Why are nonprofits missing out?
According to New Philanthropy Capital, private companies are three times more successful at winning CCG contracts than non-profit organisations.
And despite the fact that many charities know the locality and the needs better, and can often demonstrate better outcomes than their commercial counterparts, my guess is this ratio is at least as high, if not higher, across all public sector contracting.
So why are non-profits consistently losing out to commercial organisations when it comes to winning contracts?
Three reasons:
- Flawed procurement processes that advantage larger, financially stronger organisations
- Low awareness of what charities and social enterprises can offer, and
- Weak relationships between non-profits and commissioners
The received wisdom within the sector is that the answer to all three of these issues is “partnerships”. Unfortunately, that received wisdom is completely wrong. Commercial organisations are not winning in three quarters of the market by creating partnerships, they are winning by seeing commissioners as valuable customers, and dedicating skilled people to developing and managing relationships with them.
Partnering with other providers can help win contracts, but it’s certainly no panacea, and the refrain that “commissioners should see the charity sector as partners” will, for most non-profit organisations, be a perennial pipe-dream.
What the most successful commercial organisations understand is this: your customers will see you as a partner when, and only when, you can regularly and repeatedly provide them with unique value, across a range of their most pressing issues. And you can only do that if you take the time to provoke, listen, and ask about what those most pressing issues are, and offer compelling and credible ways to solve them.
Commissioners, like any other customers, don’t want to have their “awareness raised” about all the things you can do, and the majority feel no compunction to “understand the charity landscape”. They want you to listen; to help them frame their problems in a way that they can be solved; and to offer them solutions that they can believe in. Get the relationship right and awareness won’t be an issue, and you’ll find procurement process barriers will quickly fall away.
BOTTOM LINE: Despite their disadvantages in local awareness, and in many cases technical expertise, commercial organisations are winning the vast majority of public sector contracts. Why? Because they have sales teams that understand how to build relationships and navigate the buying process, pure and simple.
If you want your strengths to shine through, that’s the playing field you need to level.