — a group of smart people gathered around a conference table, looking for answers to complex questions and planning the way forward. Your KPIs should be an important part of that strategic process.

Using technology to promote best practices

Every nonprofit best practice — from knowing your donors to collecting essential data — can be supported by the right technology. Nonprofit-specific software can help organizations streamline many aspects of their day-to-day operations, including donor relationship management, donation tracking, email marketing, and reporting.

By investing in key tools right from the get-go, your organization will be well-equipped to capture new leads, turn those leads into donors, and execute campaigns to keep donors engaged for the long haul.

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