Sunday, September 11, 2011

BIG’s Blog: Consolidation

In the business world as industries mature, there is a normal consolidation that takes place. You may have seen this with some of your vendors from mature industries like printing or direct mail marketing agencies. A larger company purchases market share by buying a smaller competitor. It happens all of the time.

The reasons for one company buying another vary greatly, but with the profit motive of the commercial world, there is always some value in a commercial firm.

Is there a corollary in the nonprofit world? Generally not. Although there are times where two nonprofit organizations will merge or there is a buyout (as in the case of hospitals) but, generally in the realm of charities, it is normally not the case.

This is why it is so important for fund raising groups within nonprofit organizations to be successful. The fund raising group literally keeps the organization alive. As the fund raising group succeeds, so too does the mission of the organization.

While this seems so self evident to those in the nonprofit world, the truth is way too many fund raising groups are moving too slowly to react to some of the most profound changes in the nonprofit fund raising world in 40 years. Fund raising groups that do not take seriously fundamental changes in technology; especially communications technologies, the changing composition of generational cohorts and rising competition for donors and dollars are putting their organizations at undue risk.

This is why more and more fund raising organizations are reviewing the very fundamentals of their fund raising strategy even if they have never done it before.

If a commercial business finds that it is losing market share or is falling behind the competition, generally there are always buyers that, for some price, will buy the business. But nonprofit charities don’t have the luxury of a buyout--if they can’t keep up . . .


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