Mind vs. market: organizing your group into the thoughts of donors.

If it had to be done over again, most national nonprofit federations would be organized by media markets. That's right, organized as media markets, not neighborhoods, not cities, and not even states. Most of the national federations--or movements, as they often think of themselves--depend on substantial public visibility and the fundraising dollars that flow from it.

Organizing by land mass such as cities and regions seems to be in the human DNA, and in fact that approach worked well enough for nonprofit federations throughout most of the last century. But today, it's a new game.

Those same organizations might not know that that's the way they would organize themselves. Right now they may not even be giving much thought to how they're organized, although that would put them in the minority. But if they could wipe the slate clean and start over again with no vested organizational interests and with only the most effective organizing model in mind, most name-brand nonprofit movements would give very serious consideration to the preeminent role of electronic media markets in this society. Moreover, the same can be said for local nonprofits not affiliated with a national system and not primarily funded by government.

Here's why this is tale, and here's what you can do about it. When most of today's federations went through their major growth phase in the mid-20th century, the economy was still based primarily in manufacturing, and was chiefly organized in either national or regional segments. Sophisticated, efficient automobile transportation zones were just developing. President Dwight D. Eisenhower's interstate system didn't get started until well into the 1950s. Most people's primary identification was with their local community, with statewide or even regional identifications being secondary at best. The federal government and the private for-profit sector took up most of the attention and resources because the third sector now known as the nonprofit sector was relatively small and was thought of primarily as hospitals and universities.

The dizzying changes of the next several decades, such as governmental retrenchment, the globalization of the economy, and the rise of electronic communication dramatically altered the landscape. The sheer rise in the numbers of nonprofit public charities turned the sector into an increasingly competitive marketplace for everything from funds to board members to staff and public attention. Yet it is precisely this multi-faceted competition which has fragmented the nonprofit sector that is, paradoxically, at the heart of its best strategic position for the future.

Start with the presumption that government at all levels has demonstrated its utter lack of interest in maintaining its past level of investment in the nonprofit social welfare, education, and health care fields. Whatever investment it continues to make is often inadequate and somewhat grudging. That enormous base of funding won't go away entirely, but it is clearly not a thriving source of funding anymore.

That pushes most nonprofits toward the private sector, particularly the 83 percent of all contributions that typically come from individuals each year. This consumer-oriented funding marketplace consists mostly of large numbers of relatively small donations. That market requires a different approach, especially by those nonprofits used to getting their funding mainly from government and/or foundations where the model is larger quantities from smaller numbers.

What is the easiest way to succeed in a competitive, fragmented marketplace such as is true of most local philanthropic sectors? The classic strategy is differentiation, and the classic way to achieve differentiation is through branding. This is where national federations have an advantage because they have created for their local affiliates a strong brand name.

However, a brand name only goes so far. A brand name will get a nonprofit mindshare, but not necessarily market share. For market share, one needs a story, literally an individual story such as an accomplishment or a fundraising campaign or figuratively a story in the sense of a mission, plus widespread relevance. And this is how most national organizations, as well as many local ones, fail to get their story out. It is a truism that the media, especially electronic media, need simple messages that will resonate with their markets. A strong brand and a compelling story fulfill those requirements but fail the last part unless they cover the entire media market.

Think about it from the perspective of the media outlet. Why would you want to run any story that doesn't appeal to all of your market? It's hard enough to compete in the media marketplace with an integrated message, why would a nice story from a Northwest Market nonprofit be relevant to the Southeast, Southwest, and Northeast?

What it means

A good brand name is crucial to success in today's fundraising marketplace. So is the ability to craft a good story. As difficult as these are to achieve, they are not sufficient. One also needs the ability to speak to as large a number of people as possible. This is where nonprofits of all kinds need to take action.

Affiliates of national federations usually have an automatic advantage with their brand name. Many local organizations have equally strong brand names. Local affiliates and local independents may also have the ability to create a compelling cause, or story. But where both need to work is on their distribution channel, and this is the heart of the case for organizing by media market.

In tomorrow's brand name-oriented fundraising environment, media markets will be the fundamental organizing principle. Local affiliates of national federations will have the pre-established brand name and the story, and they will probably find it easier to create ways of speaking to their entire media market through common and coordinated messages, collaborative approaches, and ultimately mergers that cover all or most of their market area.

Local independent nonprofits must create their own strong brands and develop the ability to tell equally strong stories. To ensure that they can touch all of the media market, they will need to cover the entire market. In all likelihood they will do this through mergers and media alliances of some kind. These will be the driving considerations when national federations consider restructuring. They will also increasingly drive local independents.

The ingredients of success in a media market-dominated society favor local affiliates of national federations, and strong local independents. The work is the same, the only question is how it will get done. Success tomorrow will favor those organized to speak through the media.

Thomas A. McLaughlin is a national nonprofit management consultant with Grant Thornton in Boston. He is the author of the new book The Art of Strategic Positioning. Decide Where to Be, Plan What to Do (John Wiley and Sons). This column is based on a portion of that book. His email address is [e-mail].

There are 210 media markets in this country, as defined by the Nielsen
Media Research, the folks who bring us the well-known television rating
system. The list of the top ten and bottom ten give some idea of the
variability of the markets.

Nielsen Media Research Local Universe Estimates * (US)

The Top Ten Media Markets in the US

RANK   Designated Market            TV Homes    % of US
       Area (DMA)

1      New York                     7,375,530    6.692
2      Los Angeles                  5,536,430    5.023
3      Chicago                      3,430,790    3.113
4      Philadelphia                 2,925,560    2.654
5      Boston                       2,375,310    2.155
6      San Francisco-Oak-San Jose   2,355,740    2.137
7      Dallas-Ft. Worth             2,336,140    2.120
8      Washington, DC               2,252,550    2.044
9      Atlanta                      2,097,220    1.903
10     Houston                      1,938,670    1.759

The Bottom Ten Media Markets in the US

200    Mankato                       50,930      0.046
201    St. Joseph                    45,840      0.042
202    Zanesville                    33,080      0.030
203    Fairbanks                     32,310      0.029
204    Presque Isle                  31,140      0.028
205    Victoria                      30,250      0.027
206    Helena                        25,810      0.023
207    Juneau                        24,130      0.022
208    Alpena                        17,790      0.016
209    North Platte                  15,320      0.014
210    Glendive                       5,020      0.005

Copyright Nielsen Media research