Public Relations Commentary

Increasingly, public relations pracititioners have to know not only how to write for the Web, but also how to manage and respond to blog postings. This blog was created to use in my public relations courses to help my students prepare to blog and learn how to respond to others in a virtual yet professional manner.

Wednesday, March 12, 2008

Introducing a fee for your nonprofit service.

So rather than having class this week, I wanted to pose a couple of questions that I'd like each of you to post your own answer to the original question and respond to others.

I think we can all easily see how strategic communications can help us advance our nonprofit interests and organizations. But one of the key distinctions between marketing and public relations involves price. For the arts and culture subsector, fees aren't viewed negatively at all. Even religious organizations "expect" tithings.

As we read this week about diversification of revenues, what happens when your social service nonprofit has to charge for its services to stay afloat? Say fundraising and government cutbacks have resulted in your organization needing to plan ahead for the future by finding new outlets for revenue. How would you decide (and convince your organization) to start charging a fee for services? How would you decide how much to charge? Would you try to spin-off a money-making entity (like the construction company from the Westside v. Eastside Community Center example from a few weeks ago)?

Note: Before you say, "Oh, we would never do that!" Just keep in mind the other option is closing and not being able to offer the services at all.

posted by Richard @ 4:18 PM  

10 Comments:

  • At 10:20 PM, March 12, 2008, Anonymous Anonymous said…

    Charging a fee for the non-profit’s service might decrease those that are able to benefit from the NPO, but it will be better than closing and not being able to help anyone at all. It’s a risk analysis, and I think helping some if better than none.

    Maybe if the organization was able to voice it’s dilemma to the public it serves, people’s response might be able to be swayed. If the organization was able to mention that this fee is just so the organization can stay alive that it is still not making a profit, people will probably be more understanding. Lets say it is a health service, if you create a chart that shows that it costs $5 to buy the flu shot and that your non-profit is only charging $5 for the shot at their organization instead of the normal free shot they might see they they are still benefiting. And if you compare it to the $20 flu shot at the doctor plus the doctor’s fee, then people will realize that they are still being offered a service at a reduced rate and will probably still be inclined to stay with the non-profit. Or even in the shots are $7 and $2 is used for administration costs for the NPO. I think the main importance is to convey to the public this sudden need for change and the need of a fee. If it is just implemented without any sort of explanation, they might think they are being slighted.

    Maybe in conjunction with the fee there can be more emphasis on a donation box. When people are finished receiving their service, maybe staff from the organization can explain the need for funds to remain afloat and those that are able to give might be able to give to help those that can’t, and it might be able to balance each other out.

    There might also be the possibility of offering a reward system. If you convey to the public that the organization is having financial problems and those that are able to volunteer or provide some help might be able to continue to receive a free service if they able to volunteer 5 hours during the week.

    These ideas all provide some change but some creative changes. And again I think the main point in any change is to make the public aware of the reasons for change and usually people can be more understanding!!! Hopefully!!

     

  • At 5:36 PM, March 15, 2008, Blogger Brittney Mills said…

    In convincing the organization that we need to make a change I would start by getting all the facts together. For example, how much money we are losing, how long it will take for us to run out of money, the number of people (or whatever) that we will have to stop serving, etc. Oh, and how long it will be for the employee until they lose their job…nothing like a little motivation. Next, I would compile a list of possible options to bring in more money from most appealing to least appealing. Once the facts of doom and the list of hope are in a presentable form I would then present them to the appropriate audience, whoever that might be in the org. During this presentation I would concentrate on pushing to create a “spin-off money-making entity.” I believe that it is very possible that an NPO can “mimic private enterprise AND perform their social missions,” so I would be sure to come up with multiple spin-off ideas. For example, I worked for the Humane Society at one point and if they were needing funding I would suggest a dog training spin-off entity. The work would come from volunteers that were either dog trainers or trained by dog trainers to be trainers (that’s complicated) and then participants would pay a fee to participate in the classes. And of course it would have to just be for dogs because the shelter I worked for had horse stables as well…riding lessons could be an option. Basically any “spin-off money-making entity” should consider the NPO’s mission along with the skills that they currently have with volunteers or employees.
    In my opinion, anyone who supports or works for the organization will not be content with change unless they know the facts, you make it personal and they have to choose between either a positive or negative change (which they would have to do in this case). With that, I think that everyone will choose the positive change if at all possible.

