By guest contributor: Jennifer Harrington, President, HATCH
I recently met with the Executive Director of a nonprofit agency who was lamenting that her organization’s most recent branding efforts had not gone as well as expected. I asked what went wrong, and her perspective was that:
- The process was lengthy and expensive, and
- She didn’t get the deliverables needed to launch the brand in the market.
What struck me was that while a metric for success for a new brand is the ability to clearly articulate the organization’s story, the metric for failure usually comes down to money not well-spent.
I am always surprised to see how often nonprofit branding conversations include a seat at the table for various senior staff, but rarely one for the chief financial officer (CFO). This is unfortunate, as the CFO is well-positioned to ensure the conversation moves from what branding costs to the value of the branding investment to the organization over time.
Here are four important reasons why CFOs should be a part of the branding process.
- CFOs are members of senior management and brand stewards.
Because branding is integral to any nonprofit organization, all members of senior management should be, to some extent, included in and aware of the process. This only makes sense, as each is an important brand ambassador for the organization. Defining the brand strategy, making sure it is aligned with the mission and supporting both short- and long-term goals is a management responsibility.
The CFO brings a unique perspective to the branding process that complements that of the others at the table. He or she also has a vested interest in ensuring that resources allocated to drive future success are well-spent.
- CFOs assist management in asking the tough and practical questions about cost, and more importantly, cost of implementation.
Branding is an investment; one that involves budgeting implementation resources in order to successfully launch the brand. Initially, the branding effort requires organizations to go through a strategic and creative process that typically means hiring external resources, such as consultants or an agency. However, once the brand is defined, there could be substantial additional costs involved in implementing the brand when applying it to priority communications. For many organizations, that can include a new website and promotional pieces, as well as new development and fundraising materials. If the branding includes a name change, everything from business cards to signage and uniforms will be affected as well.
It’s critical to the success of the effort to discuss what it will cost not only to define the new brand, but also to implement it. Chief financial officers, chief executive officers and chief marketing officers should work together to ask the tough questions and understand the overall expenses associated with a rebrand. After all, a brand that never sees the light of day because it costs too much to implement is as impactful as the proverbial tree falling in an empty forest.
- CFOs can help put the branding costs in perspective of an investment tied to ROI.
Incorporating the CFO’s perspective into a rebrand is an excellent way to consider how (and if) it can be funded. It is essential that nonprofits carefully examine both the branding process and the anticipated deliverables before the project begins. This enables the organization to determine which costs can be capitalized and amortized over time and which will have to be expensed as incurred. For instance, if you are undertaking a website redesign as part of your rebrand, some of the costs can be amortized but others will have to be expensed as incurred. This can have a significant impact on the overall cost of your project.
The current influx of marketing data and analytics has empowered many organizations to see what works and what doesn’t and evaluate the overall success of their efforts based on the investments they have made. Identifying goals, deliverables, long-term return on investment (ROI) at the outset is a must for any branding process, but specifically for nonprofits that have limited unrestricted funds. Senior management—especially of nonprofits—will want to understand exactly:
» What the costs cover;
» The costs’ breakdowns;
» The timeline for incurring the costs, and
» How the organization will monitor and measure the success of the effort.
Having the CFO involved from the start could help the process be more efficient.
- CFOs have a vested interest in accounting for how fundraising dollars are spent to advance the mission of the organization.
Competing for dollars is tough. For nonprofits, protecting and building a brand that represents the mission of the organization and attracts donors is critical. Most nonprofits are actively seeking financial support and are therefore required to explain what percentage of their funds go directly to services, as opposed to operational expenses. Today’s donors expect to see evidence that the organization is investing its funds in ways that furthers the organization’s mission. Few are interested in supporting organizations that are not cautious and careful about how and where they invest their dollars. In fact, there is no surer way for a nonprofit to tarnish its brand than to gain a reputation for spending dollars unwisely. CFOs have a strong understanding of how a branding effort fits alongside other investments and the collective impact non-service related funds have on the organization’s brand.
CFOs bring a much-needed perspective to branding efforts. Aside from the reasons above, when brought in early they can be among the most outspoken advocates for branding. Working in concert with their marketing team and senior management, CFOs can play an important role in helping the rest of senior management feel confident about the investment and its long-term value for the organization.
For more information on rebranding, refer to the contact information below.
Copyright © 2016 CBIZ Tofias & Mayer Hoffman McCann P.C. - Tofias New England Division. All rights reserved. CBIZ Tofias and Mayer Hoffman McCann P.C. - Tofias New England Division are separate and independent legal entities that work together to serve clients. CBIZ Tofias is a leading provider of tax and consulting services. Mayer Hoffman McCann P.C. - Tofias New England Division is an independent CPA firm providing audit and other attest services. This article is protected by U.S. and international copyright laws and treaties. Use of the material contained herein without the express written consent of the firms is prohibited by law. Material contained in this alert is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their business.