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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. While the pandemic also brought increased workloads and a need to respond at a faster pace than was previously required for nonprofit communications teams, there were some silver linings as a result.

With in-person networking and fundraising events put on hold this past year, nonprofit leadership teams have developed a deeper understanding of how investing in marketing can help their organization attract potential partners, raise awareness, measurably impact fundraising, attract volunteers, or reach potential end-users in need of services.

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Nonprofit Communications Trends

According to the 2021 Nonprofit Communications Trends Report, most nonprofit marketing and communications teams reported the following outcomes as a result of the pandemic.1

  • Appreciation by leadership for investment into digital communications strategies 
  • Willingness to test and implement creative new ideas without fear of failure 
  • Increased participation of program staff to contribute content, including video 
  • A strong show of support from newly-engaged audiences via online communications

These positive effects have paved the way for nonprofit communication teams to successfully lobby for additional marketing budgets for their organizations. 

It is also critical to keep in mind that communications efforts are more than just about raising funds and awareness. 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 a crowded landscape. It’s no longer just nice to have, it’s a necessity — particularly at a time when nonprofits’ target audiences are actively looking for ways to become more involved and connected.

The Old Way: Communications Budget Status Quos

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

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 nonprofits have no firm budget at all and ‘find’ budget when the need arises.2

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 outdated equipment, paying sub-market wages, and not investing in impactful marketing and communications to help tell your story to a broader audience, attracting talent, funds, and partners? How can limited communications teams effectively manage all facets of various communications channels without support from a creative agency with the right expertise?

We believe that looking historically at the 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!

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The New Way: Goal-Driven Nonprofit Budgets

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 dollar spent, or press contacts made per media placements. A digital fundraising campaign, for example, is much easier to quantify results than media placements, but both are important.

Your marketing goals and KPIs 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 digital marketing 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 your team’s experience, goals may need to be tweaked as learnings come in to ensure that your budget is as accurate as possible. As time passes, the marketing spend will become a dialed-in machine, with much better projections around ROI before even starting.

Communication Channel Strategy

In addition to establishing goals, it’s also important to examine which communication channels will best support these goals. In 2020, nonprofit organizations reported that email has moved to be their top communication channel (that’s up from a 3rd place ranking behind website and social media about 5 years ago).1 

However, these same organizations recognize that continuing to only focus on speaking to the subscribers on their email list limits opportunity for growth and awareness among new audiences. While leveraging an email list for communications can be low cost, it does require a team to produce and distribute the content and a portion of the marketing budget dedicated to sustaining email list growth over time.

With a limited communications budget, nonprofits can take advantage of grants to fund their campaigns. Eligible nonprofits can apply to receive a $10,000 Google Grant to fund their Paid Search marketing efforts which can help bolster their email growth effort as well as raise awareness for the organization’s work. Learn more about the steps needed to register for Google Nonprofits program and the Google Paid Search Grant.

Through Vermilion’s work with the Milbank Memorial Fund, our Digital Marketing team considered their budgets and goals to recommend a marketing plan which included leveraging a Google Paid Search Grant. With an opportunity to measure results and report back to leadership on campaign performance, “we have our organization’s support to try to meet people where they are but also have to work within a fairly tight budget,” relayed Milbank’s Communications Director, Christine Haran. Her team’s goals are to gain and retain email subscribers, gain Twitter followers, and increase traffic to the website. “I think all three are essential to getting our population health messages to our target audiences, which include state policymakers and health policy and public health researchers.”

Considering the communications team needed to support these channels is a key element to the recipe for achieving set goals. Approximately a third of nonprofits report having a single staff member responsible for their organization’s communications, but studies have shown that having three full-time communicators is the sweet-spot for efficiency and effectiveness of managing cross-channel communications strategies.

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.

 

1 Source: 2021 Nonprofit Communications Trends Report

2 Source: 2017 Nonprofit Communications Trends Report

 

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