     

  • At 2:40 PM, March 17, 2008, Blogger abwilli3 said…

    I think the NPO should educate their employees first so they can easily explain it to customers. I also think it is ok for NPOs to charge a fee as long as it is reasonable and a reduced fee compared to corporations. The NPO should research the prices of similar services or products and then decide a price range. The organizations could involve stakeholders (internal and external) to receive feedback. It is essential for every type of stakeholder meet together to understand both sides of the situation (why they have to charge a fee and what price the public is willing to pay). I think much consideration needs to take place before a price is set. If the NPO sets a price and it changes later, people will question the quality, assume the organization is " out to get their money," etc.

     

  • At 9:06 PM, March 17, 2008, Anonymous Anonymous said…

    I think charging fees is not completely unconventional. Most npos that I know of charge a nominal fee for services.

    I believe people put more value into something they have to pay for. Depending on what kind of service we provide, I do not think a fee will negatively impact our constituents.

    If I were a charitable organization, I would consider a sliding fee scale based on income level and need for the service. I certainly do not want to lose or shun the very unfortunate away from my services. I am here to serve them as well.

    I also believe you have to have complete buy in from your board and employees. Just keeping them involved in the conversation builds credibility and encourages them to be thoughtful and supportive through a difficult process.

    I would also incorporate this into my fund raising strategy. I would set a fee structure, take it to my major donors with facts and figures about why I have to do this, ask for their support, both financially and emotionally, and then work it through the rest of our contributors base.

    If done smartly, it could yield new services for our constituents or more access for those that cannot at this time.

     

  • At 9:22 PM, March 17, 2008, Blogger Emily Burnett said…

    If an organization must charge a fee, they should:
    1- make sure the public knows about the fee in advance so they are not surprised and explain what the public will receive in return for the fee so they feel it is worth the money
    2- determine what would be a fair amount to charge by thinking about the worth of the service they are charging for, what similar organizations charge, how much they need to actually make a difference in their budget

     

  • At 10:13 PM, March 17, 2008, Blogger Lei said…

    In order to convince our clients that it is worth the price for our service, I think our organization needs to find a way to add new, affordable but valuable features on our current service. So in addition to my own research about the financial situation of the organization, I would conduct a small scale research among present customers about their thoughts of introducing a fee, and what they hope to get out of this charged service.

    I agree with Emily that the organization should inform their customer of the fee so that people are not surprised. For this I would organize a small campaign to raise client's awareness on the coming fee, and inform them of what additional values they would receive from it. I also agree with Brittney that a nonprofit can have forprofit functions and still works well for its original cause. In fact, this is how a lot of nonprofit organizations in China operate; they run their own "business" so that they don't entirely depend on governmental funding. So I hope to use the fee that we collect and funding from other sources to create a money-making entity, which also provides job opportunities to the community.

     

  • At 10:25 PM, March 17, 2008, Blogger Jessica said…

    I think in some cases it is very acceptable to charge members/clients a fee, while others it would be very inappropriate. For example, if I have a non-profit association geared toward the preservation of the arts within a community, it would be much easier to charge fees: members or donors of the association would more than likely be upper-middle class art lovers, well educated, with fairly high paying jobs. These people would be able to afford a small fee, and would likely be willing to pay. Organizations that have a social service focus, like AIDS prevention or subsidized healthcare, should not charge members/clients. People involved with this organization would probably be lower income, and therefore unable to afford even the smallest fee. This would also decrease the number of people coming in for the service, thus decreasing client and public interest, etc.

