14 Mar 2005  Research & Ideas

The Tricky Business of Nonprofit Brands

Coca-Cola, move over. Many of the world's best-known brands belong to nonprofits, but the brand management issues these organizations face can be quite different. A conversation with professor John A. Quelch and collaborator Nathalie Laidler-Kylander.

 

Are brand management issues faced by a powerful for-profit company such as Toyota the same as those navigated by an international non-government organization (NGO) such as the Red Cross?

Yes and no. In their new book, The New Global Brands: Managing Non-Government Organizations in the 21st Century, authors John A. Quelch and Nathalie Laidler-Kylander see branding issues that are shared by many international entities, but also recognize that NGOs have missions and constituencies that add to the complexity of brand management.

They look at twelve in-depth case studies of NGOs including the International Red Cross, UNICEF, Médecins Sans Frontières, Oxfam, and Amnesty International. Topics include managing growth, performance assessment, mission and strategy development, and most of all, understanding, developing, and communicating the brand.

As the authors put it, "All of these organizations face a similar set of challenging questions as they enter the twenty-first century. How should they respond to the increasing number of complex emergencies? To what extent should they cooperate with national governments and the private sector if doing so will advance their missions? How should they balance operational activities and advocacy efforts? How can they better measure performance against their missions and improve accountability to stakeholders?"

The authors discuss their book in the following Q&A. Quelch is the Senior Associate Dean for International Development at Harvard Business School; Laidler-Kylander (HBS MBA '92) is a PhD candidate at the Fletcher School of Law and Diplomacy at Tufts University.

Manda Salls: Any organization—profit or nonprofit— faces challenges when it goes global. What are some of the unique challenges nonprofits face? Are there best practices that global nonprofits should adhere to when creating their international brand?

John Quelch and Nathalie Laidler-Kylander: Many of the same challenges and global brand management approaches apply equally to for-profit and nonprofit brands.

One of the additional challenges nonprofit brands face is that they must appeal to a broader array of stakeholders. Nonprofit brands have a dual objective: to enhance fundraising and to ensure the implementation of the organization's mission. In addition, nonprofit organizations tend to be more decentralized, with little formal hierarchy. This can mean that implementing activities that protect the brand or attempting to update or modify the brand often meets with resistance internally. In some cases, highly decentralized organizations such as Médecins Sans Frontièrs [also known as Doctors without Borders] depend on their brand to provide organization cohesion. The brand is the glue holding the components of the global organization together.

Q: Some NGO brands, such as the Red Cross, are recognized worldwide. When a humanitarian crisis such as the recent Asian tsunami strikes, donors know almost automatically to send money. How do brands establish this incredible level of trust?

A: Trust is essential for nonprofits. The purchasers or donors are not the ones receiving or benefiting from the nonprofit organization's services and programs. Since the purchasers cannot directly evaluate the quality of these services and programs, they rely on the reputation of the nonprofit and the belief they have that the organization is doing, and will continue to do, good work.

Edelman PR tracks consumer trust in global brands and has found that many global NGOs such as Amnesty International and the WWF score higher than major global corporations such as Microsoft or Coca-Cola, particularly in Europe. Many NGOs, by the very nature of the work they do and the dedication of their staff and volunteers, attract the respect and admiration of many individuals. Nonprofits are effective at creating emotional connections with consumers because of the very nature of their mission and objectives. People feel good about contributing to and participating in helping those in need. Nonprofits provide a channel for them to do so.

Q: Is there a downside to such widespread recognition?

A: The downside to the importance of trust for NGOs is that it only takes one or two mistakes to cast doubt on a nonprofit organization. It takes many years and a lot of hard work to reestablish the credibility of nonprofit organizations and rebuild consumer trust.

Nonprofits run the risk of not extracting the full financial value from partnerships and co-branding opportunities that they deserve.

Two examples come to mind, the American Red Cross's use of 9/11 funds and the United Way executive scandals. Both of these events eroded consumer trust in these organizations and had a direct impact on their ability to raise funds and implement their missions. In the case of the Red Cross, the negative impact extended to other Red Cross organizations located in Europe that registered a decline in donations even though they had been in no way implicated.

Q: You cite a study by Interbrand that found that Habitat for Humanity has the same brand value as Starbucks. How important is it for NGOs to know what their brand valuation is, and how should they use this information?

A: It is important for any organization, for-profit or nonprofit, to know the value of their brand so that they can allocate adequate resources to nurturing, building, and protecting it. For many nonprofit organizations and consumer goods companies, their brand is, along with their people, the most important asset they have. Tracking the value of that asset and understanding what activities increase or decrease asset value is key to managing it effectively. As traditional sources of funding erode for nonprofits, an increasing number are turning to the private sector for funding. Businesses are also increasingly searching for opportunities to form partnerships and co-branding programs with high-profile nonprofits. If nonprofits are unaware of the value of their brand, they run the risk of not extracting the full financial value from these partnerships and co-branding opportunities that they deserve.

Q: Do you have advice for aligning brand with mission? In particular, your case on Habitat for Humanity shows brand recognition is high, yet there seems to be some ambivalence about branding the organization with its Christian, Jesus-centered message. What can an NGO do when what resonates with potential donors or volunteers differs from what the organization's leaders believe?

