“All transactions involve an exchange of value,” explains Bill Oakley, President and CEO of Goodwill of Central Florida, a nonprofit with yearly revenue exceeding 31 million dollars. “We continually study and seek to know more about why people give us their goods and money.”
This article introduces The Value Exchange Tool to help increase your income. The Tool helps you to clarify the value your nonprofit offers to different funding sources. The more you know about the value exchanges taking place, the more you can shape your income requests and grow your income.
All income or goods that your nonprofit receives involve a value exchange. Yes, this includes donations. For example, an orchestra learns that its children’s programs motivate many individual donors. Therefore, it always mentions and shows children in its annual appeal letter, as the letter is one tool the orchestra uses to garner new donors. The orchestra also actively identifies current donors who care about children and regularly informs them about programs for young people. In short, the orchestra ensures that people who are interested in children know about the value it provides to children. Donors who respond and provide income benefit by partnering with the organization to help local children experience and learn about music.
Based on who is giving the money, seven sources of nonprofit income exist. They are listed in the left-hand column of the attached Tool. Some nonprofits obtain income from all seven sources, others just three or four. Organizing income by sources helps you to see that entities within each source often seek similar values. Corporations, for example, anticipate similar value to what other corporations expect. This differs from the value that individual donors seek. (For more information about the income sources, read this article.)
The Tool asks you to identify the value you provide in exchange for income. To start your thinking, an example and a corresponding value exchange for each of the seven sources is listed. Under mission earned, the exchange is between a patron that buys a ticket at Atlanta History Center. The Center receives cash, and the patron receives access to the Center to learn more about Atlanta’s fascinating history. In all likelihood, the patron’s motivations are more complex than just learning history. Perhaps, she also wants a place to bring her out-of-town visitors. Or, her hobby is historic gardens.
Heifer International is the example for individual donations. Heifer provides gifts of livestock, seeds, trees, and extensive training to those in need. Their goal is to end poverty and hunger in a sustainable fashion. What value exchange is taking place? Heifer receives a credit card payment. The donor impacts poverty and hunger in a sustainable fashion. Again, this represents just one value. Some donors may care deeply about work in specific countries. Others may donate internationally to have a polite way to turn down dozens of local requests. To save space I haven’t listed these other values here, but you get the idea. You will want to list all of the major value exchanges from each of your income source.
It is very worthwhile to study the value you offer from the viewpoint of those giving you income. The tool makes visible and tangible what otherwise might be vague or even misunderstood. Nonprofit leaders often prefer the value to be all about the mission work. Very likely this is a component, but rarely is it the only reason for the exchange. For instance, say you provide amazing value by keeping children off the streets after school. A corporate sponsor, while appreciating that value, prefers the computer expertise you provide. They fund you because of it.
Filling in the chart is the first step. Next test your ideas. Asking people why they buy or donate to you. Record the answers so you can study them and consider their frequency. Make gathering data about your value exchanges part of what you do. Listen, and like Goodwill of Central Florida continually study and seek to know more about why people give you their goods and money.
Tools You Can Use
The Ten Most Important Nonprofit Measurement Tools
Value Income Exchange
Service/Product and Value Provided
|Income Source||Exchange||Value Provided||Exchange||Value Provided|
|Mission Earned||Atlanta History Center/Ticket purchase||Historic, inspiring mission experience|
|Individual Donation||Heifer International/Personal check||Opportunity to improve lives across the world|
|Government||Houston Arts Alliance/Contract payment||Strengthened art and cultural presence in Houston|
|Foundation||Community Housing Network Inc./Funds from the Robert Wood Johnson Foundation||Improved health and health care of Americans|
|Corporate||Ronald McDonald House/Corporate check||International branding|
|Other||Tampa Bay Watch/Rental fees for space use||Unique wedding location|
|In-kind||Goodwill Industries/Donation of used clothing||Used goods transformed into value for someone else|
For more answers, check out this Nonprofit CEO Library.
For solutions delivered to your inbox sign up for Karen’s CEO Solutions.