Last week I was asked to be a part of a panel discussion on social entrepreneurship and I think I might have been the Simon Cowell of the panel.

One particular discussion centered building awareness for a new nonprofit.  An example was described by one of the panelists who owns a law firm that provides services and grants to nonprofits.  Apparently, one of their clients, a new nonprofit, had hired an individual to be in charge of spreading awareness, but without a marketing budget.  The law firm awarded them a grant for the production of a DVD video describing the work the nonprofit does and covered the costs of mailing out to its target audience.  This grant for the DVD video dramatically increased awareness of the program.

Well… DUH.

It was at this point, my Simon Cowell side came out.  I posed the question: If a for-profit company, let’s say a restaurant, was opening, should they A: Hire a single sales person to go knocking door-to-door or B: advertise and build a sales strategy?  The response was silence.  Then, a few head nods.

In what universe does it make any economic sense, especially in this day and age of technology, to resort to door-to-door selling?

I am befuddled by the disconnect between economic thinking and nonprofit strategy.  Now, I am not suggesting nonprofits have huge marketing budgets (well maybe I am), but work smart and work strategically.  Nonprofits can build referral programs, use Internet marketing strategies, find strategic partners, etc. If you know your targeted audience, find out how they get their information and spend some money to get your organization in front of them.

The challenge with this thinking, however, is donor expectations.  Donors expect that their donation go directly to the mission, not to marketing or advertising. Yet, most of the high-level donors probably accumulated their wealth through sound business strategy.  Surely, to promote whatever they were selling, they knew they had to spend money on marketing and sales.

What good does it do a nonprofit if they do not share the good they are doing?

The public’s negative perception on a nonprofit spending money on marketing is simply stunting the growth of that nonprofit.  A brilliant article by Dan Pallotta published in the Wall Street Journal states:

“Fundraising consultant James Greenfield estimates that, for major gifts, every 10 cents spent on fundraising produces, on average, a dollar back. For direct-mail solicitations, the cost is 20 cents per dollar back. For special events, 50 cents. Investment in fundraising and marketing multiplies the money put into it. For example, in just five years, Share Our Strength, a national organization committed to ending childhood hunger, was able to quadruple the money it raised by investing in fundraising. A $30 million organization in 2010, it has grown into a $43 million organization today, just two years later.”

“If you build it, it will come” simply does not work.  Any successful entrepreneur will tell you that.  And yet, successful entrepreneurs that donate to charity magically expect it to work in the nonprofit arena.  If the work a nonprofit is doing is worthwhile, shouldn’t more people be entitled to discover it?

I think my next gift to a charity will be a restricted gift that implicitly states – “To be used for marketing only.”  Imagine the growth of the nonprofit sector if more donors took that attitude.