Planning for 2012 Part 2: What You Need to Know for New Business Development in the Nonprofit Sector Prepared by GuideStar USA, Inc.
New Business Development in the Nonprofit Sector Over the years, companies have balked at selling in the nonprofit marketplace. Since nonprofits are generally organized differently from traditional forprofit companies, they are considered to be confusing in terms of needs, decision-making processes, and key contacts. Figuring out whom to sell to and how to sell to them are unclear at best. Add nonprofits reputation as penny pinching, and you have a market that is underpenetrated and underserved by most industries. But nonprofits will still need products and services to carry out their objectives in 2012. Businesses that can help organizations address those needs cost-effectively will be in the best position to snag new nonprofit clients. Gathering information is essential to generating and vetting viable prospects for your sales force, however. 1 Intelligent data on the who, what, where, how much, and other key statistics about your prospects will help you identify new leads, close deals faster, and keep client relationships generating revenue over the long term in any sector. Results-driven sales teams should approach nonprofit prospects with the goal of meeting the organizations unique needs, just as they would for any for-profit business. This paper pinpoints the key elements your sales force needs to know to develop new business and revenuegenerating relationships within the nonprofit sector. Key Things to Know before You Approach a Nonprofit There are nearly 1.6 million nonprofits registered with the IRS as tax-exempt. 2 In order to find the most viable leads from such a large and diverse market, you need to define clearly who your best prospects are what they look like, what they do, how they do it, and what they need to accomplish Think Globally, Act Locally: Does Size Really Matter? In the nonprofit world, thinking globally and acting locally are mottos to live by, and your sales force needs to think the same way. Selling medical supplies to the Red Cross may be a sweet deal, but don t forget that local organizations may need to prepare for disasters, or that individual chapters may be responsible for purchasing supplies. their missions. Every sales force looking to create new business in the nonprofit sector should gather individualized information on the following five data points: 1. Show Me the Money! Financial Outlook 2. What, Who, and Why? Mission 3. Helping Them Help Others Helps You: Specific Needs 4. The Right Place, the Right Time: Location and Scope 5. Hello, New Business! Whom to Call Show Me the Money! Financial Outlook Knowing and identifying a viable prospect is all in the numbers whether you count annual expenditures, employees on staff, or people served by the organization. 2
Most tax-exempt organizations are required to submit an annual reporting return (Form 990, 990-N, 990- EZ, or 990-PF) to the IRS. 3 A nonprofit with revenues greater than $50,000 must submit a more detailed return that can help your sales force determine both the organization s financial health and how much room it might have for outside services hence, answering the key sales question: How viable is the organization as a new business prospect? A nonprofit s Form 990 is public information. The more detailed returns will tell you how much the organization is spending on different types of services, including office expenses, information technology, or legal and accounting services. Combined with the other data points outlined below, this information can help identify appropriate leads and determine their viability. What, Who, and Why? Mission Determining what a nonprofit does with its funds and the specific audience it serves is essential to finding the right prospects for your product or service. Plus, shaping your approach to the what, who, and why behind potential prospects is good sales practice plain and simple. Look for the following mission information for hot leads: What: What is the nonprofit s primary purpose? Your organizational software services may be just as essential to a database of rescued animals as it is to a university service that tracks alumni data, but each requires its own unique pitch. Who: Knowing the demographics the organization serves is essential. Are they students? Disaster victims? Art enthusiasts? How many people do they serve per year? If you re selling accounting services, enterprise software, or hybrid utility vehicles, each demographic served comes with individual and unique problems that you re aiming to help the nonprofit solve. Why: Matching the product or service you are selling to the nonprofit s mission is critical to Finding Nonprofit Data Online Finding accurate and detailed information on nonprofits may prove more challenging than obtaining similar information on forprofit corporations, but the Internet has made this task easier: Many nonprofits have their own Web sites. Some of these organizations post their annual returns IRS Form 990, 990- EZ, or 990-PF and annual reports on their sites. The Foundation Center, GuideStar, and the National Center for Charitable Statistics (NCCS) all post nonprofits 990s. 4 GuideStar incorporates mission and program information from the 990s into the filing organizations individual GuideStar profiles. Thousands of nonprofits have supplemented this information with descriptions of their respective missions, programs, needs, and leadership, and some have uploaded their annual reports to their GuideStar profiles. 3
