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November 8, 2004

Marketing appeal | An Auburn entrepreneur tries to build her business by focusing on nonprofits

By Sara Donnelly
Candace Sanborn, marketing partner at Encompass Marketing & Design in Auburn, believes she has found the next growth industry in marketing services. Companies in Sanborn's niche market share a few basic characteristics: They tend to have smaller budgets than her other marketing clients, they answer to a board rather than a CEO and the success of their communications campaigns is not measured in dollars and cents but rather by a vague notion called "increased awareness."

Sanborn's special niche market is nonprofits, and she and five other communications companies statewide recently formed a collaborative that will cater exclusively to them. With more nonprofits in Maine competing for less federal and private grant money, Sanborn believes stronger marketing and public relations efforts will help them woo much-needed funding. She and her coalition, called MaineSpring Collaborative, are prepared to come to the rescue.

The MaineSpring Collaborative includes Sanborn's own Encompass Marketing & Design, which specializes in strategic planning and creative design, along with Fletcher Media, a media relations firm in Portland; The Pitman Group in Lewiston, which provides executive coaching; Deximer, a tech company in Bethel known for its "free-range computing" consultants; Innovative Writing Solutions in Machiasport, a grant-writing service; and Gary Friedman & Associates, a Bar Harbor firm that helps nonprofits develop capital campaigns. MaineSpring plans to function as a one-stop-shopping center for nonprofits interested in marketing, development or public relations. The idea is that any one member of the collaborative can refer client projects to specialists within the partnership. Nonprofit clients will receive one bill from the collaborative, which Sanborn says will be operational by Jan. 1.

Sanborn says she sees a demand for communications services in the Maine nonprofit world that outweighs the organizations' relatively slim purses. As a result, she says, the coalition's services will cost roughly 15% to 25% less than rates in the for-profit market (Sanborn estimates hourly rates will range from $50-$85). "While the work we do is discounted, the market is larger, so it's a growth opportunity," she says. "The growth [in the number] of nonprofits has been enormous, not just in Maine but nationally. As a result, we have a lot more groups going after the same funding."

But some in the local nonprofit world don't believe the growth market Sanborn sees is all that dynamic. Many nonprofits in the state with the extra budget for communications needs have hired full-time marketing directors rather than resort to outsourcing; smaller organizations often rely on their boards for specialized help, rather than spend precious cash on marketing services.

At Mission Possible, a teen center in Westbrook that employs seven people, Executive Director Maria Dorn says a member of her advisory board leads a marketing committee that handles all of her agency's communications needs for free. With an annual budget of $200,000, Dorn wouldn't even consider outsourcing to an organization like MaineSpring. "I would never pay for marketing," says Dorn. "It's expensive. Marketing isn't the same as development," for which Dorn says she might hire a consultant. "There are no bells and whistles with [marketing] most places. Most [nonprofits] in Maine are just too small." And, Dorn says, in her experience, most nonprofits think similarly.

Making the sale
Judging by the numbers, though, Sanborn's interest in Maine nonprofits is well founded: According to a 2003 study sponsored in part by the Maine Association of Nonprofits, the percentage of the state's workforce employed by nonprofits is nearly twice the national average. Nearly 12% of workers in Maine (or one in eight employees) work for nonprofits; the national average is a little over seven percent. Only manufacturing and local government jobs rival nonprofits' share of the state workforce. An economic impact study by MANP in 2000, the most recent available, found the expenditures of Maine nonprofits totaled $4.6 billion that year, equal to nearly 13% of Maine's gross state product. The national average is 7.8%.

Sanborn's company, Encompass Marketing, is not new to the nonprofit world. Currently, nonprofits comprise 60% of her client base, a share she hopes will increase to 75% when the collaborative is launched early next year. Sanborn says the idea to collaborate came from a series of conversations with her nonprofit clients, like the Maine Centers for Women, Work, and Community, in which she identified an industry need for comprehensive communications services. "There's no one source available for communications-based services," she says.

And Sanborn is not the only Maine communications businesswoman to identify a local need. Hannah Brazee Gregory of Shoestring Creative Group in Portland stakes her business on the strength of Maine's nonprofit industry. One of only a handful of communications companies in the state catering exclusively to nonprofits ˆ— others include collaborative member Gary Friedman & Associates ˆ— Shoestring provides a range of marketing and communications services to nonprofits in Maine and across the country at a rate Gregory says is 20% to 40% lower than comparable agencies in the for-profit sector. Gregory believes the market for nonprofit communications is strong and getting stronger, but she says communications companies looking to succeed in the business of marketing nonprofits must share something with their clients ˆ— priorities beyond the bottom line.

"We're not afraid of small budgets," says Gregory, who claims one of the biggest challenges to working with nonprofits is not affording the work but finding it. Nonprofits "tend to forget how meaningful their work is, how important their stories are," she says. "The challenge is to get people in the organization to understand the value of marketing. Like, do we spend $20,000 on buying a new piece of medical equipment or $20,000 on marketing that can eventually get us $50,000? A lot of it is educating nonprofits to understand that investment."

Audrey Alvarado, executive director of the Washington, D.C.-based National Council of Nonprofit Associations, says nonprofits nationwide, including the NCNA, are learning they must become more comfortable with marketing and public relations to survive in a competitive funding climate. The NCNA is even taking its own advice; it recently created two staff communications positions to better market itself. While the council hasn't conducted any studies of members' marketing strategies, Alvarado says she has noticed increased interest in the council's nationwide marketing trainings.

"The [MaineSpring] Collaborative is probably an indicator of things to come," says Alvarado. "Many nonprofits are going to have to distinguish themselves in a market of potential donors."

