Who is the Customer in a Non-Profit Organization?

Our Yellow Belt course includes an assignment that challenges students to think about improving the processes that serve their customers.  One of my Yellow Belt students works for a non-profit foundation that raises funds that are used for providing scholarships to students and grants to educators.  She recently submitted the following statement:

“My organization’s customers are divided into two distinct constituencies – external (customers) being donors, and educators and students as the internal customers.”

I responded as follows: “In the future when you think about improving the processes in your organization, you need to think in two directions.  Your downstream external customers are the students and educators who receive scholarships, grants and supplies.  These are analogous to customers who pay for goods and services in a for-profit company.  This is not where your revenue comes from; however, you do need to focus on improving how you meet their needs. 

Your donors are upstream from your organization and provide the funds that you need to serve your downstream customers.  Your donors are analogous to people who invest funds in a for-profit company.  Investors and owners in a for-profit company expect a financial return on their investment.  Neither the donors nor the recipients of funds are internal customers.”

In the context of discussing how her organization focuses on the needs of their customers, the student focused on how donors are recognized with an annual program book.  She stated:

 “While a very large emphasis in our organization is placed on the correct spelling of an individual’s name, and rightly so when they are philanthropists, there seems to be less attention paid to the quality of the piece in which these names/logos are displayed. In other words, if the written “content” of a program book is poorly written or if every sponsor logo is displayed at the same size regardless of sponsorship contribution level, prospective donors are not as likely to invest their philanthropic funds with us.”

I responded as follows: “Your donors are not expecting a financial return back to themselves, but they do have expectations.  You need to think far beyond simply recognizing them for giving you money by creating a slick program book that spells their name correctly.  You need to focus on meeting the expectations that the donors had when they gave you money.

What are their expectations as far as how their money will be used?  As far as how much gets spent on administrative expense versus how much money reaches the recipients?  As far as what is accomplished with the grant money?  What benefits to society are generated by the money that you give away?  Simply increasing how much comes in and subsequently gets given away is not enough.  What benefit is being generated from these funds?”

Your comments or questions about this article are welcome, as are suggestions for future articles.  Feel free to contact me by email at roger@keyperformance.com.

About the author:  Mr. Roger C. Ellis is an industrial engineer by training and profession.  He is a Six Sigma Master Black Belt with over 50 years of business experience in a wide range of fields.  Mr. Ellis develops and instructs Six Sigma professional certification courses for Key Performance LLC.   For a more detailed biography, please refer to www.keyperformance.com