A: Aligning the mission and brand is critical. However, as the needs in the world change, nonprofit activities and missions can and do evolve to meet these changing needs and challenges. When the mission and brand image (as perceived in the market) are no longer in synch, a re-branding process or revitalization may be needed.

It is important for nonprofits to clearly understand and target their donors and not attempt to be all things to all people. By aligning the current mission with their target donors, nonprofits can create a brand identity that both more accurately reflects the organization's activities and mission, and resonates with their target donors and or volunteers.

Q: Recent humanitarian crises—the Asian tsunami, conflicts in Afghanistan, and the war in Iraq—are high-profile opportunities for NGOs. Is this a time to capitalize on strengths, or just to pitch in and be seen? What pitfalls do these organizations face when the world is watching?

A: It is always good for NGOs to be seen working in the field, actively and effectively helping in the middle of a humanitarian crisis. In addition to the media coverage that results in increased donations, the NGO brand is strengthened and the needs of the individuals affected by the crisis are clarified.

In many humanitarian crises, however, there may be a lack of coordination between NGOs resulting in duplication and inefficiencies, which, if highlighted by the media, may backlash against the same NGOs. During the post-genocide period in Rwanda, many NGOs found that they were providing relief to the very perpetrators of the genocide now stationed in refugee camps and planning to return and continue the violence. This had a negative impact on the NGO community, and some NGOs chose to withdraw.

Another potential setback is that while a humanitarian crisis is newsworthy, the donations tend to flood in. As the media focus on another crisis, the donations tend to dry up even though, as has been noted in the case of the tsunami disaster, the long-term rehabilitation needs are vast and require a tremendous amount of funds.

Q: Many cases featured in The New Global Brands reveal the desire of leaders to move from relief and hands-on work to policy and advocacy roles. Why do you think we are seeing this trend?

A: The move towards advocacy is driven by two main themes, an increase in the importance of taking human rights into consideration generally, and a desire to address the root causes of many of the world's problems today. The past few decades have seen a shift in the development and relief industry to incorporate a rights-based approach to programs and services. In addition, the ability to solve hunger, for example, requires advocating for political change, access to markets, and the right to decent wages. Even strictly humanitarian organizations are now calling for changes in the underlying structures of the societies in which they operate.

This complicates things somewhat for nonprofit organizations since being an effective advocate requires different skills, and credibility implies the ability to remain financially independent of governments.

Strengthening the Red Cross Brand

by John A. Quelch and Nathalie Laidler-Kylander

Brand image
In July 2001, the International Federation commissioned the Young and Rubicam (Y&R) Advertising Agency to review the strength of the Red Cross brand in fifteen countries. Y&R's brand asset valuator (BAV) viewed brand strength as a function of brand vitality and brand stature. Based on consumer research, brand vitality was a function of a brand's differentiation (how distinctive the brand was perceived to be). Similarly, brand stature was a function of a brand's esteem (how highly regarded the brand was) and brand knowledge (how well known the brand was). The main conclusions of the study were as follows:

  • The Red Cross brand stature was high in all countries and across all consumer groups.
  • The Red Cross brand strength was more variable, with signs of weak differentiation (rather than low relevance) in Asian markets, especially in Japan and Malaysia.
  • The image of the Red Cross evoked feminine and nurturing associations. The Red Cross was seen as a group of focused and helpful people, of good value and high quality, but traditional, lacking an "edge," and not missionary in its goals.

[Christopher] Sorek [head of communications at the International Federation] drew the distinction between the Red Cross and NGOs:

Although our brand was compared to major NGO brands, we are not an NGO, and at the International Secretariat level don't really compete with them. Most of our funds come from governments, and we are really competing for funds with many of the U.N. agencies. At the National Society level, however, competition with national and international NGOs is obviously stronger, although our mandate and function make us distinct from NGOs and the major competitors vary by country.

Young and Rubicam suggested that the Red Cross brand could be strengthened if it were more differentiated in the minds of consumers. They believed that an opportunity existed to "bridge the female, passive supporter" characteristics of the existing brand with the "male, change agent and difference maker" of more "missionary" brand images of organizations such as Mèdecins Sans Frontiéres (Doctors Without Borders). "We were seen as a great, trustworthy organization that everyone knows and respects," Sorek said. "We are very well known, but what we are known for is rather fuzzy. The key question is, what do we want to be known for?" Sorek believed that given the strategic redirection of the International Secretariat's role, the organization had a perfect rebranding opportunity.

In 2000, Smith Beers Yunker and Company conducted a series of interviews with corporations specifically on the Red Cross Red Crescent brand. They found that the organization enjoyed a solid reputation and was viewed by the corporate community as a global organization "worthy of partnership." The International Federation was perceived as among the least adversarial humanitarian organizations and accepted by the establishment, which many corporations viewed as a positive trait. However, the International Federation and its members were considered old-fashioned and "shackled by inflexible structures," and there was no understanding, in the minds of those interviewed, of the different roles of the International Federation, the ICRC, and the National Societies.

