Kevin Grigorenko, Software Engineer, IBM SWAT Team (http://www.ibm.com/), Edward Charles Institute (http://www.edwardcharlesinstitute.com/)
Using Technology to Boost Your Agency Revenue and Value
Out of destruction comes life. As such, in a difficult economic environment, nonprofit executives, CIOs and CTOs, and technologists must step-up to properly nurture a nonprofit’s sustainability and growth as budgets and donors get squeezed. This article will outline key areas to focus on, including efficiency through technology, online and social marketing, cutting waste but not employees, donor databases, and emerging technology trends such as cloud computing. The topics are broad and our coverage of them will necessarily be cursory, but we hope that our decades of experience in nonprofit management and technology can help put a laser focus on areas of further research for you to cut costs, maximize your return on investments, guide future investment, and help your nonprofit succeed and prosper in rough seas.
Maximize the Value of Existing Donors
Unlocking your donor database to help find the right donor at the right time with the right message is the single biggest immediate jump in revenue you can achieve in a short period of time. Avoid barraging your donors with incessant and shrill calls for donations or fatiguing your board with crisis donations. Find creative ways of engaging with your donors — or as the well known management gurus Peter Drucker and Peter Ferdinand, a writer, management consultant and university professor; fundraising legend Don Kuhn and database fundraiser pioneer Andrew E. Svenson put it — your “consumers:”
The purpose of the [nonprofit] organization is not to earn a monetary profit, but to pursue various purposes desired by the income-paying donors. In a sense, then, the donors are the “consumers,” except that they consume the services of the organization not by purchasing a product but by helping the organization pursue its goals [e.g. through donations or volunteering]. The donors are at the same time the investors, the consumers and the influencers of the operational decisions.
Following are four ways to maximize donor revenue:
-
Show your donors how their donations have been and will continue to be in use. Involve your donors in a personalized way, soliciting feedback and suggestions for how the agency can better meet their “demands.” Our experiences have shown that identifying the donor with the right message can increase responses by 15 – 30% and increase the donor value by double or even triple. Results have proven the cost to raise a dollar is only four-cents. So what are you waiting for!
-
Mine your donor database on a weekly basis to drive revenue in these difficult times. Don’t wait for the “annual” mailing, but instead do it weekly to increase cash flow. The response will go up and you will bring in higher donations per donor. By adding additional information to your donor database you can start an ongoing dialogue resulting in more satisfied donors and higher revenues. In data mining, this same agency cost to raise a dollar from new donors is only 64-cents.
-
Start thinking about ways to generate and capture donor reviews and testimonials as just another part of normal business. Integrate this into every transaction by making it second-nature for your employees and for your donors. For example, arm your donors (especially those who have had a personalized experience) with specific website URLs, social media widgets and “share” links for social networks, email-to-a-friend tools or other ways for them to share their experience with others. This is akin to FaceBook, without the bells and whistles.
-
Make sure donors have access in all donor touch points including at the end of your email signatures, on event notices, celebrations and blogs on the website, these contacts should be kept with the donor relationship manager. Provide donors (and employees, if necessary) an incentive for doing so (e.g. referral program, raffle entry, etc.). Don’t be afraid to ask current clients and donors for recommendations.
It’s no secret that nonprofit revenues are down for everyone, but reach out to your donors and you will be surprised to find how helpful they can be on this front. In one instant, one agency received 35% of its revenue from using its database, and leveraging the information to reach donors at the right time with the right message.
Riding the Wave of Emerging Hot Technologies
Emerging technologies are a double-edged sword. By their nature, they usually solve an existing problem through a more efficient use of technology; however, migrating to these emerging technologies sometimes comes with added cost, vendor lock-in, or a low return on investment in.
Nevertheless, we think it’s very important to highlight some of these trends, as some can provide immediate cost savings and increased employee productivity. Research carefully before diving in, but also don’t be too conservative, especially with some of the free or open source solutions which can provide enterprise quality solutions for… free!
IBM recently identified eight technology trends for 2009 as an internal service to executive decision-makers for product development and marketing. A subset of this report was published externally: http://www.slideshare.net/HorizonWatching/horizonwatch-2009-trends-1275272.
Gartner, a respected technology research and consulting group, and others create similar reports. We can’t cover all of these topics, but we believe that many of the trends are well worth investigating for your nonprofit. Below, are our own high-level synopses of eight major trends, along with a few relevant resources. The list is prioritized based on our experiences of each trend’s maturity, applicability to nonprofits, and bang for the buck (note that any companies or products referenced are just examples and there are many alternatives and options, including non-free options that should be investigated):
- Telepresence / Video Conferencing: Consider saving office space costs and commute time for your employees by allowing for telecommutingc (i.e. working from home). Open VPN (http://openvpn.net/) is a free solution that can be used for a secure bridge into your intranet from employees’ home internet connections, and services like Skype (http://www.skype.com/) offer free business conferences for up to 25 participants as well as basic video conferencing.
