Saying nonprofits don’t have a ton in common with the business world might be the understatement of the year. They have different goals, operate under different restrictions and often have very different outlooks.

So you’d expect them to approach social media from radically different angles. But as Olivier Blanchard explained at Wednesday’s Buzz 2010 event, which SmartBrief helped organize, the two kinds of organizations certainly have their differences, yet the ways they approach social media have more in common with each other than you might think.

Both kinds of organizations can use social-media tools to improve their human resources and public relations operations, he noted in his presentation:

  • Social-media tools can lead to better hires and can help organizations make sure their workers represent the brand well online.
  • Social media is a vital reputation-management tool, especially during a crisis.
  • Social media helps organizations explain to the public why their product, service or mission is important.

One difference between the two kinds of organizations is whether they view the people they’re trying to reach as customers or members, he added:

  • Businesses want to establish a brand that customers trust. Nonprofits still need members to have trust in the organization, but they also want to build member involvement in whatever cause the organization has as its nonmonetary goal.
  • Customer service takes on an extra dimension, as well. While nonprofits want the same kinds of support and feedback that business customers expect, they also need to feel a deeper connection, with more kinds of engagement.

The biggest difference between businesses and nonprofits is ultimately their goals. Both kinds of organizations need to worry about money — but for most businesses, profits are an end point, whereas the money a nonprofit brings in has to support some other goal. But Blanchard argues that these different goals shouldn’t change the way an organization thinks about return on investment.

Businesses must make sure their social-media efforts raise or save more money than they spend. Nonprofits need to do this, too, he notes, even though money is secondary to those organizations’ primary goal. Nonprofits need to resist the temptation to try to assign arbitrary monetary figures to actions, such as getting a member to write to their congressional representative.

Instead, nonprofits need to calculate the ROI of their social-media presence and use the money they’re bringing in or saving to accomplish those goals. Blanchard recommends nonprofits get around this by starting with their ultimate goal and planning backwards. Start by thinking of your nonfinancial objective, then ask how much money you’ll need to support that objective, and then design your social-media efforts in support of those financial goals. Identify exactly how your social-media presence will lead you to those goals, he said, and then set clear metrics for success at every step along the way.

Image credit: raalves, via iStockphoto

If you missed the Buzz2010 series of events on social media for associations, recordings have been made of all three events. Both the June 16 session on open leadership and July 20 session on social media risk are available right now. The August 18 session on social-media ROI will be available on Sept. 1. Click here for more details.

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14 responses to “Understanding social-media ROI in the nonprofit space”

  1. […] This post was mentioned on Twitter by Santi Chacon, Marketing 150 and Hannes Krueger, Vinoth Chandar. Vinoth Chandar said: #SocialMedia Understanding social-media ROI in the nonprofit space http://bit.ly/bSgEYD #Marketing #SM […]

  2. I work for Vision Multimedia Technologies, LLC, and would like to make you aware of SocialToaster, a social marketing tool that helps business owners broadcast their message through band ambassadors and measure their metrics from sales lead to revenue generation. We have created a version of SocialToaster called Association Toaster that is for nonprofits in particular. We are finding this product popular with our nonprofit clients because of its unique ability to truly measure ROI of social media in an age when budgets are tight – especially nonprofits. I encourage you to review our product at http://www.socialtoaster.com

  3. In starting up my own social media consulting firm for nonprofits, I'm often asked, "What makes social media for nonprofits different than for-profits?" The first thing that comes to mind is budget restrictions, which is usually when the other person reminds me that startup for-profits also have limited budgets. Then I start thinking about building a strong volunteer and donor following and making emotional connects. But then, don't for-profits also strive to build customer connections to their brand as well?

    I think the most important difference is that the two industries must appeal to different motivations. Nonprofit industries must appeal to one's desire to give back, to do good, and to be charitable. I don't want to go as far as saying nonprofits appeal to selflessness while for-profits appeal to selfishness ("I want that product!") because that's an extreme over-generalization, but the root emotions are different.

    The differences between marketing for nonprofits and for-profits are harder to spot than one might think, but it's important to try to distinguish the differences as well as the similarities. It will help us target our efforts and develop a deeper understanding of how to connect to our audience.

  4. Elaine Fogel says:

    Jesse, I believe there's an even finer difference between nonprofit associations (501c6) and charitable organizations (501c3). The presentation to which you refer, appears to be about membership marketing. Recent studies show that charities are not generating much revenue using social media. They are, instead, building relationships and brand awareness – both good things.

  5. […] Blog on Social Media… Understanding Social Media ROI in the Nonprofit Space Despite having different goals, the non-profit and business worlds both approach social media in […]

  6. […] The ABCs of Social Media ROI & Measurements, and Understanding social-media ROI in the nonprofit space. […]

  7. […] How nonprofits make sense of social-media ROI Measuring return on investment from a social-media program causes headaches for marketers in the private sector and the nonprofit world, but the key is to be clear about what exactly your goals are, says Oliver Blanchard. Nonprofit groups should take an inverted-pyramid approach to determining their social-media strategy, he argues. Start by figuring out your nonfinancial goals, then design out a social-media strategy that can financially support your organization’s mission, and focus on the appropriate metrics for measuring success.  SmartBrief/SmartBlog on Social Media […]

  8. JMC says:

    Ok. In specific terms, tell me how a state Tobacco Prevention program would calculate ROI from using social media. I have an idea, which involves some assumptions, but I'd be curious to hear something more specific from any of you.

  9. Deepak Gupta says:

    Jesse,

    You bring up some interesting points. I have been measuring the social media ROI for the non profit I work with for almost 2 years now. Everyone's goal are different.

    Deepak Gupta

  10. […] to Jesse Stanchak in his post, Understanding social-media ROI in the nonprofit space, on the SmartBlog on Social Media, nonprofit organizations strive for greater involvement with […]

  11. […] Stanchak, J.  (2010, Augusut 19).  Understanding social media ROI in the non-profit space.  SmartBlog on Social Media.  Retrieved from:  http://smartblogs.com/socialmedia/2010/08/19/understanding-social-media-roi-in-the-nonprofit-space/. […]