Nonprofit Fundraising: What to Do When Your Nonprofit Sells Good Stuff and Good Will

When my kids were little, my friend Colleen made them fabulous cakes for their birthdays. The cakes were elaborate, themed and tasted great. When she delivered a cake, I tried to pay her, but she declined every time. This made me feel horrible because I wanted to pay her for something I valued. She has real talent and deserved to be compensated for it. But Colleen didn’t want my money. She made the cakes because she cared about my kids and loved making people happy. Taking money for that felt wrong to her.

I was operating under market norms. I wanted to pay her for a product that had value to me. Colleen was operating under social norms. She was making the cakes because it was the right thing to do. 

Social and market norms are often confused in nonprofit marketing and lead to miscommunication and alienation. Imagine a friend whipping out cash to pay you for dinner you served in your home. Or, imagine performing a service and getting a gift or thank you note in exchange. When you confuse market and social norms, it can be alienating to your friends, colleagues and your audiences. 

Nonprofit fundraising primarily operates on social norms and products primarily operate on market norms. Market transactions can have some social value but the primary driver is the right value for the money. Fundraising can have some market value, but the act of giving is primarily a social norm. Understanding and applying both can give donors and consumers a way to enter into and maintain these relationships successfully. 

Social norms drive nonprofit fundraising.

As nonprofits, fundraising is your social norm. You ask people to donate money because it is the right thing to do. This is a gift-oriented, right brain transaction. You use social norm drivers like hope, belonging, collective impact, and yes, even guilt, to get people to donate money. And your donors give because it makes them feel good, it makes them feel like they belong, and it relieves their guilt. Social norms are requests made of one another to form a sense of community and goodwill. They do not require immediate payback.  

Market norms drive product sales.

Many of us also sell products either through a social enterprise, membership or a fee for service. Product sales are a cash-driven, left brain transaction. Whether you are selling bread, cookies, catering, tutoring or any other product, consumers will make a purchase because they think that product is the right value for the money. That the product benefits a nonprofit adds to the value, but it is not the only factor in a consumer’s decision to buy. The product needs to compete in other areas as well. We won’t buy a cookie just because it supports a charity. That cookie has to taste good too. 

You may be thinking, “My donors want to know their donations are the right value for the money, which is a market norm.” And this is true, but our donors give to the charity that they connect with emotionally, and then they look at outcomes. Your donors need to be personally connected to your mission before they will give a gift. Your nonprofit fundraising messages should meet those social norm needs.

These organizations need to pay attention to social and market norms.

1. Organizations that started as a fee for service that are now branching out into individual giving. To help your audiences adjust, create and name a fund for the individual gifts so it is clear that this gift is beyond the market transaction.
2. Organizations that are primarily driven by giving that are now starting social enterprise. Focus on the market value of what you provide and know that people won’t buy or shouldn’t buy something inferior because they believe in your cause.

An example of social and market norms

The Gateway Region YMCA manages both market and social norm relationships. Members join the Y because of a market-based relationship. They want a fitness facility, sports leagues for kids or a pool to visit. Members want value and service for their membership.

There is also a strong social norm contract with the Y. They raise money for children and families to access the Y’s programs. These are two different relationships that are distinct in their messaging and marketing materials.

After a few years of awkwardness around the birthday cakes, Colleen and I came to a compromise. She made cakes, and I make a donation in her name to a favorite charity. Once you are clear on how you are valuing each relationship, you can meet each other’s needs. Understanding market and social norms is key to being clear communicators, engaging your audiences and making both efforts successful.

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