Part 2:

Planning for 2011–

Best Practices for
New Business Development
in the Nonprofit Sector

www.guidestar.org
Part 2: Planning for 2011: Best Practices for New Business Development in the Nonprofit Sector

Summary
Over the years, companies have balked at selling to the nonprofit marketplace. Since they are generally
organized differently from traditional for-profit companies, they are considered to be confusing in terms of
needs, decision-making processes, and key contacts, and figuring out whom to and how to sell is unclear at
best. Add to that their reputation as “penny pinching” and you have a market that is underpenetrated and
underserved by most industries. But the outlook for nonprofits is better now than it is in the for-profit sector
according to recent studies, so the time is ripe to learn why you should include nonprofits in your sales mix
and how to make sure you are in front of the right people, presenting the right solution to meet their needs
and close your deal.

Introduction
2011 is shaping up to be a great year for businesses looking to take advantage of selling to nonprofits. In fact,
the Nonprofit Research Collaborative’s November 2010 Fundraising Survey found that 47 percent of the
2,350 public charities and 163 private foundations surveyed plan budget increases in 2011, and 33 percent
expect to maintain current levels of expenditures.1

Increased budgets may spell increased sales opportunities for professional service providers, but there are
challenges when approaching nonprofits. Cost-effectively addressing program-related needs for nonprofits is
a great way to help maximize budgets. Before you can determine those needs and position your product or
service accordingly, however, you need information.

Gathering information is essential to generating and vetting viable prospects for your sales force.2 Intelligent
data on the Who, What, Where, How Much, and other key statistics about your prospects will help you
efficiently identify new leads, close deals faster, and keep client relationships generating revenue over the
long term in any sector—nonprofits are no exception. The nonprofit sector relies on goods and services just
as the for-profit sector does, and results-driven sales teams should approach prospects with the same goal of
meeting nonprofits’ unique needs as they would for any for-profit business.

In this paper, GuideStar has pinpointed the key elements that every sales force needs to know to develop
successfully new business and revenue-generating relationships within the nonprofit sector.