In November 2001, the American Red Cross came under a barrage of well-publicized criticism for its handling of the Liberty Fund, which grouped funds collected after the September 11, 2001, tragedy, causing then-president Bernadine Healy to resign. Specifically, the organization was criticized by the local and national press for planning to use nearly 50 percent of the $550 million it had collected on a variety of other projects and administrative costs. Following closely on its heels, another scandal hit San Diego's Red Cross chapter in January 2002. The chapter had raised $400,000 for disaster relief after a series of wildfires in the San Diego area, but fewer than half the funds reached the victims. At the time, the local press reported that the San Diego Red Cross president was earning more than $300,000 a year.5 These scandals hurt the organization's brand in the United States, which saw a significant drop in revenues in 2002. How other National Societies and the Red Cross Red Crescent Movement as a whole suffered from the negative publicity had not been quantified.

Emblem
Although the red cross and red crescent emblems had worked well for a long time, a number of problems had arisen by 2002. First, in some conflicts, the cross or the crescent had been interpreted as having religious significance. Second, some National Societies, such as those in Israel and Eritrea, felt uncomfortable using either the red cross or red crescent, and the former used a red shield of David, whereas the latter used both the cross and the crescent together.

In 2002, an additional emblem, with no religious or political connotations, was being proposed to resolve these problems. It would be used in conflicts for protection and as the indicative emblem of a National Society. Implementation, however, involved changing both international law and the statutes of the Red Cross and Red Crescent Movement. Specifically, a third additional protocol to the Geneva Convention would need to be adopted, requiring a diplomatic conference, convened by the Swiss government, of all 188 parties to the Geneva Conventions. In addition, a full International Conference of the Red Cross and Red Crescent, comprising 188 governments and 179 National Societies,6 would be required to change the statutes.

Network coordination
Since each Red Cross or Red Crescent National Society was an independent organization, uncoordinated bilateralism, often consisting of agreements between two National Societies, one with funds and the other needing funds, were frequent. "All these activities are undertaken with the best of intentions," [Mathew] Varghese [head of the Evaluation Department at the International Federation] explained, "but when they are not coordinated, they often don't result in the maximum favorable impact." In many cases, these activities did not focus on the right priorities or long-term objectives of sustainability.

In response to the January 2001 earthquake in India, for example, a number of Red Cross Societies started to send in their own technical personnel. Varghese said:

    India had all the educated technical personnel it needed, and so bringing excess international capacity bilaterally when local skills existed affected the quality of the disaster response. The challenge we face is to help build the National Society's capacity to respond locally and empower the International Secretariat to coordinate activities so that we maximize resource utilization and benefits across the entire network.

Strategy 2010 and self-assessment
Strategy 2010 was the International Federation's ten-year strategic plan. It was the result of a two-year process of consultation with National Societies, the analysis of trends in the external environment, and an internal capabilities assessment summarized in the report "Learning from the Nineties." Adopted by the International Federation's general assembly in October 1999, it outlined three strategic directions and ten expected results. In essence, Strategy 2010 defined the four previously mentioned core activity areas as the common denominators on which the International Federation would build its reputation. Well-functioning National Societies would be strengthened through capacity building, using the self-assessment tool and network wide programs of cooperation.

Strategy 2010 required that a new capacity-building culture be developed alongside the strong emergency-response culture that dominated the organization. Many people saw the International Federation, in its emergency-response role, as very different from the development organization that built National Societies' capabilities and promoted cooperation among them. In October 2002, [Didier] Cherpitel [former Secretary General and CEO, International Federation of Red Cross and Red Crescent] expanded on the drivers and nature of the strategic changes:

We are in the middle of a change process. We were previously short-term oriented, focused on emergencies, a doer/actor type of organization. Both external and internal forces have caused us to rethink our role and strategy. Externally, we have witnessed an explosion in the number of NGOs internationally and domestically. In many countries there is increasing confusion about the role of the state, and we have experienced a substantial decrease in funding. Internally, many National Societies have built up important international capacity [ability to provide international assistance], and the International Federation and various National Societies were often in competition operationally, resulting not only in inefficiencies but also in a negative impact on our image. In the Balkans in 1995, for example, within two weeks there were sixteen National Societies in the field tripping over each other. Now the International Federation must take a supportive leadership role, serving all National Societies, becoming a facilitator and a coordinator. Building the capabilities and reputation of each member of the network will enable us to build our overall visibility and image and attract more funding. Longer term, this strategy will enable us to become the most respected and reliable civil society partner.

Excerpted with permission from "International Federation of Red Cross and Red Crescent Societies," The New Global Brands: Managing Non-Governmental Organizations in the 21st Century by John A. Quelch and Nathalie Laidler-Kylander. Copyright 2006 Thomson South-Western. All Rights Reserved.

Footnotes:

5. This section is based on an article by J. Stryker Meyer, "Bad News for the Red Cross," North County Times, April 28, 2002.

6. The number of National Societies was 179, 178 of which were members of the International Federation and one of which was awaiting admission at the next general assembly.

About the author

Manda Salls is the Web editor for Baker Library.