- Analytics as a Service: Google Analytics (http://www.google.com/analytics/) provides a free service for analytics reporting on your websites.
- Software-as-a-Service: This trend, also known as SaaS, describes using software through a web interface “on demand” rather than installing boxed software within your local IT infrastructure. The key point here, is that you should only use SaaS for non-critical functions, with good support contracts and SLAs (service level agreements), or where you have full control of your data. Although there are few SaaS providers specifically for nonprofits, companies such as SalesForce (http://www.salesforce.com/) provide good CRM tools. Google Apps for nonprofits (http://www.google.com/apps/intl/en/group/index.html) can provide free email hosting. However, be careful of some of the other services from Google or Zoho (http://www.zoho.com/), such as online spreadsheets and document storage as it’s more difficult to get your data out of these services. Google “Apps” email, on the other hand, provides full IMAP or POP access so you can always access or backup all of your email from anywhere.
- Cloud Computing: This trend describes moving your IT infrastructure into “the cloud.” Businesses today don’t generate their own electricity, they get it from a grid, and this is the same idea applied to IT infrastructure such as servers (similar in many ways to shared or dedicated hosting websites). Cloud computing is one of the more popular recent trends; however, be careful of the hype and costs. Cloud computing “platforms” such as Google App Engine (http://code.google.com/appengine/) have vendor lock-in with their custom data store. Amazon’s EC2 (http://aws.amazon.com/ec2/) service provides a more vanilla infrastructure giving you full control, although costs can be high, and administration not as “free form” as in-house systems. Other services include Microsoft’s Azure (http://www.microsoft.com/azure/).
- Virtualization: This trend describes a technology which can be installed on your servers to run multiple virtualized operating systems at the same time, in theory better utilizing idle resources. There are many benefits and equally as many pitfalls to virtualization, so investigate carefully. Xen (http://www.xen.org/) is an open source virtualization hypervisor (commercially supported by Citrix), and VMWare (http://www.vmware.com/) is the poster child for virtualization.
- Web Services: This trend describes a design philosophy and set of standardized technologies to facilitate a “Service Oriented Architecture” and communication across a heterogeneous IT infrastructure. The design philosophy is to expose business functionality as “black box” services, thus cutting development costs and making the infrastructure more agile. The underpinning technology is a set of standardized protocols called Web Services, usually utilizing XML and SOAP over HTTP. Don’t try this at home; it definitely needs a professional IT person.
- Security: Entities need to manage risk end-to-end across all areas of the organization. With the downturn, smaller organizations will likely be subject to higher security risks, so common security practices and security surveillance vendors are probably the safest path.
- Mobile Applications / Services: Tying tightly into social marketing, mobile applications are a new form of marketing and social connectedness.
Efficiency through Technology
If your nonprofit doesn’t have the time, skills or budget for investigating emerging technologies, here are some simple, tried-and-tested high-level concepts worth re-visiting within your existing IT infrastructure during hard economic times. At a high level, we will cover standardizing, optimizing and automating for short-term cost reductions. This includes the networks, servers, storage and software that comprise the basic building blocks of any technology service, and lets you get the most from your existing investments.
Every organization needs to look at the root causes of technology problems and high costs. In so doing, they often find that it is outdated systems, manual processes and incompatible platforms that are the underlying causes. Standardization, optimization and automation can help resolve these issues by boosting infrastructure utilization, simplifying processes and allowing technology to manage technology. The resulting optimized infrastructure also enables technology to better flex with changing economic climates and nonprofit organization demands. You want your organization to run with the efficiency of a business with purpose and proper return on investment. Businesses have learned long ago the critical importance of a competitive technology department.
Standardize To Build Value
With agility and cost management a top-of-mind concern for CIOs, successful organizations are standardizing on next-generation technologies and services that are quicker to deploy and easier to manage. This allows organizations to extract maximum return from their technology investments.
Leading organizations have found an economic downturn to be the right time to be looking at standardization of infrastructure and management. That’s because multiple, sometimes overlapping standards are a drag on cost and agility. Industry-standard technologies can rapidly drive costs out of deployment, management and maintenance activities.
Optimize to Build Value
Optimization allows you to get more out of your infrastructure and use fewer resources to fulfill your technology mandates. It is worth asking your employees about inefficiencies they find in their day-to-day work with the existing IT infrastructure. Work with your vendors or in-house developers to find projects that can more effectively utilize existing critical resources, potentially using resources devoted to experimental or long-term projects.
Automate To Drive Revenue
Automation allows IT organizations to reduce operating costs and increase productivity by streamlining operational tasks. Automation reduces manual errors and frees up scarce resources, shifting funding to strategic initiatives. By taking a comprehensive approach to infrastructure management and automation, entities can get a complete view of their resources from the nonprofit organization service level straight down to the individual component level. This provides an increase in availability and performance management. Alongside this, standard builds and configurations, together with automated procedures, accelerate the time to deploy changes so that nonprofit organization needs can be met more quickly.
