By Lisa Fraimow
In tough economic times, the first instinct of any business or non-profit organization is to cut costs – after all, it is far easier to control what money goes out than what comes in. And one of the first targets of the fiscal axe in non-profits is typically the marketing department (which is usually underfunded in the sector in the first place).
The American Marketing Association found (PDF) in 2008 – even before the full effects of the financial crisis were felt – that 56% of U.S. non-profit organizations had annual marketing-budgets of less than $100,000 and that 42% of marketing departments were managed by one person. On average, the marketing budget was generally 2% to 3% of the overall budget, compared to the 10% or more that is typical in a for-profit business. Even more significantly, the AMA found that the percentage of an organization’s operational budget devoted to marketing tended to decrease as the size of the total budget increased.
One can only imagine the situation today in the two years since the report was released and the economy has yet to recover.
Still, there is more news that is both good (for the world) and bad (for individual non-profits) – the competition in the “market” is increasing (likely in part because young people today both cannot find traditional jobs and want to do something positive with their lives). As Network for Good COO Katya Andresen has noted:
With more than 100 nonprofits forming every day, it’s becoming a very competitive world for donor dollars. That’s driving a lot of marketing spending. And since most of us don’t have a huge marketing budget to sling around, we have to work smarter than ever.
In such an environment, the worst thing a non-profit organization can do is cut its marketing budget – even though it is understandable. If a non-profit runs a soup kitchen, then its first priority is to keep buying the same amount of soup. All else is secondary. But the short-term benefit of cutting a non-profit marketing budget comes at the price of long-term decline.
If an organization (or business) decreases its marketing, then donations (or sales) will decline and force further budget cuts. Again, the marketing budget will be cut in response, and the entire process will begin anew and create a deflationary, downward spiral that will eventually imperil the very existence of the organization (or business). In either a non-profit or for-profit context, the marketing department is the fuel that – in the end – feeds the entire organization.
But how can non-profit marketers prevent such a situation? Nancy Schwartz offers some good advice:
Rather than taking a defensive position when faced with budget cuts, proactively respond to your leadership’s challenges with either or both of these proposals:
- Leave our budget untouched, and we will increase X by X in the next fiscal year. Even better, if you will increase our budget by X percent, we’ll increase X by an additional X percent.
- Let the marketing and communications teams work with the current budget for the next two years, and we’ll deliver an X percent increase in revenues (donor and/or earned income) in that time.
In short, find a way to do more with less – even though it is always easier said than done.
I was once personally affiliated with an organization that used a novel strategy that involved the use of volunteers (the life-blood of nearly any non-profit). The situation involved declining donations, fewer community grants, and the laying off of the executive director. Times were desperate, and the board of trustees determined that there was a great need for marketing – something that, in all honesty, had always been ignored.
The board created a marketing subcommittee comprised of MBA students, for-profit marketing professionals, and internal staff-members. The students wanted something to add to their resume, the staff members needed to help their own work, and the people from marketing companies could promote their involvement in a good cause. Everybody wins. And although I cannot disclose the specific details, the results were indeed beneficial.
(A side note: One way for non-profits to encourage marketing companies to volunteer their assistance is to give a link to their companies on the non-profit’s website. Marketing companies should know about search-engine marketing (SEM), and links from .org domains especially help Google search-rankings because non-profit organization websites are viewed as particularly “authoritative.” Links could also be given to companies or organizations that donate. This is yet another example of how strategic, integrated-marketing methods that combine traditional and online methods are crucial in today’s business world. In addition, non-profit organizations should find a marketing firm that is willing to work for a low retainer – both for budgetary purposes and because of the fact that help in online marketing from students and volunteers is usually not as beneficial and productive as that provided by professionals.)
Careers in Marketing describes the life of a non-profit marketer as “hard, frustrating, and lonely.” But it does not have to be that way. With a little ingenuity – and perhaps a little luck – the best can be made of tough economic times.