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Diversifying Revenue

How content strategy builds relationships and grows revenue

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We’re looking at how organizations undervalue the first, and often only, thing people coming to them experience – their content. The articles, stories, blog posts, photos, videos, emails, and social posts are all opportunities for connection, not just attention. Here’s why that is and how to think strategically about content for connection.

Every website visit is an opportunity for real connection.

If we start from that point then we want to assume that people are coming to us for a reason. We are answering a question, solving a problem, or providing a service. We assume this person will return (or is coming back to us).

We want to know who this person is so we can ask them to join us or support us. And we also want to better meet their needs.

Our content is the terrain on which people discover and interact with us: blog posts, resources, news articles, case studies, action alerts, social media posts, photos, emails and even podcasts and videos.

Content strategy is has two key parts. First is understanding how to meet people’s needs with your content by making sure people can find and use content. Most content strategy work really focuses on things like search optimization. Too often it ends there.

The second piece of content strategy is relationship and community building. When you know about the person using your content you can meet their needs over time and help them help you by joining, donating, contributing, purchasing, volunteering or any of the other actions people can take.

A drawing of people standing in front of a purple building. The people are passing stars to each other. The person at the end of the line is putting stars on a blue easel.

What if we built for connection first?

Most organizations know how many people visit their site and which pages get the most visits (I bet you two of the top three include the home page, about page, and the careers or team bios page).

Meanwhile, groups spend time and money creating content with few tools for knowing who is reading and using it, the value it provides, and what people are really able to do when it comes to supporting, acting on and engaging with groups.

It’s inexplicable. And there’s a better way.

We can rethink web design, content and even emails and social media to optimize for direct connection. This would mean that we expect every visitor to tell us who they are and, at least implicitly, show us what they’re doing with our content, how they’re using it and what they can do to support its creation and our work.

I don’t actually expect every organization to get contact info for every visitor or be able to track every visitor with personally identifiable data.

But if we want to create content that’s useful to people then we need to know who people are and what they really think. And if we want people to support our group for the long haul then they need the best content, experience and relationship we can provide.

Data is not insight

Today’s organizations don’t have a clear idea who is using, visiting, reading or viewing any of the content on their sites, emails or socials. Most organizations have subscribers (an email address and maybe a name and physical address) or donors (email, name, address). And they have visitors who, unless they graduate to one of the above, are little more than electronic ghosts. Bits of aggregated data.

But wait, we have Google Analytics installed. We know which search terms people use to find our site. We know how many times a form is submitted. And we can see who clicks links in email, comes to our site and

True. But most site analytics are vague and general. They tell you how many people come to a page and, if you’re tracking an ad or email campaign, how they got there.

You don’t know who’s there. You don’t know why they’re there (though perhaps you can guess). And you certainly don’t know what they thought or if they’ll be back. A report saying that visits go up or down offers a data point. But it’s not necessarily actionable.

Content strategy vs the void

Organizations often have an engagement process that looks like:

  1. Many visitors to one or more websites and/or social media accounts.
  2. People click and read or view a second page or click from social to web.
  3. Someone fills out a form (subscribe, action, volunteer, event RSVP, survey). It’s only at this point we discover who the visitor is and we still don’t know if/when they revisit our content.
  4. A visitor becomes a supporter by donating or becoming a member.
  5. A person who attends an online event or training.
  6. Someone you meet at an in-person event.
  7. And the smallest group: sustaining donors, members and/or activists.

A lot of people hit the top of the list once, twice or multiple times. Most never advance past that point. And many that do move on won’t be able to tell us if or how the content is useful to them.

We build content with low expectations if we assume that a nameless visit and click is OK for 95% or more of visits.

We don’t have to approach content – be it web, social, email or audio/video – with the the presumption that “views” are what matter while actions and donations are a separate channel or group of people.

Make connection normal (if not required)

Here’s another look at that engagement process with direct connection as the goal:

Visitors => Frequent visitors => Multi-page visitors => subscribers or registered users => members (and/or donors and/or volunteers)

A connection emphasis could start by optimizing for form completion. Subscribing to an email newsletter is often the only form option.

Donating is another option. Organizations and consultants understandably test and optimize donation forms.

