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Is Your Nonprofit’s Reputation at Risk? What You Can Do About It

May 2, 2016 by Dennis Fischman 7 Comments

Nonprofit organizations live and die by our reputation.  It’s what brings us clients, volunteers, funding, and dedicated staff who could earn more in a for-profit setting.  But what is reputation, and how do you protect it?

Nir Kossovsky

Nir Kossovsky

I spoke with Dr. Nir Kossovsky, the executive secretary of the Intangible Asset Finance Society and the author of Mission: Intangible. Managing risk and reputation to create value and the more recent Reputation, Stock Price, and You ).

Nir, what is reputation as you define it?

Many companies think of reputation in terms of likeability, but people express your reputation through their wallets.  In every relationship, there comes a moment of truth.  The customer is looking at what you have to offer and thinking about everything they like about it–but do they actually buy it?  The correlation between likeability and the decision to purchase is very low.

I think of reputation as a set of expectations.  The customer expects a specific kind of performance from you, and you expect that if you perform, the customer will purchase what you have to offer.

So your reputation is more than just your brand?

Your brand is the promise you make, and that sets the expectations.  Your reputation is whether you are known for keeping your promise.  Your reputation can be your greatest asset.  It can create cash flow for your organization.  (It’s also a liability in the sense that to keep your brand promise, you will have to spend time and money.)

What is the cash value of having a good reputation?

It adds value at every level. For instance, you can hire and retain good employees for less when they expect your company will be a great place to work and their expectations are fulfilled.

The way the New England Patriots used to be able to attract great players for less because they expected to have the chance to compete for a championship every year?

Exactly.  You can measure the discount employees give when they love to work for you, and when they stop loving their jobs, it costs you.

How else does a good reputation pay off?

Suppliers and vendors also charge less when they trust you, and they charge more when they think you are the proverbial pain in the ass to work with.  Regulators are required by law to take reputation into account.  Even creditors, who are as unsentimental as anyone in business, give a reputation discount.  Organizations with a good reputation borrow money at 60 basis points, or .6%, less than companies without that advantage.  And nonprofits start out with a good reputation because people know they are devoted to a mission.

But it’s different for nonprofits, isn’t it, because we don’t have one set of “customers”?  Some people pay for the services that other people receive, and the funders and regulators often don’t know what the clients think of us.

It is more complicated for nonprofits.  Your funders and regulators try to measure performance by setting up objective measures and requiring you to use them when you report.  Having a good reputation with them is important because when they come under public pressure to cut programs, they may wield the axe somewhere else.

It’s like protecting against terrorism.  The U.S. can’t prevent terrorists from striking anywhere in the world: all it can do is to ensure they go seeking a softer target.  You can’t stop ideological attacks on your programs, but you can make your own agency less vulnerable.

You believe performance is the key to reputation.  Should nonprofits take the attitude, “Just do the work and it will speak for itself?”

No, that would be naive.  If a tree falls in the nonprofit forest and no one hears it, it will not make a sound and it will not add to your reputation.  You may be not-for-profit, but you are still competing with other organizations: not only in your field, for clients, but all the other organizations, for funding.  You have to communicate your value proposition just as effectively as for-profits do.

What role can nonprofit communications play in building reputation?

Communications are a major tool for reducing reputation risk and increasing the value of your reputation.  Relations with the public and with the funders and donors who invest in your program are key.  Your communications are vital to the financial health of your nonprofit organization.

Okay, readers, your turn.  What are you doing to make sure your nonprofit organization lives up to the promise it makes…and that people recognize and appreciate your performance?

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The Cash Value of a Good Reputation

March 24, 2014 by Dennis Fischman 1 Comment

Why does it matter what people think of your organization?

Ask Brandon LaFell.  He used play wide receiver for the Carolina Panthers.  He chose to play for the New England Patriots this year because “These guys were winning up here the last 10-plus years. So why not come to a winning organization?”

Brandon LaFell

Do people see you as a winning organization? 

According to Dr. Nir Kossovsky, there’s an easy way to tell the value of your reputation.  If you have a good reputation, people will give you better deals.

The Patriots are able to get better players for less money.  What does a good reputation get your nonprofit?

Kossovsky says:

  • You can hire and retain good employees for less when they expect your company will be a great place to work (and their expectations are fulfilled).
  • Suppliers and vendors also charge less when they trust you, and they charge more when they think you are the proverbial pain in the ass to work with.
  • Even creditors, who are as unsentimental as anyone in business, give a reputation discount.  And nonprofits start out with a good reputation because people know they are devoted to a mission.

 

How do you get full value out of your reputation?

Your communications are vital to the financial health of your nonprofit organization.  Investing in better communications makes financial sense.

A good first step would be to read “Hiring a Communications Consultant: What to Look For.”  Then, drop me a line and ask me for a free 15-minute consultation: [email protected].  I’ll help you make your good name your greatest asset.

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Six Ways Nonprofits Succeed on Social Media

August 13, 2013 by Dennis Fischman 5 Comments

It’s easy for a business to know whether or not they’re succeeding on social media.  After a reasonable amount of time on social media, the business makes more money.  For a business, that’s the meaning of success.  End of story.

Image

For nonprofits, it’s not so simple.  Nonprofits are mission-based organizations.  They need money to do their work, but the purpose of their work is not to make money.  When your “business” is arts, health, the environment, rights, or justice, what counts as success on social media?  Here are six signs of success.

  1. Mobilizing.  If your mission involves changing policy or institutions, you need people power to achieve it.  From calling Congress to getting out in the streets, getting people to take action is a measure of success for your social media efforts.
  2. Organizing. There’s power in numbers, and people taking direct action can succeed in changing things directly.  Boycotts can change the behavior of companies. Sit-down strikes can prevent foreclosures.  On the constructive side, people can get together to build houses, or to assist survivors of natural disasters.  Social media  have been indispensable in situations as varied as Occupy Wall Street and Superstorm Sandy.
  3. Changing the culture.  Some nonprofits work to change the way we think and behave.  In an earlier era, social marketing turned smoking from a widely accepted habit into a public health threat.  Today, social media are full of ongoing discussions aimed at changing our ideas about rape culture and body image.
  4. Sharing.  More people are seeing works of art online than in museums.  More get their news online than from newspapers.  Freecycle and similar email lists allow people to pick up goods they need for free, and every giveaway prevents a throwaway and reduces the waste stream. If your nonprofit is concerned with arts, public information, or the environment, social media may be part of how you do your work.
  5. Building assets.  A nonprofit’s greatest asset is often its reputation. As Nir Kossovsky has pointed out, your reputation may actually be worth money.  You may spend less on recruitment and purchase of services because the people with whom you do business know and trust your organization.  Employees may tolerate the low salaries typical of the nonprofit sector because they are proud to work for you, and you may acquire partners and funders because they want to be associated with you.  Social media are part of your brand, and they help build your reputation.
  6. And yes, making money!  Just because you’re a nonprofit doesn’t mean you can lose money.  As Robert Covitz writes, a nonprofit is “an organization that reinvests profits and donations into its programs, services, and personnel so as to better fulfill its mission and goals.” To reinvest, you must make a surplus to begin with.  Giving via social media is on the rise, and even the check in the mail is increasingly likely to arrive after the donor has learned about you on social media.

 

So, is your nonprofit succeeding on social media? Comment to tell us your success stories and the challenges you face.

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