The dot com crash has spawned a rather interesting phenomenon. Internet players like Rhizome, Culturefinder and Viatru that did not find success in the commercial marketplace, reorganized themselves as nonprofits. Ostensibly, these organizations returned to their value-based objectives, which they hitherto felt could be also marketed commercially. The challenge for these newly minted nonprofits is significant. They must convince their constituents that the brand recognition and loyalty they spent significant capital to establish are not simply the products of marketing and sales savvy but rather, that they flow naturally from a value-based mission now defined as their primary objective.

These challenges are similar to what for-profits have always faced when attempting to partner with nonprofits. They need to establish a “trusted source relationship,” with a targeted constituency as a prerequisite for developing credibility in the nonprofit environment.

The Trusted Source Relationship Defined

The trusted source relationship is both a simple and sophisticated concept. Its definition implies establishing relationships of trust and credibility with various constituencies (including nonprofits, the public, government institutions and for-profits) that share similar values and missions. Implementing this relationship has stymied many savvy for-profits in their drive to help the nonprofit community through a variety of product, service and branding initiatives. While they may make real attempts to “talk the talk” in assisting the nonprofits, they find it hard to “walk the walk” because of learned marketing and sales behavior required to be successful in the for-profit world that work against them in the nonprofit context.

The premise of the trusted source relationship dictates that if a company’s largess is put to enough good use, people hear about it through the long-standing trusted source networks established by the public sector. The reality is, most people learn who is funding what projects, what projects are really making a difference and who is good to work with through a vast informal network of trusted source relationships that literally span the globe. One can make the argument that companies promoting their goodwill projects are marketing to consumers and not the public sector. Here’s a news flash: Those consumers are very much a part of the public sector. They are the affiliates, the donors and the volunteers these value-based organizations rely upon. And they are the employees and consumers of the same organizations promoting these projects. In short, the trusted-source relationship network extends well outside the nonprofit environment.

Defining a mission and carrying it out credibly are crucial to developing a trusted source relationship. It cannot be bought, and, by its nature, must be earned. Once earned, a trusted source relationship must be protected at all costs because losing it can diminish the real value an organization has accumulated both in terms of credibility and its financial worth. For example, Firestone could afford to advertise on television in prime time about what it’s doing to correct its tire problem. The United Way, on the other hand, could ill afford to do so when it had its well-reported problems. What would donors have thought of it using their money to advertise in that way instead of meeting mission objectives?

A good nonprofit trusted source relationship can influence other nonprofits, government and commercial actors to want to partner with and promote it. It influences constituents to trust in its products and services even though it spends minimally on establishing brand recognition and loyalty. It influences the media to promote its activities free of charge in the form of public service announcements, because its mission is in line with the values and interests of the constituents they serve. Finally, it more effectively fosters successful requests for discounts, donations and grants for the initiatives it implements.

The trusted source relationship is viral in nature. Often people and institutions adopt a positive view on a particular project, and de facto, the organization managing it through first hand dealings or, very often, through other trusted sources informing them of it. The “branding” of the organization managing the project flows directly from how effectively it carries out its mission and the number of trusted sources it accumulates.

For-profit Marketing Techniques vs nonprofit Promotion

I have written previously about the different contexts in which for-profits and nonprofits work. Commercial entities operate with forthright, focused profit-based missions. Nonprofits operate with subjective, interpretable value-based missions. If these two disparate missions define the context, then how each approaches marketing and promotion defines the different languages the two cultures use to accomplish their objectives.

When for-profits market themselves and their products, it is completely fair game to convince the potential consumer that he needs something he didn’t know he wanted in the first place. An excellent example is the way oil companies market higher octane fuels to consumers in order to convince them their cars run measurably better if they purchase the higher priced fuels. Self-branding is also important in the for-profit context, because it sells more products. In the US, Kleenex has become synonymous with tissue, and Xerox with photocopying. Numerous product examples of this exist throughout the world.

Nonprofits by contrast “promote” their values and their missions. Selling a value is somewhat of an oxymoron. Nonprofits don’t start out trying to convince constituents about the perceived need. The need is already implied by their very existence and mission objectives. You don’t start an NGO soup kitchen unless there are people that need feeding. People buy into the mission because it resonates with their values. Self-promotion of an organization over its mission is not viewed favorably by other nonprofits partners or its constituents. On the other hand, there are numerous examples of high profile, nonprofit organizations that carry out their mission successfully and that are well known in their specialty areas locally, nationally or internationally. This despite marketing budgets that pale in comparison to their for-profit counterparts.