But there are countless other possibilities to present people with forms or even register as site users (a vastly stronger option for long term engagement).

The trick is in creating content that people need and value. And providing a user experience that makes forms simple.

About requiring connection

What if we valued our content enough to require payment for it? For most organizations this is a preposterous thought experiment. “We serve the community. Why would we limit access?” Fact is, most organizations have premium content for high level donors, board members, or task oriented folks like volunteers. We see those people as valuable so we create valuable content for them (and often only for them).

The point is not to restrict content to members or registered users or to set up paywall types of experiences. These are tools in the toolbox, of course.

What does matter, however, is the connection powerful content creates between people and organizations. Too often we invest a lot of time and money in content with little clear strategy. And less clarity about its relationship to revenue, membership or programmatic results.

Great content brings people in and keeps them there. It connects people. Invest in content strategy, not just content, and create systems for measuring the value of that content to your visitors and your organization.

Top image by Ivonne Navarro at The Greats and used via a Creative Commons-Attribution-NonCommercial-ShareAlike 4.0 International license (CC-BY-NC-SA).

Our First Book Launch: The Nimble Nonprofit Hits the Streets (and Barnes & Noble)

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The Nimble Nonprofit is now available at Barnes & Noble ($4.99)!
Yesterday Trey and I launched our first book, The Nimble Nonprofit: An Unconventional Guide to Sustaining and Growing Your Nonprofit, with a ton of help from our Bright+3 colleague Ted Fickes.

We’re only a day into it, but it’s been great fun so far: a ton of awesome reviews on Amazon, a bunch of great Twitter traffic, and even an unsolicited and really favorable full-on book review (thanks Bonnie Cranmer!).

In addition, I now have a “Jacob Smith” author page on Amazon. I wasn’t expecting much when I logged in to set it up, but I must not have paid author pages much attention previously because it turns out they’re actually set up pretty well. In addition to what you’d expect (profile, photo, etc.), they also allow you to bring in a Twitter feed and an RSS feed, which is a nice touch.

And great news if you are a Nook fan: The Nimble Nonprofit is now available at Barnes & Noble!

The book is in review at Apple, and as soon as it launches there we’ll announce it.

We’re thrilled to sent our little book out into the world, and we welcome your comments, critiques, and thoughts … send them our way:

The First Bright+3 Book Launch: The Nimble Nonprofit

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I am thrilled to announce the launch of The Nimble Nonprofit: An Unconventional Guide to Sustaining and Growing Your Nonprofit.

The nonprofit world truly is in a state of flux. Much of what used to work doesn’t anymore. The need to invest in growing ass-kicking staff and to develop sustained organizational capacity has never been greater, yet the difficulties of doing so are growing as quickly as the need. In The Nimble Nonprofit we cover a wide range of what we believe are critical challenges facing the nonprofit sector:

  • cultivating a high-impact innovative organizational culture;
  • building and sustaining a great team;
  • staying focused and productive;
  • optimizing your board of directors;
  • creating lasting relationships with foundations, donors, and members;
  • remaining agile and open; and
  • growing and sustaining a nimble, impactful organization.

We mean for The Nimble Nonprofit to be a guide – an unconventional irreverent, and pragmatic guide – to succeeding in a nonprofit leadership role, and to tackling this incredibly challenging nonprofit environment. We aimed for a conversational, practical, candid, and quick read instead of a deep dive. If you want to immerse yourself in building a great membership program, or recruiting board members, or writing by-laws, there are plenty of books that cover the terrain (and some of them are quite good).

But if you want the no-nonsense, convention-challenging, clutter-cutting guide to the info you really, really need to know about sustaining and growing a nonprofit, well, we hope you’ll check out The Nimble Nonprofit.

This is our first book, and the publishing industry is a state of disarray, so – following the spirit in which we wrote the book – we are taking an unconventional path. We decided to publish strictly as an e-book, and we decided to self-published (with a bunch of help from Ted here at Bright+3). We are offering the book through the big three e-bookstores (Amazon, Apple, and Barnes & Noble, and we might add a few more to the mix), and we’ve priced the book at $4.99, which is much less expensive than the vast array of other nonprofit books.