2 www.guidestar.org
Part 2: Planning for 2011: Best Practices for New Business Development in the Nonprofit Sector
Key Things to Know about Every
Nonprofit before Approaching
There are more than 1.8 million nonprofits
recognized as tax-exempt organizations by the IRS.3
In order to find the most viable leads from such a
large and diverse market, you need to define clearly
who your best prospects are—what they look like,
what they do, how they do it, and what they need to
accomplish their missions. Every sales force should
gather individualized information on the following
five data points:
1. Show Me the Money! Size Matters:
Financial Outlook
2. What, Who and Why: Mission
3. Helping Them Help Others Helps
You: Specific Needs
4. The Right Place, The Right Time:
Location and Scope
5. Hello, New Business: Whom to Call
Financial Outlook: Show Me the Money!
Knowing and identifying a viable prospect is
all in the numbers—whether you count annual
expenditures, employees on staff, or people served by
the organization.
Most tax-exempt organizations are required to submit
an annual reporting return (Form 990, 990-N, 990-
EZ, or 990-PF) to the IRS.4 Nonprofits with revenues
greater than $50,000 must submit more detailed
returns that can help your sales force determine both
the financial health of a nonprofit and how much
room it might have for outside services—hence,
answering the key sales question: How viable is the
organization as a new business prospect?
A nonprofit’s Form 990 is public information.
The more detailed returns will tell you how much
the organization is spending on different types of
Size Matters!
Smaller organizations, which tend to use more
volunteers than paid personnel, should not be
discounted as prospects. Often, they have a real and
immediate need for automated services. If that’s your
selling point, be ready to demonstrate how automated
services will enable smaller staffs to focus on their
missions while saving resources over the long term. Keep
in mind, however, that the more revenue an organization
brings in, the more likely it is that there’s a budget
available for professional products and services.
Things Are Looking Up
for Larger Nonprofits
The 2010 Fundraising Survey revealed that the larger
an organization’s size, as determined by total annual
expenditures, the more likely the organization was to
report an increase in charitable receipts in the first nine
months of 2010 as compared to the same period in 2009.5
services, including office expenses, information
technology, or legal and accounting services.
Combined with the other data points outlined
below, this information can help identify appropriate
leads and determine their viability.
Mission: What, Who, and Why?
Determining what a nonprofit does with its funds
and the specific audience it serves is essential to
finding the right prospects for your product or
service. Plus, shaping your approach to the “what,
who, and why” behind potential prospects is good
sales practice—plain and simple.
3 www.guidestar.org
Part 2: Planning for 2011: Best Practices for New Business Development in the Nonprofit Sector
Look for the following mission information for
hot leads:
• W
 hat: What is the primary purpose of the
nonprofit? Your organizational software services
may be just as essential to a database of rescued
animals as it is to a university service that tracks
alumni data, but each requires its own unique pitch.
• W
 ho: Knowing the demographics served by your
nonprofit target is essential. Are they students?
Disaster victims? Art enthusiasts? How many people
do they serve per year? If you’re selling accounting
services, enterprise software, or hybrid utility
vehicles, each demographic served comes with
individual and unique problems that you’re aiming
to help the nonprofit solve with your services.
• W
 hy: Matching the product or service you are
selling to the nonprofit’s mission is critical to
getting your prospect’s attention. Offering special
pricing for nonprofits is another way to show
commitment to a nonprofit’s cause.6
Needs
Closely related to determining a nonprofit’s mission
and purpose is determining what needs are unmet
in fulfilling that purpose—and positioning your
product or service as a solution to those needs.
Helping Nonprofits Help Others Helps You: Are you
selling mobile donation and transaction software?
Legal services? Office supplies or furniture? A
little research goes a long way, and once you
find a nonprofit that meets your criteria for
size and budget, it helps to have a look around
the organization’s Web site, blog, or any other
information available online to determine specific
needs and to position your product or service to
meet those needs.
A nonprofit’s 990 lists the types of services it engages
and the amounts spent on them—as well as amounts
and categories for independent contractors. It’s
a great source of information for prospecting. In
addition to this information, some nonprofit database
services provide comprehensive, timely surveys
on exactly what nonprofits need and are looking
for as well as articles and other resources that help
determine hot-button issues for nonprofits. Whether
it is legislation changes that could affect operations or
how to manage volunteers more effectively, knowing
these issues gives you that much more advantage in
understanding your potential new client.
Location and Scope
Sometimes, location really is everything.
The Right Place: Are the services you’re offering
limited to a regional area, or is the scope worldwide?
Either way, you want to target an organization with
a similar outlook. Using a nonprofit data provider
with the capability to search for organizations with
specific criteria within certain zip codes or regions
is a great way to hone in on only the prospects that
apply to the area your product serves.
The Right Time: If you know you’re going to be in
a metropolitan area for face-to-face meetings, why
not arrange sales meetings with a few nonprofits
in the area while you’re there? Using a data service
that provides information on nonprofits via easy-
to-use search and sort tools and the most current
information available—which has been verified and
is trusted by multiple sources—is crucial to success.7
4 www.guidestar.org
Part 2: Planning for 2011: Best Practices for New Business Development in the Nonprofit Sector
Whom to Call
We’ve established that before approaching a
nonprofit to offer your services, you should first
know more about its financial profile, organization,
mission, the people it serves, and, most important,
what it needs to accomplish its mission more
efficiently. The next most important piece of
information may be the difference between finding
a prospect and turning that prospect into a client:
exactly whom to contact. Some 6.6 million people
work in the nonprofit sector.8 Reaching the right
person is essential.
Hello, New Business! Knowing the key contacts at
the organization tasked with purchasing or hiring
outside services saves you time and increases the
likelihood that your call will be well received.
The more senior the contact, the more likely
they are to know if enterprise software or asset
management solutions are right for the organization.
Just make sure your product aligns with helping
the organization achieve its primary mission.
Fortunately, Form 990 requires nonprofits to provide
the names of their CEOs, and oftentimes includes
other key staff as well, granting access to information
that might otherwise be difficult to obtain.
Show Me the Money (Again): Form 990 provides the
CEO’s salary as well as his or her name and title.
Knowing the compensation of a company’s top
executive is helpful in assessing potential prospects—
the more money the CEO makes, the more money
the organization might have in its budget for outside
services. Without other data points to identify
whether the nonprofit is really a viable prospect or
not, however, it’s presumptuous to start making sales
calls based on CEO salary alone.
Think Global, Act Local
In the nonprofit world, thinking globally and acting
locally are mottos to live by, and your sales force needs
to think the same way. Selling medical supplies to the
Red Cross may be a sweet deal, but don’t stop short of
anticipating the needs of local organizations to prepare
for disasters, or other products that fall under the
responsibility of individual chapters to purchase. Selling
to smaller, local nonprofits has its challenges, but it’s also
where creative sales can go a long way.
Consider the local car wash that rents out space to the
local high school to raise money for team sports—they
may get a small share of the profits and gain from a
boost in their PR image. If you’re in marketing, don’t be
afraid to consider partnering with a smaller, localized
nonprofit to support a new store opening or regional
product launch campaign.
Without accurate, trusted data that’s sourced from
multiple areas—including both the nonprofit itself
and outside sources—generating new business leads
from nonprofit directories is near to impossible.
How to Find the Key Stats
Finding accurate and detailed information on
nonprofits may prove more challenging than
obtaining similar information on for-profit
corporations through Web sites, directories, and data
reports, but there are resources out there, and some
are considerably superior to others.
5 www.guidestar.org
Part 2: Planning for 2011: Best Practices for New Business Development in the Nonprofit Sector

