Do visitors know that museums and other cultural organizations are nonprofits? Data says: Nope. Here is what really matters to audiences about your organization.
This week’s Fast Facts video covers a big misconception that folks working within cultural organizations (often unknowingly) promulgate: That being a nonprofit is a key differentiating factor to their audiences. As it turns out, data suggest that your organization’s tax status is relatively unknown among visitors and non-visitors alike.
This video explores the data. Not a video person? (That’s cool. You do you.) Here is what you need to know:
1) The majority of people in the US do NOT think cultural organizations are nonprofits
Check out this data from IMPACTS that uncovers the percentage of the US adult population that believes that cultural organizations such as museums (e.g. art, science, history), zoos, performing arts centers, botanic gardens, and aquariums are nonprofit organizations. Like much of the non-proprietary data that I am able to share on Know Your Own Bone, the findings informing this analysis come from the ongoing National Awareness, Attitudes, and Usage Study of 98,000 adults (and counting).
The findings may be a tad alarming to some. I have personally heard the, “But we are a nonprofit!” excuse for not keeping up with financial realities (among other things) more times than I can count. This data flips the popular excuse for lack of evolution on its head. Not only are most non-visitors to these institutions unaware that cultural organizations are nonprofit organizations, but over half of the people who do visit these types of organizations are unaware that they are nonprofit organizations.
Take a look at history museums, for instance. Only 47.2% of visitors to history museums know that they are nonprofit organizations. The other 52.8% of visitors (over half) are unaware that they are reliant on philanthropic support: They believe that the organizations are for-profit entities or government-funded operations that are otherwise provided for by their taxes.
Regardless of the reason for the misperceptions, more than half of visitors to ALL cultural organizations do not believe that they play any role in keeping these organizations healthy or alive after walking in the door. Beyond paying admission (to what they consider a business) or paying their taxes (to an organization with free admission because their taxes fund a government-operated entity), the majority of visitors risk believing that there is no further need for their support.
2) The market is sector agnostic
The misconception that these types of cultural organizations do not need support as nonprofit organizations is a problem – but how big of a problem? We’ve created a situation wherein people think admission to cultural organizations is largely either a prepaid entitlement (thanks to taxes) or a fee paid to a for-profit company. Admission to most cultural organizations is neither of these things.
Tied to the misconceptions regarding the need to support cultural organizations is another market-based truth: Today’s audiences are generally sector agnostic. This means that they don’t much care about an organization’s tax status. They care about how well your company or organization does what it claims to be expert at doing. Loyal Know Your Own Bone readers (you guys rock) know that I have shared this nonprofit recognition data before in a post about how, today, for-profit and nonprofit organizations compete against one another. At IMPACTS, we continue to find evidence supporting this fact nearly every day.
Let’s be honest: Market confusion makes sense in the case of many nonprofit, visitor-serving organizations. We are nonprofit, but our operations often follow a traditional economic utility curve. In other words, unlike giving to a charity that supports the homeless, people are “paying” for the personal experience of visiting our organizations. But unlike SeaWorld (for instance), those revenues cycle exclusively back into our social missions to educate and inspire – because that is what 501(c)3 organizations do. And that brings up another potential point of confusion: Disney World, SeaWorld, and Universal Studios are primarily for-profit companies (with nonprofit “arms”) – and SeaWorld hits the “We’re mission-driven” button hard (or rather, it tries to). It makes sense that the market might give up on differentiating visitor-serving nonprofits from for-profits! And until recently, most nonprofit, visitor-serving organizations were marketing themselves primarily as attractions – NOT mission-driven organizations. Some laggard nonprofit visitor-serving organizations still do.
3) The tax status of cultural organizations is not their differentiating factor
So far, this is looking bad. Our audiences largely do not know that we rely on their support in order to stay alive and they are sector agnostic so they, in a sense, don’t even care that we are nonprofit. So what do our audiences care about? How well we carry out our missions.
But nonprofits do not “own” social good, and that is a big reason for evidence of the market’s sector agnosticism. Corporate social responsibility is a necessity for companies today. There are countless articles on the importance of for-profit companies “doing good.” It is a key tactic for gaining more customers. And that is interesting because there are still some cultural organizations that do this weird, outdated thing where they try to overlook their social advantage and exclusively promulgate “Visit us today!” messages (and even offer discounts that devalue their brand and cause even more sector confusion for cultural organizations).
Being good at your mission is good business. Data demonstrate that organizations highlighting their missions outperform organizations marketing primarily as attractions. Perhaps, in all of our “But we are a nonprofit” excuse-making, we missed the true differentiator that has provided us that tax status in the first place: Our bottom line of making a difference.
Our key differentiator is not our tax status, but that our dedication to making a difference is embedded in the very structure of how we operate. There is a thought that we need to run more like for-profit companies (and in some ways we do, but the blanket directive is an ignorant miss). But look around. For-profit companies are actually trying to be more like us in the sense that they want audiences to know that they stand for something that makes the world a better place.
4) Communicating nonprofit status is critical in order to make the case for support (but it is a secondary communications goal)
When people do not know that we are nonprofit organizations, it is a lot more difficult to secure members and donors. For that reason, we do need to better communicate our need for support. But perhaps before we ask for support, we need to do a better job showing the world what supporting us means. In other words, the lack of knowledge about our need for support may be indicative of a long-term communication and programmatic failure.
We educate. We inspire. We connect. We conserve. We teach. We change the world, one mind at a time. But perhaps the misconception about the need for support stems from our own communications focused not around how we change the world, but how we do not change the world: “Visit!” “Discount!” “New exhibit!” Those messages are important, but are they most important? After all, can we blame the market for not knowing that we are nonprofit organizations if we bury the missions and ideals that are the foundation for our existence in more commercial messages and programs?
Fewer than half of U.S. audiences are aware of the nonprofit status of cultural organizations. That is a big deal because it makes it harder to secure support. But it is also a good reminder that audiences are increasingly sector-agnostic, and our competitive advantage may not be our tax status, but what our tax status means: That we are here to change the world.