As of right now, the book is available on Amazon (and it’ll hit the other two stores shortly). If you’d like to score a copy of The Nimble Nonprofit and enjoy reading it on your Kindle, iPad, or another tablet, jump on Amazon and grab it (did I mention it’s only $4.99?).

And, because our main goal is contributing to the conversations around these critical questions, we are also making a .pdf version of the book available for free.

We suspect that most readers will agree with some of what we argue and disagree with other parts, and because we challenge much of the conventional wisdom about building strong nonprofits, we’re pretty sure that some folks will disagree with a lot of what we write. And we look forward to the conversations. Please send us your thoughts, critiques, comments, and ideas

Tell us where you think we’re wrong and where we’ve hit the nail on the head, and please share with us other examples of nonprofits doing a great job of tackling these challenges and where they are just getting it wrong.

Happy reading –

Jacob

(P.S. The Nimble Nonprofit is available right now on Amazon.)

Surviving a Cash Flow Crisis

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What to do when the cash runs out? (Photo by Flickr user NoHoDamon).

One of the most difficult challenges of running a nonprofit, but one of the least discussed, is surviving a cash flow crisis. If you’re really lucky, you may never encounter the “crap, we’re going to run out of money before the end of the month” moment, but most folks who work for small or mid-sized nonprofits have experienced that moment at least once or twice. After you negotiate the immediate crisis you’ll need to buy yourself some breathing room and then tackle whatever systemic failure led to the cash crunch in the first place, and if happens more than once in a while you’ll need to grapple with the possibility that your organization simply doesn’t have a viable business model. But first you have to survive the crisis.

Some tips for surviving to fight another day:

  • Stop all of your discretionary spending. All of it. No computers, cameras, pencils, hotel reservations, coffee, or anything else. If it’s something your organization truly can’t live without, then do whatever you can to beg, borrow, or steal it.
  • Figure out what bills you can ignore. Some accounts payable won’t notice you haven’t paid them for a cycle or two. Others might notice but not care. Ignore (for now) any expense you can get away with ignoring.
  • Identify every automatic subscription expense. Cancel any you can get away with, and where canceling will cause you to lose critical data or severely hamper your organization’s ability to do its work, downgrade to the cheapest possible service level.
  • Identify every vendor to whom you owe money or will soon owe money. You may be able to directly approach some of them about your predicament to work out a payment plan. In many cases, for instance, a landlord would rather work out a deferred payment arrangement with you than kick you out (especially if you don’t have a habit of coming up short on the rent). For other vendors, you may need to take a more aggressive approach, and simply pay them a lot less than you owe them, perhaps with an explanatory note. As one of my favorite CFOs points out, a vendor is very unlikely to sue you if you are paying them something, even if it’s modest.
  • Talk to your staff about delaying payroll or in some other way reducing what you pay them in the short term. It’s a tough conversation to have, but for many nonprofits payroll represents a very large proportion of the monthly cash burn, so buying some time on payroll obligations can make a big difference in the short-term.
  • Identify any revenue stream you can accelerate. Any accounts receivable that you can get to pay you now instead of in a month? Any foundations who might be willing to cut you a check a little early? Any committed membership donations you can ask for early delivery on?
  • Calmly (but quickly) reach out to all of your mid-size and larger donors and ask them to make a one-time extra donation to help you out of this pinch. Before you start reaching out, arm yourself with at least something that looks like a plan to both stop the hemorrhaging and then recover your longer-term financial health. It’s much easier to ask for help in a crunch if the donor feels you really can solve the crisis and fix the deeper problems as well.
  • Think about donors that might not be directly invested in your organization specifically but might place a lot of value on your role in the community. Some of them might be willing to help on a one-time basis in a crisis if they know you and value your contribution even if your work isn’t part of their normal philanthropic giving.
  • Explore getting a line of credit from a bank. This is expensive money, and of course it’s easier to secure a line of credit before you find yourself in a crisis, but especially if your organization has some real assets, you might be able to come up with some short term cash.
  • Credit card debt is expensive and dangerous, and once you get into a hole it can be difficult to get back out, but in a real cash flow disaster it can be a lifesaver.

The problem with all of these strategies is that they truly are short-term solutions. They won’t generate any additional revenue, for instance, but at best they’ll simply accelerate payments you were already counting on for use in the future. Most of these spending cuts don’t change your organization’s burn rate; they simply push expenses into the future, where they pile up into even more ominous obligations.