The key to determining viable prospects is to make
sure the information collected and accessible is
broad, up-to-date, and accurate—i.e., intelligent
data—that is both trusted and easy to use. Even with
the wealth of information available on nonprofits—
thanks to public access to Forms 990—having
verified information from other sources will prove
extremely valuable. In addition, being able to sort,
search, aggregate, and compare that information is
far more effective and efficient for finding the right
prospects ready to buy.
There are organizations that provide Form 990
information online. There are also organizations
that provide Form 990 information alongside
detailed nonprofit analyses by outside organizations
and profiles submitted by nonprofits themselves
in one comprehensive, multi-level data engine.
The intelligent data provided by GuideStar when
it comes to comprehensive, multi-level search
capabilities is considered the best available in the
nonprofit sector.9
1 “November 2010 Fundraising Survey,” Nonprofit Research Collaborative,
2010 (http://www2.guidestar.org/ViewCmsFile.aspx?ContentID=3117).
2 “Driving Sales Results in Any Economy: Executive Summary of the 2010
Miller Heiman Best Practices Study,” Miller Heiman, 2010 (http://store.
millerheiman.com/kc/abstract.aspx?itemid=0000000000000714&VIP=DE
SMM510).
3 “An Overview of the Nonprofit and Charitable Sector,” Congressional
Research Service, 2009 (http://www.fas.org/sgp/crs/misc/R40919.pdf ).
4 “Form 990 Series—Which Form to File (Phase-In),” U.S. Internal Revenue
Service, 2010 (http://www.irs.gov/charities/article/0,,id=184445,00.html).
5 “November 2010 Fundraising Survey,” Nonprofit Research Collaborative,
2010 (http://www2.guidestar.org/ViewCmsFile.aspx?ContentID=3117).
6 Marketing to Nonprofits: Helping Them Help Others Helps You,” Steps to
Faculty, May 28, 2010 (http://www.stepsto.com/marketing/marketing-to-
non-profits-helping-them-help-others-helps-you/).
7 “Guide to B2B Leads: Ensure the Highest Quality Business Data,” Jigsaw,
2010 (http://info.jigsaw.com/LC_B2Bleads.html).
8 “An Overview of the Nonprofit and Charitable Sector,” Congressional
Research Service, 2009 (http://www.fas.org/sgp/crs/misc/R40919.pdf ).
9 “GuideStar Premium” (http://www2.guidestar.org/rxg/products/guidestar-
premium.aspx); “GuideStar Enterprise Solutions” (http://www2.guidestar.
org/rxg/products/guidestar-enterprise-solutions.aspx).

Conclusion: Intelligent Data = Increased Sales

Armed with intelligent data, your sales force can
effectively find worthwhile leads, reach the right
person, land the right pitch, and sell services to the
nonprofit sector that benefit everyone’s top and
bottom lines: yours and the nonprofit prospect’s.
Having the right data can even help you anticipate
a nonprofit’s needs before a busy administrator has
even considered outside services—enabling your
sales force to get in early on opportunities.

Companies that provide business intelligence data

on nonprofits in an accurate, trusted database that
allows you to determine easily the viability of a
nonprofit lead are few and far between, and the
key to unlocking new business in a growing and
underserved sector.

6 www.guidestar.org