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The Missing Power of the Beneficiary


Andrew Means explores how nonprofits can provide more market power to the individuals they serve.

Have you ever thought about the power you hold in your wallet?

Consumers in a capitalist economy, taken collectively, change the world. They drive markets. They push entrepreneurs to innovate. They cause businesses to compete with one another to provide the best experience for customers. When they deliver value to consumers, they flourish. When they fail to meet consumer needs, they lose money and market share.

In the nonprofit sector, beneficiaries often lack this consumer power. They don’t drive nonprofit behavior in the same way. Nonprofits rarely compete with one another to provide the best quality of service for fear their beneficiaries will jump ship to another organization.

Instead, most nonprofits see donors as their customers. They compete for donations from prominent foundations and they court high-profile philanthropists and community leaders to their boards. They certainly notice – and quickly adjust their behavior – when they lose a donor to a rival organization.

This is all a bit backwards. Nonprofit organizations don’t exist for donors. They don’t even exist to raise money. They exist to create change in the world – change that will directly serve their beneficiaries.

We need to find ways to give beneficiaries more influence, and we can start by considering the analogy of the consumer economy. Why do consumers have so much power over businesses?

The first answer is choice. Businesses know that consumers can chose where to spend their money. Likewise, consumers have access to powerful tools to help them make effective purchasing decisions. Yelp, Amazon reviews, and countless other sources of data provide valuable information about the quality of products and services.

How do we get to a place where beneficiaries of nonprofit organizations have the same level of knowledge, choice, and power as private sector consumers? How can we provide better, more transparent information about how well nonprofits are serving their beneficiaries?

This goes beyond beneficiary feedback. We absolutely need to do a better job of listening to the people we serve, but we can and should go further. I think we can find innovative ways to help beneficiaries of nonprofit services make rational, informed decisions.

I’m not sure the sector will ever get to the point where beneficiaries drive nonprofit service delivery and innovation in the same way that consumers drive business decisions. But we can do a better job of listening to beneficiaries and crafting our organizations to best serve them. After all, they are our real customers.

How does your organization listen to the needs of your constituents, and how do you respond to that feedback? What do you see as the biggest roadblock to empowering beneficiaries? Chime in with a comment below. You can also connect with Andrew Means on Twitter or LinkedIn

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