100: Seth Godin on Nonprofit Strategy

Acclaimed author, marketer, and teacher, Seth Godin, whose mentorship inspired the birth of Whole Whale, joins us for our 100th podcast episode.

While there is more knowledge accessible today than any other time in human history, Godin contends, we’re spending our time watching cat videos instead. (Hey, some of those cat videos are trying to cure lung cancer.) The biggest enemy, beyond competition of failure, is fear, which leads to this inertia that keeps people and organizations stuck in a status quo and afraid to move forward.

Here are 10 highlights of the conversation — plus more in the audio itself.

1. What Seth is interested in right now

Mostly I’m wrestling with how people are stuck in their status quo, afraid to move forward. There’s more teaching and learning available to everyone today than any time in human history, but we’re spending our time watching cat videos instead. And I’m fascinated by our fear of fear, and trying to decode that and hopefully unlock a better future for people.

When you read about extraordinary institutions that have made a big impact on the world, we look at them and say, “Well, that’s impossible, that guy’s a genius.” If I look at the Aravind Eye Hospital in India: They do 250,000 cataract surgeries a year with half the rate of infection that they have in the UK. It’s magic, but it’s not magic. It’s actually kind of obvious when you see how they did it. But too often we say, “Well, I did my 8 surgeries today, I did a good day.” Aravind redefined the standard to be 120 surgeries in a day. I think each of us can think about how to redefine that standard, whatever it is, in our space.

2. Permission Marketing, 20 years later

When GDPR went into effect, all of us got those emails: Your privacy is very important to us, blah blah blah. Well, guess what? If our privacy had been very important, they wouldn’t have passed a law. They passed a law because marketers are selfish, short-term narcissists who are taking every scrap of our attention that they can get their hands on. When I wrote Permission Marketing in 1998, it was a scandal. And it was a scandal because I said that personal and anticipated, relevant messages always do better than spam. Not just when you’re out raising money, but when you’re sending an email to everyone inside your organization. When you’re talking around the dinner table. Talking to people who want to hear what you have to say always works better. It seems super obvious.

But as soon as we made it free to show up in someone’s email box, this sort of asymmetrical API in which people could take your attention without asking, people took it. And when I think about the people in my life who get an instant “Yes” — when they reach out they always get an answer; when they ask me for something, I always say, “Sure” — it’s a very small number. One of the jobs of a nonprofit, when it deals with the outside world, whether it’s the people they serve, their staff, or people they’re raising money from, is to figure out how to earn that “yes” as opposed to cutting through the noise and the clutter every single time.

The fundamental precept is that permission doesn’t belong to you. It’s loaned to you. It’s not your right, it’s something you got as a privilege. You have to treasure it, or it evaporates.

3. Use the Placebo Effect for good

This is a mystery to me. Placebos are the thing that I talk about that gets the least amount of response. If a doctor said to you, “I could sell you knee surgery right now, and it would be painful, and it might get an infection, and it will cost you $5,000 out-of-pocket, or I could just thump up and down on it 3 times and it won’t cost you and it won’t give you an infection,” which would you prefer? I think most of us would thank her and leave without the surgery. But we know that the placebo, that sham knee surgery, actually has the same outcome for various meniscus carriers as real surgery. It makes no sense to me.

What we know when we’re serving people as a nonprofit is that much of what we deliver is the feeling of dignity, of being seen, of sawabona. And that that’s what people are engaged with us for, not what we think of as our intervention. If we think about fundraising, what does someone get when they give you $10,000? They don’t get a brochure, they don’t get a chicken dinner. What they get is a feeling. And that feeling is a placebo, and it’s worth more than $10,000. If it wasn’t, they wouldn’t have given you $10,000.

4. Question what’s worked in the past (especially the galas)

So much of what New York, or New York-style nonprofits do is based on tradition, not effectiveness. If we took a deep breath and zero-based budgeted how we spend our time and effort, we’d understand why we’re here and what we do.

For example: If you insist on having a gala (I hate galas), you’re going to have 35 minutes of everyone in the room’s attention. During those 35 minutes, if you started from scratch, if you could do anything you wanted for those 35 minutes, are you really telling me that the way you did it last year is the optimal way to make a change on the people in the room? Or, think about the waiting room in a tuberculosis ward. If you thought about what the waiting room is for, if you thought about the fact that everyone who’s there has a smartphone, if you think about the fact that a lot of the people there are bringing their families, how would you design that?

So much of what we do isn’t in a serum or in a box of food; it’s in a feeling, it’s in a surrounding, it’s in a narrative. And yet we take it for granted, that’s a given, I’m not allowed to change that. It’s the easiest thing to change. And changing it is transformative. All you’ve got to do is spend an hour at the offices of the American Cancer Society, and go spend an hour at the offices of DoSomething. The difference is profound. And that’s a choice.

5. At a nonprofit, your job is to fail

Get over your fear of fear. I have no problem with fear, fear is fine. But fear of fear? Fear of fear is a waste. The magic of being a nonprofit is this: Our society gives you respect. Our government gives you a tax deduction. What do you have to do in exchange?

What you have to do in exchange is fail.

