Having Two Customers
I wrote recently about the importance of your relationships with your customers and how, if you can continue to refine your understanding of who they are and what they care about, you can secure the success of your organisation in the long term.
There is an added complexity to this for non-profits and social enterprises.
That's because any organisation that receives grant funding has two types of customer.
They have the customers who receive their work - who are traditionally called 'beneficiaries' (although not everyone likes this term). And they have the customers who pay for their work1, generally known as 'funders'.
This creates additional challenges for leaders in these organisations, who have to not only make sure that these two sets of relationships are maintained, and that an understanding of both types of customer’s needs is spread through the organisation - but also that the competing interests of these two groups are correctly balanced.
This is a complex picture to be across, and it falls to the CEO in particular, and the leadership team more generally, to maintain this.
"Your job is to see the whole picture. To step back and see the whole picture. Because if you're not doing that, then no one's doing that."
- Anonymous charity CEO quoted in ACEVO’s The Chief Executive’s First 100 Days
But, as I so often say (here and to clients!), it is not enough just to have this perspective - it is your job to spread this into the team. To challenge your fundraising team to think about beneficiaries, and your delivery team to understand the perspective of funders.
In the end, what must matter most is the beneficiaries. Funder needs can seem more urgent, because our ability to have money (which keeps us alive as an organisation) depends on them. But our reason for existing is to serve our beneficiaries, and if we are not being genuinely useful to them, there is no point in us continuing to make money.
PS: Balancing beneficiaries and funders is similar to balancing value and impact - but these do not map onto each other 1:1.
Both groups of customers should receive value. We need to do things that funders care about enough to pay for (IE to generate “value”). We also need to do the same for beneficiaries, even if their only form of payment is their time.
Impact (progress against our mission) is ultimately an internal concern. It can involve our customers (eg via our theory of change) but we are the ones who care about it.
More accurately: Work is delivered to beneficiaries at below its true financial cost, and funders make up the shortfall (which could be the whole cost if it is provided to beneficiaries free of charge).