nonprofit consulting zone blog

Defining “B2N”

When I say “business-to-business,” chances are you know what I mean. In case you don’t (and there’s no shame in a bit of education), it’s when you, a business, sell your services to another business. In contrast, there’s “business to consumer,” where you sell your services to an end-user. For example, a retail business is a “business to consumer” enterprise. “Business to consumer” is often called “B2C” and “business to business” is known as “B2B.”
Are you a B2B business? You’re selling your services to another organizational entity, in effect, a business, right? Still, there’s something not quite the same. Yes, you’re selling to a “business,” but it’s not a typical business organization. It’s a nonprofit, which often looks like a business from the outside, has many of the same functions as a business on the inside, but whose mission and purpose is very different than the local drugstore down the street, or accounting firm next door.

That’s why I think it’s important to come up with a new identity for what we do: “B2N.” B2N, or “business-to-nonprofit” better describes what we do because our clients don’t behave in ways that are typical of most businesses. They have a “double bottom line.” On one hand, they have to balance their books. At least breaking even or showing a profit, or as it’s known in the nonprofit world, a surplus, is essential for financial viability. That’s not too much different than a business. However, it’s that second bottom line, the mission, which turns everything on its head. An organization’s mission will even affect its other bottom line, its finances. What may seem like a decision to question in a business might be perfectly rational in a nonprofit. For example, how many of us would willingly lose money when servicing our customers? Yet that’s what happens every day in the nonprofit sector, because the customers are the clients and the clients are the purpose of their mission.

To understand this, it’s important to “follow the money.” In a business, if you have a product to sell. If your client wants your product, you give the product to the client and the client gives you money. Transaction done. It is a bilateral relationship.

In a nonprofit, this becomes more complicated. You have a mission. Your mission is to provide a service. You give that service either free of charge or at a reduced price to your mission recipient. Then you turn to your donor and say “can you pay for that?” It is this trilateral relationship that makes nonprofits unique. If that focus on mission that makes everything else happen.

Of course, not all nonprofits raise money through charitable gifts. Many get their revenue exclusively from government grants, and others operate similar to businesses, using a fee-for-service model.

Regardless of the revenue source, what remains the same in any nonprofit is a dedication to mission over profits. That’s why it’s important for us to reconsider “B2B” and think of it as “B2N.”

Published by

Matt Hugg

Matt Hugg is the president of Nonprofit.Courses.

See his bio here.