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Value Proposition

The Blog

 

 

Value Proposition

Scott Alexander


One of the biggest challenges for non-profits is to establish and communicate the value of their strategy to consumers (funders) who aren't necessarily participants.

Let's put it in terms of a product we all know - hamburgers!  If I go into business selling hamburgers, I would have to decide where I fall on the spectrum - do I sell a $1 fast food burger or do I sell a $12 gourmet burger?  There is a market for both and both products have scaled costs and profit margins.  Both have proven to be viable business strategies.  There is a consumer base for both burgers and their reasons for choosing one over the other include: cost, speed of service, atmosphere, quality of the food, and healthiness of the food.  Ultimately, my business strategy will be successful if I connect to my consumers' needs and wants - they are active particpants in the business eco-system.

Here's the non-profit challenge:  the funders aren't necessarily participants in the business eco-system.  While the funder may provide much needed financial assistance in the form of a grant or donation, they are not receiving any goods for their money.  Typically, a funder wants to know two pieces of information:

  1. What's your overhead?
  2. What's your cost per service? 

Unfortunately, that means the $1 burger is the one that funders want to support! 

But what if your mission is to provide healthy food?  In order to receive funding, the non-profit has to provide $1 burgers.  But that means the non-profit will actually undermine the community impact it originally set out to create! 

Ultimately, every non-profit that is invested in creating community impact must be able to quantify that impact in terms of dollars and cents.  Don't get caught up in the "activity" of your non-profit, rather, focus on it's "impact"!

It is also important that we help funders understand that sometimes investing in the service with the lowest overhead and cost (the $1 burger) isn't always the one that will provide the greatest impact - in fact, just like the for-profit world, there's always a reason for one product being less expensive than another.