Hidden Resources

Think nonprofits have no money to spare for your company? Stop ignoring this $621 billion market.

Does it seem like every time you turn around, a charitable organization is hitting you up for a contribution? You've probably bought products, sponsored events and written checks--but have you considered that these nonprofit groups might be potential customers?

If you think "nonprofit" means "no money," think again. With more than 1 million nonprofit institutions in the United States--schools, hospitals, human services agencies, arts and cultural organizations, religious groups, and more--employing nearly 15.1 million people and generating revenues in excess of $621 billion, this is a market worth a good, hard look.

Growth in the nonprofit sector has mushroomed in recent years, and although governments continue to reduce funding for social programs, that growth is expected to continue. And beyond the nonprofits themselves are their stakeholders--the supporters, members and funding sources that may also be potential markets for your business.

What do they buy? Just about everything. For example, nonprofit associations are a significant market for insurance, printing, travel services and technology, both as end users and as the conduit to sell such products to their members. In fact, working through a nonprofit can be an excellent way to reach consumers.

Sandy Suarez Boutin knows this well: As the director of Great Dane Rescue Inc. in Plymouth, Michigan, Boutin is always in need of dog food but has a very limited budget. So she invites pet food manufacturers to participate in her group's fundraisers. The dog food companies get their names out in front of a big group of prospective customers, and in return, they donate food for the dogs in Boutin's shelter.

The most important point to keep in mind: Nonprofits consume the same goods and services for-profit companies do, and for the most part, they pay fair market prices for those products. Which is not to say you should market to nonprofits the same way you do to for-profit customers. While there are many similarities, there are also some distinct differences between the two sectors--differences that are important to grasp if you want to succeed in selling to nonprofits.

Contributing writer Jacquelyn Lynn regularly writes "First Steps" and "Your Business."

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This article was originally published in the January 2000 print edition of Entrepreneur with the headline: Hidden Resources.

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