Outside perspective
Alvarado says whether the nonprofit chooses to outsource or wrangle with communications strategy in-house depends on the agency, although she's seen plenty try to solve the marketing challenge at home. "Anecdotally," she says, "I have seen more members attach 'communications' to job titles" in recent years.

Sanborn is hoping Maine's medium to large nonprofits instead will look to the collaborative for their communications needs; organizations of that size already make up much of Encompass Marketing's nonprofit client base, she says. These companies, which Sanborn estimates have an average annual budget of $2 million-$3 million, set aside about $20,000 a year for communications services.

To help get the word out, each of the six members of MaineSpring has agreed to add the collaborative's logo and tagline to its individual business cards and ads. A series of in-house workshops for nonprofits on communications and marketing will be offered to promote the collaborative during its early days, and Sanborn plans to sponsor programming on Maine Public Radio to gain some visibility.

But Scott Schnapp, director of MANP, wonders if the state's medium to large nonprofits won't try to solve their communications needs in-house. Schnapp says that, while outsourcing is not uncommon for smaller nonprofits, many of the medium to large nonprofits (those employing more than 10 people) have added in-house communications directors over the past few years specifically to avoid costly outsourcing. (See "The in-house solution," this page.) "Most [small] nonprofits have a general skill base, so outsourcing with professionals in sub-areas to me makes perfect sense," says Schnapp, although he says nonprofits of all sizes are training employees in marketing. According to Schnapp, marketing is one of the most popular training sessions offered by MANP, which represents more than 500 nonprofits in the state.

"The reality is nonprofits are primarily funded by the government or private philanthropists and both areas are either static or going downhill," Schnapp says. "So what nonprofits are doing is looking at their income and trying to even out what they're losing by building their own internal capacity."

Schnapp says his experience with Maine nonprofits is that they'll try to manage communications in-house unless there's a big project ˆ— such as a capital campaign or a major fundraising event ˆ— they believe warrants the cost of outsourcing. "It's a typical small-business approach, where you try to keep the overhead low but you budget money for specific projects as needed," he says.

Gary Friedman of Gary Friedman & Associates believes his specialized services, and those of the five other companies in the MaineSpring Collaborative, will provide nonprofits with a level of expertise that will warrant the extra expense. Friedman, who specializes in developing capital campaigns for clients including the Southwest Harbor Library and the Maine Appalachian Trail Land Trust, says he joined the collaborative in hopes of receiving referrals to nonprofits he might not otherwise come in contact with. He believes professional communications companies offer nonprofits a fresh perspective many don't get from their in-house sources.

"Nonprofits are much more sophisticated than they were 12 years ago" ˆ— when he founded the firm ˆ— "but what they still lack is an ability to look at their situation from an outside perspective and to really evaluate where they need to apply their strengths and where they have to make up for deficiencies," he says. "That's where I think the collaborative can help."

MaineSpring Collaborative

Founder: Candace Sanborn

Founded: November 2004

Members: Encompass Marketing & Design, Auburn; Fletcher Media, Portland; the Pitman Group, Lewiston; Deximer, Bethel; Innovative Writing Solutions, Machiasport; Gary Friedman & Associates, Bar Harbor

Services: A range of specialized communications services for nonprofits, including grant writing, fundraising, marketing and public relations

Projected number of clients: 10-15 in first year

Contact: Candace Sanborn at Encompass Marketing & Design

755-9445

www.mainespring.net

The in-house solution

For more than a quarter century, Portland-based Youth Alternatives took a laissez faire marketing approach, employing a patchwork strategy to promote its work with children and families. In 2000, this changed when the organization decided to enlist Kane Loukas, the organization's chief operations officer, to supervise the director of communications, who previously had reported to the agency's president. "It was being piecemealed together," he says of the organization's marketing effort. "We were only getting our name out there when we needed to raise money. In fact, we didn't even always know what was being sent out. If people were sending out things to advertise their program or event, we didn't have any consistency on what invitations or letters looked like."

According to representatives from the National Council of Nonprofit Associations in Washington, D.C., many nonprofits have for years juggled marketing strategies in-house, with staff members ˆ— often more than one ˆ— occasionally wearing the marketing hat but not specializing. The result, as in Youth Alternatives' case, is an inconsistent public presentation. "We have not, as a sector, put great awareness to the value of getting our name out there," says Quitrina Diaz, recently hired at the NCNA in the new position of membership and communications associate. "But now we're seeing that [attitude] alone is not adding to our competitiveness."

In response to what the NCNA perceives as a growing need for marketing training, the group has encouraged each of its 50 state chapters to provide marketing seminars to local nonprofits. The communications challenge also has been one the NCNA has wrestled with as an agency. Along with hiring Diaz and another communications specialist full-time, the NCNA recently enlisted a marketing firm to help develop its brand.

At Youth Alternatives, Loukas has helped his nonprofit unify its brand and clarify its marketing strategy. For example, all of the printed material includes the same logo, design and colors. "Now nothing goes out without looking close to the same," he says.

Loukas wonders whether smaller nonprofits that can't afford a full-time marketing strategist will be able to outsource projects to firms like the members of the MaineSpring Collaborative, a network of public relations, marketing and development companies geared toward nonprofits.

"Because [Youth Alternatives] has grown" ˆ— from roughly 70 employees in 1995 to 175 today ˆ— "we had more administrative money to pay what you need to pay someone to do this job," Loukas says. "We really need [the same position] at Mission Possible" ˆ— a Westbrook nonprofit for which he's a board member ˆ— "but we can't afford it. The thing is, can we afford the collaborative?"

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