Online and Social Marketing Revenue
There is still a lot to be proven about the effects of a good merchandising website, but not to have one is just not acceptable anymore. A contemporary website is considered essential no matter what the size of the entity. Some small nonprofits believe they are “done” after launching a website. But this is just the beginning. There also is the need to ensure your website can be found by search engines such as Google, Yahoo!, Bing and others. Each service provides forms to submit your website to their database of websites; otherwise, your website may be found if other websites link to it. This also is a major part of the ranking scheme in contemporary search algorithms, so it’s important to get your website link onto large publication websites, forums and blogs (without spamming!).
The type of content on your site, the links on your site and how your nonprofit promotes your site directly impact how your site will be ranked in searches against competitors. There are other low-to-no cost ways to improve how effectively your nonprofit organization is marketed online. If your nonprofit organization lacks funds to hire a specialist in this field, ask around and try to find someone like a relative or colleague who is well versed on the web and will volunteer to help you achieve some of the basics. If your organization can afford it, hiring a professional web marketing consultant and/or firm will likely pay for itself in just a matter of months.
Email Marketing For Boosting Revenue
Emails are an excellent way to drive donors to your site and get them to donate through your website. A well constructed email can generate 3 – 5% response with very little effort on your part, thus maximizing productivity and keeping your expenses contained.
When using email marketing, here are three key steps to success:
First, you need to grab the donor’s attention with a clear targeted message that resonates with the donor or volunteer (there are many ways you can think of that would resonate with your donors right now, as their pain points aren’t that far from yours).
Second, you need to build a clear and concise case as to why the donor or prospect needs to support your product and/or service. Perhaps your offering has special appeal now during the downturn because it has the potential to save money or help in other ways during these challenging times.
Last, you need to convince them to donate now, by offering a promotion and call-to-action that inspires the target audience to act. Listen carefully to why the donors you have are giving and identify the patterns. Once you have identified and prioritized the reasons, include them in your email marketing. Be sure to listen to the inverse, as well – why donors aren’t giving now. Find ways to counter those concerns in your message.
Be Poised for the Future (The Wrap Up)
“Information technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without talking about the other.” Bill Gates
A nonprofit should look at these difficult economic conditions as an opportunity. Discuss, research and prioritize some of the technologies and methodologies above, and you will be poised not only to provide a better product or service, but also to come out of the recession agile and competitive. If your organization is conservative and has had issues in the past with the well known failure rates of technology projects (you’re not alone!) and maintenance costs, be strategic in apportioning time and resources to carefully analyze the costs and benefits of each approach.
Never forget your ultimate mission, and never make any assumptions about whether or not your staff is happy about your existing IT infrastructure. If there is one lesson to take away from this article — it is to question your assumptions and inquisitively analyze prospects where technology may benefit your nonprofit organization. Good luck.
Resources
• Edward Charles Institute: Nonprofit Mergers and Acquisitions (http://www.edwardcharlesinstitute.com/).
• Edward Charles Foundation: Recycling and Renewing Charitable Assets (http://www.edwardcharlesfoundation.org/).
• HorizonWatching: Emerging Business Issues, Trends and Technologies (http://horizonwatching.typepad.com/).
• Gartner Research: Industry Standard Technology Foresight (http://www.gartner.com/).
• Charity Navigator: Competitive Information on Nonprofits (http://www.charitynavigator.org/).
• IBM developerWorks: Articles and Tools for Technologists (http://www.ibm.com/developerworks/).
• Ycombinator News: The latest in Technology News from the Hackers Themselves (http://news.ycombinator.com/).
• InternetNews: Realtime News for IT Managers (http://www.internetnews.com/).
###
For more information contact: Edward Charles Institute for Nonprofit Mergers and Acquisitions, www.edwardcharlesinstitue.com, 1880 Century Park East, Suite 315, Los Angeles, CA 90064 or Robert McKim, CEO at 310.930.0066
“Using Technology to Boost Your Agency Revenue and Value” was provided by:
Robert McKim, CEO, Edward Charles Institute for Nonprofit Mergers and Acquisitions
Kevin Grigorenko, Software Engineer, IBM SWAT Team, CTO Edward Charles Institute for Nonprofit Mergers and Acquisitions
1880 Century Park East, Suite 315, Los Angeles, CA 90067
310.930.0066* www.edwardcharlesinstitute.com
At Edward Charles Institute for Nonprofit Mergers and Acquisitions (ECI), we bring together charities that need to find partners. We find win-win conditions for both sides of the collaboration, acquisition or merger. In bringing together charities, we create an environment of trust, making the merger process efficient and successful. Founded in late 2008, ECI represents the collaboration of two nonprofit experts, Robert McKim MA, CISA, CIPP, and Kent Seton, Esq., with more than 40 years of nonprofit and business experience, including his current role as Board Chair for Meals on Wheels West, Board of Governors for Institute of Internal Auditors and Board of Advisors Chicago School of Psychology.
- END -
