Why don’t nonprofits value intellectual capital, particularly marketing expertise, when it can prove crucial to the success of their cause? I encountered that question when I learned about a nonprofit organization that was planning a campaign to raise $300,000 for food pantries and safety net social services, as well as to engage the community in volunteering on a regular basis.

This laudable goal was supported by a coalition of community organizers and $25,000 in funding to pay for professional organizers, printing, and other support. While a decent amount of planning had gone into the project, as a marketing expert, I thought that they faced some huge challenges and a solid marketing plan was needed. As the nonprofit acknowledged, they needed strategic help in planning the campaign and in developing creative materials that could captivate potential participants. And yet, they allocated money for printing, but not the strategic thinking or creative design portion of this project.

With funds allocated toward certain aspects of the initiative, this organization’s lack of priorities was not unique, and I suspect fueled by the following factors:

1. A culture that values doing rather than thinking. Given limited budgets, the cultures of many nonprofits are organized around delivering services, not addressing core problems.

2. Not understanding the value that specialized consultants can bring to help achieve their mission (in this case, not seeing how the message and design of the marketing materials would be essential to the success of the initiative).

3. A lack of understanding about what goes into the creative process and a perception that certain things (such as printing) are a cost since they yield a tangible deliverable, but that consulting services, being someone’s time, can be donated for free.

4. Being accustomed to expecting certain services for free due to their nonprofit status.

WAKE UP CALL: What can you do to ensure that your organization values and funds high-value ideas that can make a difference to its mission? Here are some considerations for addressing these issues:

1. Planning for the long-term: Given constrained budgets and a natural penchant for serving, it is not surprising that nonprofit organizations face pressure to act and get things done expediently. Funding directives or organizational structures may not be conducive to allowing time to think through the challenges inherent in dealing with a specific issue. Knowing this, nonprofits would be wise to create the space to address the logistical and political issues they are likely to face in executing their plan.

2. Investing in intellectual capital: Successful companies know that they need to invest in marketing and promotion to break through the clutter, demonstrate their value, and engage their customers. Business are not afraid to invest in the tools and intelligence that allow them to achieve these objectives. Nonprofits can learn from this model. Granted, they face inherent inertia against such investments, but viewing the results of the forward-thinking nonprofits that leverage external intellectual capital to their cause can help demonstrate the efficacy of that strategy.

3. Learning about the benefits of intellectual capital: Small and mid-sized nonprofit agencies are not accustomed to working with consultants and may not understand the differences in quality brought by various experts. For example, in this case, the difference between a freelance designer who will create a poster that looks good and a marketing expert who will uncover the motivations of potential participants to drive those people to action. The latter draws upon years of experience, as well as the knowledge about how to conduct research, develop a message, and craft appropriate materials. This takes time, and a consultant’s time and expertise is the basis for their income. So when a consultant is asked to donate their services, they are not only donating that time, but they are also missing out on income they needed to make up that billable time (referred to as opportunity cost), which puts them in a worse situation to help the next worthy group. Additionally, whereas printing results in a deliverable product, it can be donated and declared as a tax deduction; services are not tax deductible.

4. Valuing intellectual capital: The mindset of getting something for nothing must change. As nonprofits handle more of the services that were once provided by government, it is not in anyone’s best interest to leave the nonprofit sector to the whims of market giving. To be around for the long-term, nonprofits must attract funding for  sustainable, capacity-building activities that will allow for proper planning and implementation of their services for years to come. Relying on donated services perpetuates the concept that nonprofits should pay for services essential to their mission. This applies to in-house expertise as well – nonprofits need to start treating their employees as their most valuable asset.

Conclusion

Nonprofits, like the one in this case, would be better served by using their scarce resources to purchase the high-value services that will make a critical difference in their work, rather than in the lowest-value, commodity-oriented services that can usually be donated. In the long-term, nonprofits need to demonstrate to funders that they require funds for operating their organizations with a long-term mentality so that they can continue to provide needed services for years to come.