Although surviving the cash flow crisis is your first priority, you should tackle this as best you can with the long-term challenge in mind, and you need to turn your attention to solving your long-term problems (whatever it was that led to the cash flow crunch in the first place) as soon as possible. You have to tackle the structural issues – too many staff for the revenue, overly expensive infrastructure investments, or whatever the problems are – or your organization will find itself dealing with the short-term cash crunch over and over again.

Diversifying Revenue Through Earned Income

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Trey and I have long believed that many nonprofits have untapped opportunities to develop new revenue streams to supplement and strengthen their existing revenue profile. There seem to be three basic models for doing this.

One approach is for an organization to monetize something it already does well. About half of our work at PlaceMatters consists of fee-for-service projects with communities around the country. We ensure that our research is continuously grounded in on-the-ground work in real communities, we field test new community engagement tools and techniques, and simultaneously generate an important revenue source for our nonprofit.

A second is to monetize a by-product of something the organization does. The Extreme Ice Survey, which documents the impacts of climate change on glaciers around thew world, is able to generate revenue from its remarkable photographs and videos. The images and videos are a by-product of the work itself, but they can provide real financial value in support of the mission.

A third might be to monetize the mission directly. An example: by selling heirloom seeds to farmers and gardeners, Native Seeds/SEARCH directly advances its mission of protection genetic diversity in agricultural plants.

Despite many great examples across the sector (including parts of the sector that are heavily funded through direct services), we suspect that many nonprofits underutilize or leave untapped altogether some revenue streams that could provide more revenue stability and security for their mission-based work.

The main reasons for this, we think, are a combination of not having learned to think entrepreneurially (in a revenue-generation sense) and not having the skills to execute even when those opportunities become apparent. And if that’s really the explanation, it’s good news, since those seem like learnable skills and skills that may be increasingly valued in the social sector as the philanthropic toll of the recession persists.

Mobile Advertising: Jumping Off the Cliff

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Photo by Flickr user 4ELEVEN Images.
A few weeks back we made the case for having a mobile strategy: at a minimum, nonprofits need to make sure their web site is mobile-friendly (if not mobile-optimized), and mobile apps might actually be worth the effort. Mobile apps can be useful as part of an engagement strategy, and mobile apps can be useful tools for creating ongoing revenue-producing transactional relationships (e.g., the type of functionality that Urban Airship offers), content subscriptions being the most obvious. But mobile advertising is another strategy that might be useful, and Gigaom thoughtfully posted a great overview of mobile advertising ins and outs.

Mobile advertising may not be an obvious choice for many nonprofits, but if you’ve got an audience, you may be able to incorporate an advertising element that offers relevant ads to your mobile app visitors but remains consistent with the vibe and feel of the app. Whereas web sites tend to be a foundational part of a nonprofit’s brand and presence, you have more latitude with mobile apps and more opportunity to to experiment. Some nonprofits have also experimented with affiliate marketing, an option marketer Chris Brogan has thoughtfully explored quite a bit.

Mobile advertising may not make sense for a lot of nonprofits, and it seems unlikely to offer any more than one more modest revenue stream, but nonprofits really do need to grapple with the limitations of the conventional holy trinity of fundraising – members, donors, and foundations – and this may be one more tool to keep in the toolbox.

If you’ve tried mobile advertising (heck, if you’ve tried a mobile strategy of any kind), we’d love to hear about it . . . what worked, what didn’t, what you would do differently?  And if you’ve thought about it but decided not to, we’d love to hear about that, too.

Are Unrelated Business Ventures a Good Strategy?

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The revenue diversification mantra runs far and wide in the nonprofit world, and the logic is usually intuitive: diverse revenue streams help organizations protect themselves from the dramatic revenue fluctuations that can be typical in a single source. An organization overly dependent on foundation dollars, for example, particularly if they are heavily reliant on one or a few large foundation grants, may really suffer when those foundations change priorities or lose a great deal of endowment value.

