Market Analysis

Community Influences: Why Understanding Nonprofit Markets Matters

By June 15, 2018 No Comments

By: Steve Zimmerman

The environment in which nonprofit organizations operate is constantly in flux.  Shifting political landscapes and funder priorities have led to calls for more collaboration and mergers, “collective impact,” and self-sustaining nonprofits.  Add to this the changing needs of constituents and the shifting demographics of both constituents and donors, and it is easy to see how nonprofit leadership can feel overwhelmed when thinking about their community.

Boards and staff often react to their community’s complexity by resorting to the question, “What do we want to do?” Unfortunately, this approach doesn’t build the support and engagement necessary for success.  Nonprofits need a structured way of understanding the community in which they operate to inform a different, more important question: “What does our community need us to do?”

For nonprofit leaders to begin to answer that question, it is crucial they listen to the broader community—in other words, understand the market.  A deeper understanding of the needs and values of different segments of a community may influence program design, leading to greater impact. And knowing the values and motivations of current and potential funders may open up new revenue strategies to increase sustainability.

Our previous work has focused on helping organizations visualize their business model using the matrix map, analyzing how mission-specific and fund development programs work together to achieve exceptional impact in a financially viable manner.  Just as a boat moving through water is affected by the current, tides and wind, an organization’s portfolio of programs is buffeted by external forces which must be taken into consideration for sustainable strategy.

Doing so can be challenging, as nonprofit markets are complex systems.  They include not only constituents who benefit from the programs, but also funders who pay for them.  For some organizations, beneficiaries are also funders, but for most nonprofits, these are two different sets of stakeholders with different needs and motivations.

A holistic view of a nonprofit’s market also needs to include more than just the constituents who benefit from and fund an organization’s efforts.  A nonprofit’s market also consists of other for-profit, nonprofit and public organizations working side-by-side, including those whose approaches differ and who compete with the organization for resources, talents and impact.

Likewise, an organization’s mix of programs, their effectiveness, and their sustainability can be influenced by the availability of skilled labor and the political and social environment. A true market analysis needs to explore all of these influences at some level.

Over the next several weeks, we will be dissecting the components of a robust market analysis, offering nonprofit boards, leaders, and staff concrete ways to envision their community and to make more informed strategic decisions. These pieces will all be drawn from our white paper “Community Influences: Understanding Nonprofit Markets.” You should also feel free to check out our market analysis services, and contact us with any questions by reaching out to Chris at chrisf@spectrumnonprofit.com or leaving a comment on our posts.

 

(Photo by Dane Deaner on Unsplash)