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Once Again, Business Shows Nonprofits the Future

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Occasionally, we can gain great insights from small events. These brief moments often disappear into the ether, but sometimes a small moment, with perspective, can actually indicate major change on the horizon.

On a plane back from D.C. last week, I saw such a telltale sign. It was a small blurb about Barnes & Noble and their view of the book industry. Currently, 10 percent of Barnes and Noble income comes from digital products, but they believe, and are projecting, that the number will jump to 31 percent within 36 months. That's $1 billion in digital revenue.

I would wager a lot of nonprofits are taking in about 10 percent of their revenue from 'digital' sources right now, the same as Barnes & Noble, but Barnes & Noble knows that to reach the goal of 31 percent, and to meet or exceed what the marketplace is doing, they will have to dedicate real resources, and a real focus on changing their business model to capture that market share. They will objectively look at present trends and make an informed strategic decision about the future and execute to that decision.

And how many large nonprofits can say they are doing that?

When I spent 2004 as an unpaid Senior Advisor on John Kerry's campaign, I learned two things, the first is that unpaid means unpaid and you will never appreciate how much it actually costs to live until you have the word 'unpaid' in front of your job title. The second is that a technology gap exists between business and nonprofits that is fairly interesting, and important to understand.

With perspective, I see that some of the things that I saw on the Kerry Campaign, a fundamental misunderstanding of how information flowed in the 2004 world, a lack of knowledge about email, even servers going down, were actually a reflection of how many people on the campaign had either stepped into the campaign from nonprofits and D.C.-based causes. These were smart people who were dedicated, passionate about winning, but disconnected from leading digital strategies in the business world. I recall people literally walking the halls of the McPherson Square office with wonder about how "Howard Dean is emailing everybody."

What I came to understand is that the business fixation with quarterly profits, with taking market share from other companies, with the day-to-day corporate struggle has led to businesses increasingly becoming early adaptors of technology.

If a business had to make a decision between sending 10,000 direct mail pieces at 68 cents per piece and 10,000 emails at 0 cents per piece, the ROI was instantly calculated and the emails prevailed. A nonprofit or cause group or, say Senate office that doesn't even pay for its mail to its constituents, wouldn't approach the same question with the same mind-set. They would come much more slowly to a conclusion, or even a non-conclusion, compared to the business facing the quarterly profit report.

This slower approach that nonprofits take has led to a lag in adaptation, and therefore, a digital gap. This gap has always been in existence to a certain degree, i.e. twenty five years ago, nonprofits also lagged businesses but the impact wasn't as profound and it wasn't increasing exponentially. And that's where Moore's Law comes into play.

Moore's Law states the computer power doubles every two years. Think back to the computers of the 1980s, the doubling of the power within those machines was important but nothing compared to the doubling of the power within say, the latest MacBook Pro. Put another way, last year's iPhone, is today's iPad.

Consider too the pace of play in our brave world. Substantial and powerful outlets such as The Huffington Post, Twitter, Facebook, YouTube and many more are all less than five and a half years old. The gap is larger than ever, and many large nonprofits are struggling to figure out how to close the gap when seemingly every day, it is getting wider.

At the same time, you'll see nonprofits that have been created within the time frame of the new digital world leapfrog the growth of nonprofit programs operating in the old world structure. One of our clients, Product (RED) launched in fall of 2006, lives on the power of its remarkable digital assets, a million plus people on Twitter, half a million on Facebook, and so forth. This community, galvanized by a strong online connection, has generated over $150 million to fight AIDS in Africa.

VoteVets.org started by my friend Jon Soltz has mastered the blog/new media world as it too was launched in 2006. Now that group is helping making sure Vets get the care they need when they return home and influence key elections.

Simply put, the nonprofits and charity organizations that inject digital strategy in the core of the efforts will ultimately succeed just as every American business, like Barnes & Noble, must understand how digital will impact their worlds. If they do not, in either case, they will be overtaken by more innovative organizations. This requires a change in resources and in the larger nonprofits a change in core organization. Two changes that will often, and in fact, in our experience, almost always meet with resistance.

The first barrier is that you essentially are working against the core culture of a nonprofit, and the past experience of those who work there. Working at a nonprofit is not the same as working at a for-profit company. The wages, the job expectations, the vacations, they are all very different.

The second is that large nonprofits rarely re-organize like a business will restructure. A new executive will look at a company and often will make quick and radical changes. This rarely happens in a nonprofit. But it should. And, in fact, it needs to. The changes in the world around them are far too substantial to let change occur naturally. It needs to be injected into the organization, not in the traditional nonprofit mode of consensus building but with a corporate restructuring mindset.

This has to happen because the world outside the walls of nonprofits has been permanently and fundamentally altered. Recently, Arthur Sulzberger, CEO of New York Times, stated that yes, eventually the New York Times would cease to publish a print edition. Dozens of nonprofits and progressive causes act with the goal of having their cause, their work, their campaign reported on in the NY Times. But soon, I say within 24 months, there won't be a NY Times to try and get into.

Nonprofits and causes live and operate in the same world today as businesses. Business is telling us what they see coming. We'll have to see how many nonprofits can adapt, and how fast they can adapt so that they are as prepared as it certainly appears Barnes & Noble intends to be.