How is this promotion accomplished? More importantly, how can nonprofits and for-profits cooperate more effectively to bridge the disparity between meeting value-based mission objectives on the one hand and satisfying profit-based objectives of branding and sale of products and services on the other? The two goals do not have to be mutually exclusive and a win-win situation only benefits both, facilitating future cooperative ventures. Corporations need goodwill and nonprofits need sustainable paradigms. These type of partnerships facilitate both.

Partnership Practices to Adopt

For-profits wishing to partner with nonprofits need to look at the relationship in the same way they would enter into a new, developing marketplace. This market is vast, international and lucrative. Most importantly, this market is extremely loyal if an entity takes the time to understand it and “localize” its methodologies to best serve it. When a company enters a new market, it generally understands that product makeup, branding, sales, distribution, etc. have to be localized in order to be successful. Kentucky Fried Chicken didn’t sell in Japan without the addition of a soy taste. Johnson & Johnson oils needed to be less oily. The major car companies didn’t have much success pushing their autos until they created steering wheels positioned for the opposite side of the road. Similarly, ad wording and branding needed to be modified. The Japanese liked the idea of life size figures of KFC’s “The Colonel” in front of their outlets. It fit better into the kawai (cute) cultural context and lent credibility to the perception of a person literally standing behind (actually in front of) the product.

The languages of commerce across national borders are more similar than the language differences between for-profits and nonprofits operating in the same country because they operate in different contexts. It follows then that the need for ‘localization’ to fit the nonprofit sector is even more salient because of this contextual difference. Leveraging trusted source relationships is the key to localizing and adapting for-profit methodology to the nonprofit marketplace. It is at the core of how nonprofits deal, trust and partner with other sources. It is multi-functional in that it accomplishes a combination of objectives that for-profits spend significant budgets on, including creating constituent brand loyalty, partnership affiliations and distribution networks. It is also essential to an organization’s real value in both a mission-based and financial context.

nonprofits need to better distinguish the marketing and sales tactics conflicting with their missions from those that help them achieve a level of sustainable independence. They cannot afford to brand all forms of marketing as inapplicable or incompatible with mission. Strategies they share in common with for-profits include more effectively branding their value through successful projects and more creatively defining saleable products and services.

Partnership Practices to Avoid

Certain elements of self-promotion and branding that for-profits use as a staple of success in their environments are an anathema to nonprofits and the trusted source relationships they need to protect. This is often where the disparate languages of for-profit marketing and nonprofit promotion come into conflict. In the nonprofit environment, the following marketing tactics are not far less effective because they negatively impact trusted source relationships:

• Marketing a product or service that is not credibly believed in
• Self-promotion over mission promotion
• Creating need versus satisfying one that truly exists
• Disparaging another to distinguish ones product or service as better

nonprofits must avoid limiting their cooperation with other organizations to promote similar values and programs. This article paints the trusted-source relationship in its purest form with nonprofit organizations always reaching out to each other. In practice, this is not the case, due to competition for limited funding dollars, issues of time, lack of perceived importance or simply personality issues existing between two organizations. The Internet is shifting the playing field. It continues to convert a more vertical world of relationships to a horizontal forum in which institutions must reach out to collaborate in order to best leverage offerings and achieve a critical mass of constituents. A for-profit is far more likely to forge a relationship, even with its most significant competitors if doing so helps it meets its bottom line. Nonprofits need to reject extraneous reasons for not partnering and consider partnership as a significantly useful promotional tool if it better serves the mission objectives.

Case Studies

Recently a major cigarette manufacturer ran prime time TV ads trumpeting its do-good projects, such as supplying funds to fix the roof on a shelter. In the view of many of its critics, it made the mistake of enhancing its reputation by using self-promotion and the same slick product marketing that got it into trouble in the first place. It was not the most effective strategy to change people’s perceptions. Advertising good works that cost a fraction of the ad itself is never the best approach. The company would have done better to save their ad dollars and focus on funding more such projects.

Cisco provides a great example of a successful, high tech commercial entity adapting to the needs and language of the nonprofit (primarily educational) marketplace with its Networking Academies initiative. The initiative promotes network knowledge and training throughout the developing world. It’s obvious that having highly trained networking people globally benefits Cisco given its predominant market share as the equipment supplier to the Internet. However, Cisco has done a number of intelligent things to limit nay-sayers who would accuse it of pure self-interest:

It has relied upon trusted source local entities to develop the institutions, and programs. These entities already have credibility and trust in their locales. Cisco’s job was to establish credibility with them and then let them implement the project.

