Economic Blindspot of Nonprofits?

volunteersandeconNonprofits may turn a blind eye to their economic reality. But it’s not where you might expect (funding)—it’s in a different realm entirely. Here I make the argument that economic principles reveal new methods of recruiting skilled volunteers.

  • Focus on the project at hand!
  • Skilled and traditional volunteer projects are different!
  • Use the right tools for the circumstance!

If economics is the study of scarce resources, then it’s no stretch to apply its theories to the volunteer market. Perhaps especially the skilled volunteer market, where 95% of nonprofits report needing enhanced access to skilled volunteers[1]—now that’s scarcity.

Consider that market. There are two market participants (1-volunteers and 2-nonprofits). In the traditional volunteer market, nonprofits offer simple tasks for volunteers to complete, perhaps framing posters. Potentially, any volunteer could frame these posters (I’m invoking Occam’s Razor in this post now, so ignore geography, irrational fears of postage, etc.). Therefore, all volunteers are on equal footing. Similarly, so are other nonprofits’ basic tasks—homework helper, bird-glass collision monitor. Both nonprofits’ opportunities and volunteers would be “perfect substitutes” in the parlance of an economist.

Ok, no scarcity yet, so where’s the economics?

Well, despite being perfect substitutes, opportunities outnumber active volunteers. So the scarcity of volunteers results in an imbalance of supply and demand—which then begets competition on the “demand for volunteers” side. Nonprofits navigate this imbalance by differentiating themselves by cause. In the same way donations of money are solicited principally among existing supporters (think about how low the ROI would be for most nonprofits to buying a billboard), so goes the solicitation of “time donations.” In effect, the market consists of nonprofits, competing[2] for volunteers.

So, although each volunteering opportunity is a perfect substitute (as are all volunteers in this case), we’re left with differentiation solely on individual missions/causes. And the traditional volunteer market functions just fine this way.

A very different market

DifferentMarketNow, let’s examine the skilled (non-traditional) volunteer market. This market has the demand/supply imbalance in common with the traditional volunteer market (if only directionally, given the severity of the imbalance–95% of nonprofits need more skilled volunteers). However, gone are the perfect substitutes across all opportunities and all volunteers. Volunteer A (a real estate lawyer) is qualified for project A (serving on a land conservation panel), but would be lost doing project B (serving as an accounting advisor).

Clearly, this is a very different market structure. A change in the market structure should bear out in a corresponding change in behavior, according to economic theory. Volunteers adhere to the theory. Nonprofits often don’t.

In fact, nonprofits often ignore the new structure, and behave in much the same way as they do in the vastly different traditional volunteer market: they compete on mission/cause.

This competition then subdivides the possible volunteers further. Nonprofits are reaching out to a finite universe of existing and sympathetic supporters (as they do in the traditional volunteer market)—drastically reducing their pool of possible skilled volunteers for their specific project (remember—not perfect substitutes!).

Solicit volunteers based on the project first

ProjectFirstInstead, nonprofits should compete first on the type of project for which they need a volunteer. Then, at their discretion, further differentiate themselves on their mission/cause. This would be in sync with the opportunity-seeking behavior of volunteers in this new market structure. As mentioned before—volunteers do change their behavior based on this new market structure—they have to. In order to find a correct match, they evaluate based on opportunities that match their skillset and, in many cases, skilled volunteers actually have to cut through the noise of cause/mission to discover opportunities!

This is not an easy task. I’ve written about the ingredients for intensive volunteering before.

Instead, nonprofits should invoke their inner economists, evaluate their situations and the markets in which they participate (Where’s the scarcity? Which way does the supply/demand imbalance point? Who are they players? What are the key decision metrics?)—in order to be more effective practitioners. Recruit skill-based volunteers based on their skills! That can be the main selling point! Focus on the project, and use the mission/cause of the organization as a feature not a product!

None of this is to say mission/cause-based solicitation is not a valid pursuit—it most certainly is! Nor is it to say that skilled volunteers don’t care about a nonprofit’s cause—they do! Instead, this is to serve as a reminder that taking a market-based approach to skilled volunteering might require an adjustment to a recruiting strategy.

What do you think? Is a market-based, top-down approach drivel for recruiting volunteers? Let me know your successes/failures in the comments!

[1] Deloitte 2008 IMPACT Survey
[2] Clearly not tooth-and-nail competition, but it is a zero-sum game for the projects. And while I use “competition” to describe it, it’s more a process in which they tap current supporters as volunteers, not actively compete in a volunteer marketplace

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One comment

  1. Reblogged this on Carson Harper and commented:
    This approach to volunteer recruiting, management and retention requires early engagement between program staff and volunteer coordinators.

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