But the intuition is based largely on anecdote and extrapolation, and we’ve now got our first academic study interrogating those intuitions, specifically looking at “unrelated business income” ventures and their impact on organizational effectiveness and financial health. The Nonprofit Quarterly reported last week on the new study, which found that nonprofits running income-generating businesses tend to be less efficient in their mission work. The conclusions highlight what we think is a legitimate, predictable risk of “mission distraction” when groups maintain social enterprise side businesses or other unrelated business income ventures.

It’s not clear quite what the study results mean, though. It uses program expenditures as a proxy for organizational effectiveness, for one thing, which isn’t really a measure effectiveness at all. It’s much easier to measure inputs (program expenditures), of course, but what we should actually care about are the outputs (program outcomes). Whether intentional or not, the use of that proxy is predicated on the same logic that drives the “minimize overhead expenses” mantra, which we energetically resist. Program spending doesn’t tell us much about actual impact, whether we look at overall program spending or at program versus overhead spending. If you want to understand organizational effectiveness or impact, you have to look at the impact (or impact per dollar spent), not at spending alone.

Program expenditures as a proxy also misses effectiveness over the long-term. Are organizations with more diverse revenue streams more resilient over the long haul to fluctuations in individual revenue streams even if they seem less financial sound in any particular year? Does the experience of running what amounts to a private sector side business improve the business-running skills on the mission-oriented nonprofit side of the organization? Although the study found that organizations with business ventures unrelated to the mission were more likely to be experiencing financial distress (using a liabilities-to-assets ratio), the study doesn’t really tell us anything about whether those ventures are causing the distress, are caused by it, or are unrelated to the distress altogether.

And as the study’s author (Dr. Rebecca Tekula) speculates in the Nonprofit Quarterly blog comments, “nonprofits are seeing just as much difficulty with their income-generating activities as all corporations have during the last two years.” This highlights what I think is the most important question worth asking: under what circumstances do nonprofits successfully execute business ventures? I like the inquiry, and appreciate the study as a first stab on a complicated question, but I think the real value here is (hopefully) catalyzing the inquiry as opposed to any clear conclusions about when and how entrepreneurial ventures by nonprofits make sense.

Philanthropic Equity

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The Fast Company blog had a nice piece a few days ago on what the Nonprofit Finance Fund Capital Partners call “philanthropic equity.” The basic premise of this approach involves using equity capital to fund nonprofit capacity building. Among the interesting angles: a nonprofit accounting system that tracks growth capital separately from general operating revenue. It doesn’t sound so radical but for most nonprofits, I’ll wager, it would dramatically shift the way they think about budgeting, accounting, and financial planning.

Nonprofit folks have heard for years about the importance of diversifying revenue streams, but outside of shifting from foundation dollars to donations and throwing in some events, I don’t have the sense that the nonprofit sector is pulling this off in any substantial way. Fast Company blogger Alice Korngold doesn’t talk much about what some of the creative approaches funded by the firm might look like. I think one of the challenges for this sort of effort to improve long-term financial viability for nonprofits is a lack of visibility for good examples of alternative revenue models. It’s not that the examples don’t exist, but they aren’t really part of the mainstream nonprofit conversation.

I suspect that the bigger challenges are cultural, though. Nonprofit folks often have a tough time conceptualizing revenue models that involve monetizing anything. It’s not a lack of imagination, but the norms of the sector itself – “We’re nonprofits . . . we don’t do that sort of thing” – can make it pretty hard to see some of the options. It’s not just the idea of monetizing that can be hard to get your head around, but accepting private investment capital and making large investments in long-term capacity (which looks a lot like what funders often call “excessive overhead”), well, the culture of nonprofits tends to resist rather than welcome.

One example of overcoming this resistance: A women’s leadership organization focused heavily on training recognized – thanks to a new board member with substantial corporate experience – that the market for their workshops was much larger than they had realized and willing to pay much than they were charging. They substantially increased their rates, generating a great deal more revenue while still fulfilling their mission of teaching leadership skills to women. To solve the access problem – making sure that women of all means could participate – they created new scholarship mechanisms, which turns out was easy to fund because of the increased revenue stream. This was a pretty radical shift, though, and I suspect that the conversations in the board meetings and among staff were challenging ones.

We’ve got a lot of work to do if we are serious about helping the nonprofit world think a little differently about how to approach the work of doing good.