The Value Dilema for NPOs
Marlene Sathekge
Strategic Thinking Partner & Advisor to Socially Conscious Business Leaders
Starting a business is a very challenging road to embark upon because there is so much one has to figure out about customer needs or challenges and how your business is best placed to solve the problem for the customer. Businesses that tend to do well and grow sustainably understand their customer, their needs and how the product or service solves that need better than anything else that might be available to the customer.
It can be argued that the same considerations should be applied in the NPO landscape. In the funding conversation, it is fundamental to understand your customer (the funder), the customer's needs (what problem does funding you solve for the funder) and why you are best placed to be their solution.
In the example of a homeless shelter within a busy city, the organisation provides a myriad of benefits and advantages to a wide spectrum of beneficiaries such as:
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All of these stakeholders benefit in some way from the work the shelter does to keep homeless people protected, fed, clean and off the street. The challenge many NPOs have is that they are not able to drill down far enough to establish how what they do for homeless people directly solves an urgent need for the funder. People will happily pay when you can demonstrate your unique ability to solve their needs, effectively, with your service or product.
When looking at the NPO service in this way, it immediately repositions the offering from an altruistic donation to a strategic business imperative the funder can see the value of. This approach goes a long way in eliminating the feeling of "begging or pleading" for funding - the NPO is now providing a service or product that represents real value to the funder. The NPO is now more able to build a long-term, sustainable relationship with the funder because it is strategically important to the funder's business in some way.
NPOs are usually primed to look at the needs of those they will be serving, and their community and then hope that their cause will strike a chord with the right funders. With this approach the NPO has a chance to think through what the business case for funding would be, thereby establishing a much more strategic position.