    Perhaps in the latter situation the organization could create some kind of separate product like a yearly magazine, discount coupons etc that could be geared toward the donors, rather than the members/clients. Then, in order to receive this other thing, the donors would have to sign up for yearly subscription, along with hopefully donating. But then we run into the cost of creating such an extra thing.

    I agree, though, that it is better to charge in the end then close the organization down altogether. That would be a burden to those seeking the services and also to the community.

     

  • At 11:30 PM, March 17, 2008, Blogger cfriedman22 said…

    I would say that I agree with those who said it is important to educate employees and clients about why the fee is happening. I also agree that it is prudent to do some research on how much would be needed to avoid a price increase within the first couple of years. It seems like no one has addressed events that NPO's have and how they could make more money that way. Entry fees could be raised incrementally and many different avenues could be explored to raise money in conjunction with events. Maybe the Humane Society holds a dog show in a local park and its a dollar to vote this year or 5$ to enter your pet as opposed to 3$ last year. I don't think people would object to fees if they were reasonable and meant the organization could stay open. Some people would have trouble, but I think a majority of people would understand. Again, it depends on the type of organization as well.

     

  • At 11:41 AM, March 19, 2008, Blogger Jon Weiner said…

    In response to what a lot of people before me have said, I would go the education and fact gathering route as well. Assuming that the organization is filling a void in the local community that needs filling, a minimal fee might cut back on the potential number of people the organization might help, but is certainly a better option than completely going under and serving nobody.

    In a case like this, especially if the organization is a credible staple of the community it serves, the media can be a big ally. The risk here is that the message of only "This Company is Now Charging a Fee for Services that Were Free for All of Us Before" gets out without explaining the other side of the story.

    Before any word of the fee increase gets out, all employees and company leaders need to understand exactly why the minimal fee is being charged (and I would make sure that it is a very minimal fee - going from free to any cost is going to be enough of a shock as it is). What costs is the fee covering and why is this the absolute last resort for the organization in order to keep providing a high level of service?

    If you can get media on your side, saying that "because of a certain situation has come up, this trustworthy and necessary nonprofit now needs to charge this small fee to keep serving us, the absolute minimum it can," I think the community might be more prone to accept it.

    Personally, I would do everything in my power to find a corporate benefactor of some sort before charging a small fee to clients, but if it is a necessity, I would make sure that my employees and volunteers who will be in personal contact with the people who are now paying for what used to be free know exactly why the fee is now being charged.

    If the service is worthwhile, people will be willing to sacrifice a bare minimum payment to keep it there - that is my line of thinking. But, they need to be completely informed of what their payment is helping to preserve and why the change is an absolute necessity. Media can help get this message out, by posing the nonprofit organization as the victim of a change in circumstances rather than writing stories about the poor fella on the corner who can't afford to make the small payment anymore. Its all about maintaing trust ...

    Another key point, the information we tell the public on why the fee is now necessary better be 100 percent correct, or else our organization might not be around too long, fee increases or not.

     

  • At 11:46 PM, March 24, 2008, Blogger SIUchristina said…

    Sorry that I am responding to this so late!
    I think that just because you are a non-profit, serving a low-income population, doesn't mean you should not be able to institute a fee for services that were previously offered for free. I think it's important that you explain to your clients in a language that they will understand (talk TO them, not above them) that your funding decreases have lead you to begin charging.
    It should be at cost/break even. If you can show your clients how little they will be paying in comparison to what they would have to pay elsewhere, they may be willing to pay the minimal fee. They need to understand that you will have to close down, and therefore they will not be able to get the service for free OR at a minimal cost if that happens!
    In terms of creating a money-making entity, I think it would have to be in line with your mission. Perhaps you could study other similar non-profits that have done so to help you determine if it would be a good idea for your organization. It may be a better idea to explore charging a fee before you try to spin-off a money-making entity.

     

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