The Strategic Edge of Nonprofits

 

Successful nonprofit entrepreneurs make strategic choices that capitalize on the unique advantages charitable groups possess for taking on the most challenging social problems of our time.

In Harvard Business Review’s “What the Best Nonprofits Know About Strategy,” Kevin Barenblat, co-founder and president of Fast Forward, a tech accelerator for nonprofits, reveals that “too few nonprofits use the advantages of their nonprofit status.”

Those advantages vary widely by mission but after years of studying the industry, Barenblat sees patterns in the strategic choices that successful leaders make.

Customer Segmentation

Rather than the for-profit business model in which companies start with product and then segment customers based on potential profit, the most successful nonprofits commit first to reaching an underserved market, which often includes higher acquisition costs and lower lifetime value. On its face, this is a daunting task, but the unwavering dedication to such a target audience positions the nonprofit for highly successful partnerships with companies that share its vision.

Tap Into Goodwill

“Build on openness, goodwill and the wisdom of crowds,” says Barenblat. “Compared with for-profit products and services, which are often proprietary and protected with secrecy, nonprofits frequently share data, processes and ideas in ways that spark multiplier effects for the greater good.”

He cites the example of Crisis Text Line, which provides free text-messaging crisis intervention and remains free thanks to product integrations with Verizon, Sprint, T-Mobile and AT&T, which waive charges for messages sent to the hotline. “This arrangement wouldn’t be possible as a for-profit,” he says. “Crisis Text Line also created crisistrends.org, which aggregates anonymous text-message data into the largest open-source database of youth crisis behavior in the country… helping to shape the national dialogue and spur research into crisis prevention and treatment.”

For more tips on forging partnerships and creating sustainable revenue, please read What the Best Nonprofits Know About Strategy.