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4 Lean Startup Principles To Transform Your Nonprofit

Published by Gabe Cooper

Seven years ago, Eric Ries wrote his seminal book, The Lean Startup, to help entrepreneurs accelerate innovation. His book remains one of the most helpful guides for driving innovation at startups, large enterprises and even nonprofits.

Over the past few years, we’ve seen tremendous success in applying Lean Startup principles in fundraising. Ries’ basic ideas, along with some broader concepts included in Agile software development, have proven to be powerful tools for quickly accelerating fundraising and knocking down barriers to innovation. To help kickstart your thinking about lean-centered fundraising, I’ve outlined 4 core lean/agile principles that can have an immediate impact on your fundraising success.

Before we jump in, I’d like to acknowledge a common roadblock that we see in adopting lean principles in fundraising. The idea of rapid innovation and change can feel intimidating – and most nonprofits find it difficult to shift their entire culture to implement lean practices across the organization. To lessen this stress, we recommend starting small. Try limiting the scope of these recommendations by only implementing lean within your email and online giving optimization programs. By starting small, you’ll be able to prove out these concepts and demonstrate a few key wins in online fundraising. Once your organization sees the success that these principles can deliver, you’ll likely begin to see a much broader organizational shift toward innovation using Lean Startup practices.

Let’s jump into the core principles to see how lean principles can drive fundraising success.

 

PRINCIPLE 1 // ELIMINATE UNCERTAINTY

One of the basic tenets of the Lean Startup methodology is risk mitigation. Too many nonprofits spend thousands of dollars (and many years) on fundraising programs that face a huge risk of failing. These “speculative” fundraising campaigns tend to create an organizational excitement that often causes leadership to invest thousands of dollars into a program before they know if the idea has any chance of working. As a fundraiser, you have a responsibility to yourself (and to your donors) to focus on mitigating as much fundraising risk as possible, as quickly as possible, for as little money as possible. When you implement a new marketing initiative or program, your primary goal as a fundraiser should be to identify the biggest risk of failure before any real budget is allocated.

Once you identify the risk, you’ll want to figure out the smallest amount of time and money possible to test, validate and eliminate the risk and uncertainty. For example, if you are thinking about using music concerts to raise money, try launching one small, local concert first to validate your cost structure, response rate, and attendance. If you are thinking about launching a peer-to-peer program, try one simple, self-contained peer-to-peer campaign first to see if you can motivate your constituents to engage. Your goal in any new tactic is to fail fast and learn fast in order to eliminate uncertainty. A quick failure that allows you to eliminate risk, learn and pivot direction is far better than a prolonged, expensive and ineffective strategy.

PRINCIPLE 2 // THE MVP APPROACH: BUILD, MEASURE, LEARN

MVP stands for Minimum Viable Product. For fundraisers and marketers, the “MVP” represents the minimum viable marketing execution needed to test your fundraising assumptions. There are several areas where this concept can be applied, but one of the best uses of an MVP for nonprofits is the practice of message testing using Facebook Ads. If you are interested in how a new marketing message or program will play with your constituents, don’t start by putting it on the homepage of your website. Instead, create a landing page using a tool like Unbounce, then create a Facebook Ad that pushes visitors to that new landing page.

Test various copy and messages in each of your ads and landing pages, then track click and response rates to quickly see which messages resonate with your audience. For $200 and a week’s worth of tests, you can often identify your most effective marketing message without changing any of your existing programs. In almost any area of fundraising, you can use this MVP approach to test a new program at a small scale and validate results before launching more broadly.

PRINCIPLE 3 // CELEBRATE FAILURE

The principle of Celebrating Failure also appears as part of our first principle “Eliminate Uncertainty” but, because I see this as a massive problem in the nonprofit space, I wanted to give more emphasis here. As a rule, nonprofits often have very little incentive to change or innovate. Change represents risk. It can also represent new job roles, new required learning, etc. Unfortunately, many nonprofits have (often unknowingly) created an organizational culture that is actively resistant to change. Nonprofits consistently reward employees for making the “safe” choice rather than taking risks. When an employee tries something new and fails, their failure is often written into the permanent lore of the organization and recounted at every staff meeting when a new idea is suggested. There’s an old adage in software that is particularly true for nonprofits: “Nobody ever got fired for buying IBM.” In other words, the easiest way to keep your job is to make the safest choice possible. The problem is that making safe choices with no innovation is the fastest path to irrelevance and a slow death.

To truly innovate, your organization must encourage and even celebrate failure. Nothing great was ever accomplished without a few failures along way. In one case study, the tech startup IMVU saw a 200% increase in revenue when they implemented lean principles of encouraging failure and learning across the entire team… then they continuously released product improvements based on learnings. Even the Wright Brothers had years of repeated, painful failures which helped them learn enough to launch the first manned flight. If you aren’t failing, you’re not growing or learning. And if you are criticizing failure, you are creating a culture where innovation will not exist. The next time someone tries a new fundraising idea and fails… buy them a cake and balloons. Cheer for them on their learning. Then get back on the horse and try again.

PRINCIPLE 4 // DONOR-CENTRIC FEEDBACK LOOP

The final Lean Startup principle that can increase fundraising is shortening the donor feedback loop. Any good technology startup finds ways to constantly gather user feedback and make small changes to their marketing and product based on learning. If you aren’t getting constant feedback from your donors, it’s almost impossible to make quick adjustments that will increase engagement. We recommend having two distinct digital strategies for getting donor feedback: Active and Passive. Passive feedback can include tactics like A/B testing donor landing pages, email subject lines or landing page messaging. Good digital testing practices help you make implicit assumptions about what your donors really want based on their clicks – and then adjust messaging in real time to optimize results. That said, it’s important to pursue more active, engaged feedback loops as well.

I recommend surveying a portion of your donors on a continuous basis to identify their passions, interest in your programs, preferences or stage or life. A Net Promoter Score (NPS) for nonprofits can also be a helpful metric to monitor donor sentiment. An NPS is simply this question you are often asked on websites: “On a scale of 1 to 10, how likely are you to recommend xxxx to a friend?” The aggregated result of this survey is called your Net Promoter Score. NPS scoring can help nonprofits get a better sense for donor satisfaction and even help identify your most passionate donors who might be willing to host an event, tell a friend, or help in a deeper way with your cause. Research has proven this approach to work at even the most complex companies. For example, the popular cloud software company DropBox used Lean Startup principles and user feedback loops to increase registered users from 100,000 to 4 million in just 15 months.

I believe that each of these four principles has the power to have a profound impact on your fundraising. You’ll likely find that you are innovating faster and raising more money within weeks of putting these principles in place. We’d love to hear from you on your tactics – try out the principles in one of your upcoming campaigns and let us know if you’re seeing improved results.

About the author:

Gabe Cooper

Gabe Cooper

Gabe Cooper is the Founder of Virtuous Software, a CRM and Marketing platform helping charities increase their impact. He is also the founder of Brushfire Interactive, co-founder of Shotzoom Software, and has a passion for creating market-defining software and helping charities re-imagine generosity.