getting your prospect s attention. Offering special pricing for nonprofits is another way to show commitment to a nonprofit s cause. Helping Them Help Others Helps You: Specific Needs Closely related to determining a nonprofit s mission and purpose is determining what needs are unmet in fulfilling that purpose and positioning your product or service as a solution to those needs. Are you selling mobile donation and transaction software? Legal services? Office supplies or furniture? A little research goes a long way, and once you find a nonprofit that meets your criteria for size and budget, it helps to have a look around the organization s Web site, blog, or any other information available online to determine specific needs and to position your product or service to meet those needs. A nonprofit s 990 also lists the types of services it engages in and the amounts spent on them as well as amounts and categories for independent Show Me the Money (Again) IRS Form 990 provides the CEO s salary as well as his or her name and title. Knowing a top executive s compensation is helpful in assessing potential prospects the more money the CEO makes, the more money the organization might have in its budget for outside services. Without other data points to identify whether the nonprofit is really a viable prospect or not, however, it s presumptuous to start making sales calls based on CEO salary alone. contractors. In addition, having information about what nonprofits need and are looking for in general and hot-button issues in the sector gives you an advantage in understanding your potential new client. The Right Place, the Right Time: Location and Scope Sometimes, location really is everything. The Right Place: Are the services you re offering limited to a specific area or region, or is the scope worldwide? Either way, you want to target an organization with a similar outlook. The nonprofit s 990, Web site, and annual reports are good resources for this information. The Right Time: If you know you re going to be in a metropolitan area for face-to-face meetings, why not arrange sales meetings with a few nonprofits in the area while you re there? Check the nonprofit s 990, Web site, or a nonprofit database or portal for contact information. Hello, New Business! Whom to Call The next most important piece of information may be the difference between finding a prospect and turning that prospect into a client: exactly whom to contact. Some 13.5 million people work in the nonprofit sector. 5 Reaching the right person is essential. Knowing the key contacts at the organization tasked with purchasing or hiring outside services saves you time and increases the likelihood that your call will be well received. The more senior the contact, the more likely he or she is to know if enterprise software or asset management solutions are right for the organization. Just make sure your product aligns with helping the organization achieve its primary mission. Fortunately, 4
Form 990 requires nonprofits to provide the names of their CEOs and oftentimes includes other key staff as well, giving you access to information that might otherwise be difficult to obtain. Conclusion: Intelligent Data = Increased Sales The key to determining viable prospects is to have broad, up-to-date, and accurate information i.e., intelligent data that is both trusted and easy to use. Armed with intelligent data, your sales force can effectively find worthwhile leads, craft the right pitch, reach the right person, and sell services to the nonprofit sector that benefit everyone s top and bottom lines: yours and the nonprofit s. Having the right data can even help you anticipate a nonprofit s needs before a busy administrator has even considered outside services enabling your sales force to get in early on opportunities. 1. Miller Heiman, Driving Sales Results in Any Economy, http://store.millerheiman.com/kc/abstract.aspx? itemid=0000000000000714&vip=desmm510. 2. IRS, SOI Tax Stats Exempt Organizations: IRS Master File Data, http://www.irs.gov/taxstats/charitablestats/ article/0,,id=97186,00.html. 3. IRS, Form 990 Series Which Forms Do Exempt Organizations File? (Filing Phase-In), http://www.irs.gov/ charities/article/0,,id=184445,00.html. 4. The Foundation Center s 990 Finder is available at http:// foundationcenter.org/findfunders/990finder/. For instructions on finding 990s on GuideStar, see http:// www2.guidestar.org/rxg/help/faqs/form-990/ index.aspx#faq1940. Use NCCS s Active Organization Search, http://nccsdataweb.urban.org/pubapps/search.php, to find 990s on the NCCS site. 5. Independent Sector, The Sector s Economic Impact, http://www.independentsector.org/economic_role. 2012, GuideStar USA, Inc. All rights reserved. 5