Valuing a for-profit brand is a significant challenge. This is despite the fact that there exists a stream of profits you can use as the basis for the valuation. Valuing not-for-profit brands takes the challenge to a whole new level. As such it is not surprising that most people might instinctively reject putting a financial value on not-for-profit brands. To be fair this is a quite understandable reaction. Still, there are potential benefits to valuing not-for-profit brands. As such, it is worth thinking whether the exercise is feasible.
Comparing For-Profit and Not-For-Profit Brands
Just over a decade ago John Quelch, along with a few colleagues, explained how not-for-profits could value their brands. The basic methodology was developed by Interbrand, the brand consultancy. There is, of course, a bit of license taken in comparing the values of for-profit and not-for-profit brands. It is usually challenging to sell a for-profit brand independently of the company that supports it. Imagine Apple selling the right to use the Apple brand but not the manufacturing processes, patents, or stores. Selling not-for-profit brands goes beyond challenging to impossible (and hopefully illegal). It would be a strange day indeed if Amnesty International members decided to abandon their mission and sell their brand to Pepsi.
That you can’t sell a not-for-profit brand doesn’t mean valuing it can’t be of any use. As Quelch and his colleagues say. A high brand valuation
.. can help the organization attract and retain high-caliber employees and board members; motivate donors, and volunteers to increase their commitment; justify efforts to protect the brand and logo and ensure they’re consistently presented; justify marketing investments in the drivers (such as local impact) that protect the brand; and give the NFP greater influence with policy makers.Quelch, Austin and Laidler-Kylander (2004)
Value Despite The Exercise Being Far From Perfect?
The author’s viewpoint is certainly interesting. It is sad when people don’t value things that don’t have a monetary value attached to them. It may be sad, but it is often true. Having a valuation for the brand allows the organization to appreciate that not-for-profits are all about the long-term. If a brand is valuable the current managers shouldn’t be too cavalier about diluting the brand that countless volunteers have built up over many years. Perhaps estimating how valuable not-for-profits brands are, or frankly even totally making up a number, may help not-for-profits do their work. Hopefully, this will make the world a better place. Maybe that is worth overlooking the truly “heroic” assumptions that have to made to value not-for-profit brands.
For more on brand valuation see here.
Read: Mining Gold in Not-For-Profits, 2004, April, Harvard Business Review, John Quelch, James Austin, Nathalie Laidler-Kylander