If we already knew the answer to the problem you’re trying to solve, we would have solved it already. You’re in a lab, it’s an experiment. And good investigators don’t say, “I’m afraid to go to work tomorrow, because I’m going to put something on my yellow pad or in my laboratory that doesn’t work.” That’s your job.

In his best year, Albert Einstein changed the world not once, not twice, but 3 times. But on the way to changing the world 3 times, he filled pad after pad with math that was wrong. That’s your job. Your job is to do these experiments and discover which placebos, which engagements, which interventions, which stories change people more. And if you’re not prepared to fail, then you shouldn’t be at a nonprofit.

6. Status and tension drive donations

One of the things we teach in the marketing seminar is the idea of status and tension. Status and tension are the two things that drive all change in our culture. Status is, Am I moving up or am I moving down? And tension is, What will I do if it turns out that I’m wrong? Those 2 dance around in a circle.

So when I think about giving money to a nonprofit, the reason the Chronicle of Philanthropy chronicles the top donors is because it’s a chart of status. And if you look, almost all the donations are to hospitals and colleges, the two institutions that arguably need our money the least. Why do people give money to colleges and hospitals? The answer is, because you can have your name on a building. That raises your status. So when I think about a nonprofit that wants to raise money, you’ve got to think about who is going to be giving you money, why are they giving you money, what are the totems and the souvenirs of that transaction, how do I make it so that if I don’t give next year, it hurts more than giving does? Because if it hurts more than giving does, I’m gonna give.

7. How to raise $101 million in one night

One particularly crass example that my grandfather gave me: He was in charge of the local fundraising for a religious-type institution in the 50s, and he lived in a fancy neighborhood outside of New York. And the way that fundraising worked was you got 10 peers, in his case judges, lawyers, doctors, around the table. And the first person announces how much he’s giving this year, and then it goes all around the table with each person making the announcement. And then you’re done. Because no one wanted to say a number less than anyone else. And so in one night you raised $150,000 — in 1958 — and then you’re done.

So that’s too crass to work in most settings, but at the Robin Hood Foundation, it raises $101 million in one night.

8. Nonprofit giving is going to change, but not in the way we expect

It’s gonna shift in a way that’s going to disappoint most of the nonprofit industrial complex. My dad ran the United Way in Buffalo one year when I was growing up. And so I saw firsthand the power of payroll deduction. If you gained status from your position in a stable community, like a workplace, payroll deduction makes perfect sense. But, scandals aside, the United Way has been struggling, because payroll deduction and the unionized workforce is fading.

So as our culture becomes more diffused, as people who have resources are traveling in different circles and they’re not worrying about the community chest and moving up in a certain sort of elite circle, it’s going to be harder and harder for nonprofits used to raising money from those circles to raise the money they’re used to.

The other thing that’s going on is the 1% continues to pile up more and more money, and generally they don’t give bigger and bigger amounts of money as they get richer. They think, I’ve given enough. So if someone gets 10 times richer and they don’t give 20 times as much to charity, they’re actually shortchanging themselves and their culture — but I think it’s going to happen more and more.

9. What donor retention can learn from Tinder

I’m not surprised that 80% of the dates are only first dates. If we looked at the data from Tinder, it would be similar. You get almost all the value from a new donation to a new charity because you get the thrill of saying “I’m a philanthropist.” You get the relief of getting rid of the fundraiser. You get the pleasure out of seeing how things are working. But what you bought was hope.

And a year later, someone asks you for money again, and you go, “What? You guys still have that problem? I gave you money to solve that problem.” So giving money the second time feels fundamentally different than giving money the first time.

An example I like to give is the 1969 cover of National Lampoon with the dog on it. And the headline read, “Buy this magazine or we’ll shoot this dog.” And that was pretty funny, because the dog wasn’t actually in danger. But they couldn’t do the same thing next year and say, “Buy this magazine again or we’ll shoot this dog,” because they’ve already done that joke. And the same is typically true of fundraising.

So I think the biggest opportunity is not to double-down on first dates. The biggest opportunity is to realize that you’re never gonna get a second donation if make the same pitch you made for the first donation. The promise of the first donation needs to be, How do I get this person to come on a site visit? How do I get this person to foster a dog? How do I get this person to write some letters for me?

Whatever action they take after the donation, so that they identify with your mission as if it was their own, that’s how you change them.

10. Marketing is an experiment, but it’s not a science

I don’t think it’s a science. I think it’s soft. And I don’t think half your marketing is working. I think showing up gets you something, and then after that, you just want to try and avoid marketing that hurts you. But the number of institutions that have marketing that actually works is pretty small. Being a market driver is different than being market-driven.

People don’t know they want what you have, and so you’re not just announcing that you exist, you are changing them. Almost nobody gets a Suzuki tattoo. A lot of people have a Harley tattoo. So if you’re willing to get a tattoo, then your marketing is working. But if all you do is make a motorcycle, I might not pick you. That’s not marketing, that’s manufacturing.

So if you discover that writing a fundraising pitch with 5-page letters does twice the performance of a 2-page letter, then, yeah, send 5-page letters. That’s a tactic. That’s not marketing. Marketing is the story you tell, the people you serve, the change you’re trying to make. And that is mostly happenstance, accidents that happens when people who are busy focusing on something else have to do something but they’re not sure why.