SOI 2015 – Profiting from Nonprofits

Here's How To Target Nonprofit Clients

>>Back to the State of the Industry 2015 Index Page

SOI 2015 – Profiting from NonprofitsThis sector is increasing in distributor market share. Here’s how to target nonprofit clients.

While economic sectors like education and health care are perennially the top buyers of promotional products, there’s a newcomer on the block that’s increasing its advertising spending through promotional products. It’s the nonprofit market, which accounted for 7.3% of distributor revenues in 2014. That means that nonprofit clients purchased more than a whopping $1.5 billion worth of promo items last year from distributors, the fifth-largest amount by any sector behind only education, health care, manufacturing and financial.

There’s a perception, however, among some in the ad specialty industry that nonprofit organizations gravitate toward inexpensive promotional items more than for-profit businesses do. Elaine Grundhauser, president and CEO of One 2 One Marketing (asi/287682) in Minnesota, says there’s some truth to that.

“From my experience, it tends to be lower-priced items because the nonprofit associations feel that they have to guard their money tighter than the corporate businesses do,” she says. “They’re always watching their dollars because they have to report back to their members, and they want to be judicious about how they spend it. Their budgets tend to be tighter than normal year after year, depending upon how their fundraising has gone. If they’re going to buy something, they’re going to look for something they can get a good ROI for. They look for things that will help them in their fundraising.”

Of course, distributors are looking for a healthy ROI of their own. With nonprofits, it’s possible for both parties to earn a significant ROI on items, especially because of the bulk purchases that clients from this sector make.

Grundhauser’s nonprofit clients include the Lupus Foundation, which hosts the annual Lupus Food and Wine Classic. For $75 per person or $125 per couple, attendees get to sample food and wine from the best restaurants in the Minneapolis-St. Paul area while participating in silent auctions.

One 2 One regularly provides promotional items for the event – and for the most recent Food and Wine Classic in May, it donated gift bags to be given to attendees. “We were able to put some marketing materials in the bags, which was good marketing for us,” Grundhauser says.

The Lupus Foundation also provided One 2 One with a quarter-page ad in its event program. “So, it was good visibility for us, too,” Grundhauser says.

Perceived Value
Functional items are always in demand among nonprofits, according to John Hiles, co-owner of Booker Promotions Inc. (asi/142800), which is a top provider of ad specialties to The Salvation Army. The key is that those products have a high-perceived value, so nonprofits and the people they’re targeting believe that something is even more valuable than it costs.

“They provide services to the elderly and assisted living homes,” Hiles says of The Salvation Army, “so they like things like hand sanitizers, toothbrushes, slippers, slipper socks, beanie hats – some general-assistance needs.”

Booker Promotions provides headbands and gloves to keep Salvation Army kettle ringers warm; T-shirts, sunscreen and lanyards for summer camp programs; and basic uniforms such as golf shirts for employees and volunteers who manage the local branches.

But more than anything, Hiles says nonprofits like The Salvation Army are in need of solutions providers. “They’re looking for consulting ideas,” he says, noting his current project is an idea he presented to The Salvation Army: custom calendars that can be used for kettle ringers, as well as for donor recognition programs.

“It’s a custom calendar that, each month, is going to have a collage of pictures that are tied into a theme. June is going to be summer camps, and they’re going to have four different pictures from the camp,” Hiles says. “Below the calendar are going to be Bible scriptures, and at the bottom is basically a co-op – the Salvation Army logo and the local branch or church, with their information there.”

It’s this kind of promotion and consultative relationship that makes the nonprofit sector so valuable to traditional distributor firms like Booker. That type of campaign isn’t something they’d be able to carry out on their own through a website provider – for the most part, nonprofit clients will depend on the creativity and service that a traditional distributor can provide today.

And, Hiles says the calendars are a great fit because they’re low-cost items that carry a high-perceived value. “Because of the price point and because of the perceived value, it might satisfy some of the donors that might have been recipients of a $10 item – they can still give it to them even though the calendars might cost them $3 or $3.50 each,” he says. “Perceived value bumps it up there, and they can still use it for the lower-end people, as well. So, there are some other options that way.”

Nonprofits may be looking for great deals, but that doesn’t mean they don’t covet creativity and unique ideas from promotional products providers. Booker Promotions got creative for a recent order in which it provided 1,500 custom four-gigabyte USB drives in the shape of male and female Salvation Army soldiers. The order followed a similar campaign that included hand sanitizer bottles featuring the same design.

Indeed, all it takes to become a trusted partner for nonprofit organizations is to understand their ad specialty needs, recognize their need for creative solutions and, most importantly, acknowledge their need to stay within their budget in order to ensure they’re spending ever single donor dollar wisely.

“With Lupus or any of the nonprofits, you usually have one or two key people that are real close to their budget. Our Lupus contact always talks about their immense responsibility to their donors, and to the general public, too, to spend their money wisely,” Grundhauser says. “They have to stay within certain criteria in order to make sure that they’re being judicious with what they do. They want you to know their needs and challenges, and the more you know about that, the more you’re going to be able to help them.”

Top 10 Markets