It has provided program criteria but has not dictated the nature of program implementation, relying instead on local sources to shape it to local contexts.

It has indicated it will focus on generic networking techniques versus concentrating on Cisco-based products.

It has defined one of the objectives of the program as minimizing the brain drain by providing technically minded individuals the ability to pursue both education and experience in their own countries.

It has resisted its own proclivity to market its success, and rather has focused on the program marketing itself. While I don’t see commercials during dinnertime lauding the success of the program, I have heard from trusted sources all over the world about its positive impact locally. The money has been better spent making the program a success than on advertising it. Branding has still been achieved.

Cisco has reached out to other partners including local institutions to contribute a share of the project costs with both in-kind and cash subsidy support. This has helped establish local stakeholder ownership. The method used is intelligent as well. Cisco funds the establishment of the primary country center and others are expected to contribute to local hubs once the central hub has proven itself.

Microsoft is positioned to score a similar success with its early support of NPower (the NGO technology support and training organization). NPower is in the early stages of nationalizing local organizations with the help of a number of regional funders. This is a well-defined sustainability plan and a very intelligently crafted franchise grant from the Microsoft Community Affairs Department, which promotes buy-in from others.

The only early misstep Microsoft made was in announcing the NPower grant in connection with its own 25th anniversary. In doing so it combined its own corporate promotional activities with that of a grant to a deserving NGO technology provider. As is so often the case with media announcements related to large corporate giving activities, the media didn’t completely get it right. It preferred to focus on the sensational “big company giving away big money” aspect of the story rather than on the more mundane real terms and conditions of Microsoft support for NPower. This left two incorrect impressions with many: 1) Microsoft was completely underwriting; 2) NPowers all over the country NPower was exclusively promoting only Microsoft products.

It has taken NPower a significant amount of time and energy to correct this misperception to potential partner funders whom they need, some of their NGO peers who felt alienated and their client NGO’s whose requirements are satisfied based on need and not a preordained product set. It provides an excellent example of a corporation trying to do good, but mis-stepping in the marketing area by relying on standard for-profit promotional activities to relay a message about their funding support. Often the focus, context and real breakdown of the funding activity is misinterpreted. The NGO’s benefiting from this largess are left explaining the real terms of funding while their peers and the general public are left with a perception that their needs have been completely satisfied. Companies also leave themselves open to criticism if an effort they have promoted comes to naught in terms of impact on the ground. It is always better in these instances to concentrate on promoting results after the fact.

NPower’s success is doing more to promote Microsoft’s early support than any slick marketing campaign ever could. Through a grant, Microsoft products will be a part of the offerings of NPower, (just as Cisco makes equipment grants for its academies). However, NGO’s will deploy them based on their trusted source relationship with NPower, who advises them on the right solution for their needs. (Similarly, the networking academies will help their graduates with their networking issues.)

Conclusion

Returning to the reorganized Internet players Rhizome, Culturefinder and Viatru, their transition from for-profit to nonprofit begs another question:

If an organization run by entrepreneurs can take up a value-based mission successfully by re-establishing its credibility through trusted source relationships, isn’t it more feasible for a nonprofit with its credibility and constituency already intact to be successfully entrepreneurial? The ingredients for success already exist in the unique products and services some nonprofits offer and in the loyal constituencies that they serve. A nonprofit poised to exploit this possibility would more than likely already be successful in accomplishing its value-based mission. To be successfully entrepreneurial nonprofits must adapt some of the more transferable marketing strategies of their for-profit counterparts. Partnerships with for-profits that abide by this give-and-take rule provide an excellent learning opportunity, so long as the for-profit partner also understands the context in which it operates.

Successful partnership between the sectors require each to better understand each other’s language of marketing and promotion. The more successful and sustainable nonprofits already adapt transferable marketing principles to their environments while maintaining their trusted source relationships.

One last point, for-profits are defined in this context not only as pure commercial ventures. Extensions specifically created to help or seek partnership with nonprofits such as public affairs departments or corporate foundations may often have the same cooperation issues to contend with as their commercial parent if they carry most of the same methodologies, products and services into their nonprofit relationships.

– Jonathan Peizer –