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Debunking the Nonprofit Marketing & Communications Budget

While ‘marketing’ may be a term largely reserved for the private sector, we can all agree that your nonprofit can benefit from telling your story to a broader audience through communications. Marketing can help nonprofits attract potential partners, raise awareness to impact fundraising, attract volunteers, or reach potential end-users in need of services.

But it’s more than that — marketing can create emotional connections, by allowing your organization to put its ‘stake in the ground’. Establishing a strong viewpoint, voice, and your ‘why’ is essential in this crowded landscape. It’s no longer just nice to have — it’s a necessity.

And now comes the difficult part: deciding how much to spend on marketing verses programs that fulfill your mission. Exactly how much time and resources should go to marketing tactics such as PR, direct mail, revamping a website, or hiring someone to refresh your logo or brand?

There is a general rule of thumb that says to allocate between 5-15% of your operating budget to marketing. It is somewhat surprising to note that almost 20% of non-profits have no firm budget at all – and ‘find’ budget when the need arises.1

One major issue that has kept nonprofits from investing more in marketing is the controversial measure that is often used to gauge the effectiveness of nonprofits by charity rating sites – the question of how much of the operating budget goes to overhead expense. The old wisdom was that the lower the number, the better run the nonprofit was.

But is that really true? Low overhead leads to a practice of not investing in the nonprofit’s future. How can nonprofits be effective using old, outdated equipment, paying sub-market wages, and by not investing in creating impactful marketing & communications that can tell your story to a broad audience, attracting talent, funds, and partners?

We believe that looking historically at current operating budget and taking a straight percentage of that figure for marketing, communications, and fundraising is a potential trap. What if the organization’s budget has actually decreased? A blanket 10 percent for marketing (for example) of a shrinking budget, is then a shrinking marketing budget. Using that old rule of thumb, decreasing your marketing budget could be the exact opposite of what is needed at that time! A ‘death spiral’ could ensue if budgets continue to decline, and communications budgets are cut at the same time as a result. Switch the marketing budget from following growth (or decline) of an organization – to a driver of growth!

So instead of allocating a blanket percentage to marketing, we advocate for the budget to adapt based on your organization’s goals, and various tactics’ return on investment. We believe that taking a page out of the private sector playbook is important – set goals and targets for your communications spend. Have your marketing staff set realistic, but firm, goals at the outset of the budget period, and spend what it takes to achieve those goals. Some examples could be measuring response rate for your digital or direct marketing, actual dollars raised per dollars spent, or press contacts made / media placements. A digital fundraising campaign, for example, is much easier to quantify results than media placements, but both are important.

Your marketing goals should directly tie into the organization’s goals for the period. For example, an annual goal of ‘raising public awareness’ could directly tie to a measurable PR campaign. If your organization doesn’t have goals, well, that’s the first issue to solve. Marketing efforts will ladder in and support those goals.

Marketing goals should also be fluid and ‘living’. Adjusting to ensure they are realistic is OK. Depending on the experience of your team, goals may need to be tweaked as learnings come in, and to ensure that your budget is as accurate as possible. As time passes, the marketing spend can become a much more dialed-in machine, with much better projections about ROI before even starting.

With renewed faith that marketing and communications investment is a necessity, and by setting firm goals against that spend, your nonprofit’s budget should be positioned to be more defensible. But most importantly, the benefits of this investment will be clearer and should improve over time.

 

Source: 2017 Nonprofit Communications Trends Report