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The Cone Nonprofit Power Brand 100

Frequently Asked Questions

 

What is The Cone Nonprofit Power Brand 100?

The Cone Nonprofit Power Brand 100 is a first-of-its kind valuation of 100 of America’s leading social service, environmental and/or animal nonprofit brands. Brands are valued based on revenue, propensity for future growth and brand image. Through the release of this groundbreaking ranking, Cone hopes to shine a light on outstanding nonprofit brand management and provide best practices for growing revenue and building/maintaining a power brand.

 

Why is this study important?

At a time when donations are decreasing and nonprofits are continuously being asked to work across sectors to solve global issues, leading organizations are evolving and protecting their brands as a powerful engine to raise critical funds. It sets expectations, gains attention, fosters relationships and ultimately helps ensure long-term survival. The Cone Nonprofit Power Brand 100 provides a critical framework for protecting and evolving the nonprofit brand. It will help organizations justify to corporate partners and others that there is a cost associated in aligning with a nonprofit brand.

 

How is this study different from other nonprofit rankings?

Traditional nonprofit rankings rely solely on financial data. In other words, they rank nonprofits based on revenue or net assets. Although useful in determining the fiscal power of a nonprofit, this methodology fails to account for consumer perceptions and other “image”-based factors of an organization. To explore the unique relationship between financial performance and brand image, Cone, in collaboration with Intangible Business conducted The Cone Nonprofit Power Brand 100, the first public ranking in the United States to value nonprofit organizations by more than financial standing alone.

 

How did you choose the 100 nonprofits to value?

The Cone Nonprofit Power Brand 100 began with the selection of 100 nonprofits to value and subsequently rank. Because we needed a pre-existing pool of top U.S. nonprofits, we looked to private support- and income-based rankings, such as the “Forbes 200 Largest Nonprofits,” the “Nonprofit Times Top 100” and the “Chronicle of Philanthropy Top 100,” to identify the largest nonprofits. Next, we applied additional filters to determine the final 100 nonprofits to be represented:

  • Tax Status: Organizations must be public charities granted tax-exempt status under section 501(c)(3) of the Internal Revenue Code.
  • Social, environmental and/or animal services organizations: Excluded from the list are civic and cultural organizations, such as performing arts centers, museums and public broadcasting stations; non-secular organizations that do not have identities distinct from their religious affiliation; hospitals that do not engage in national marketing strategies; and universities and colleges, which do not operate as service nonprofits.
  • Location: Organizations must be based in the U.S.; however, the scope of a charity's work can be international.
  • Geographic Reach: Organizations’ services must be available to national or international audiences and not limited to specific regions of the country.

What is brand value?

Brand value is a reflection of a brand’s ability to generate revenue, both now and in the future. For a nonprofit, this is highly relevant because it generates more revenue to put toward program services. A brand valuation is a forward-looking metric that uses historic financial performance and future trends to predict future activity.

 

The brand valuation calculation attempts to derive the amount a nonprofit would be willing to pay for its brand, if it did not already own it, by determining how much money the brand contributes to the organization. This approach is called the “relief from royalty methodology” as it calculates how much the brand owner is relieved from paying by virtue of owning the brand.

 

The total brand value is driven by three key factors:

  1. 2007 revenue: Consolidated, itemized revenue, including but not limited to: direct and indirect public support, government contributions and alternative revenue streams
  2. Propensity for future growth: Compound annual growth rates (CAGR), derived from the reported financial data, adjusted to reflect the nonprofit brand’s long-term ability for growth
  3. Brand image: The relative strength of each nonprofit brand’s image derived using eight measures highlighted below

 

How did Intangible Business actually calculate brand value?

Intangible Business utilized the following equations to calculate brand value and subsequent Nonprofit Power Brand rank:

 

(Future Revenue x Royalty Rate) Discount Rate = Brand Value

  1. Future Revenue: The 100 nonprofits studied have been given indefinite lives as they are all well-established and financially robust. Their compound annual growths rates (CAGR), derived from the reported financial data, are adjusted to reflect the brands’ long-term abilities for growth. This reflects a brand and its sector’s long-term growth prospects more accurately based on its current and historical performance.
  2. Royalty Rate: The brand image score is positioned within a royalty rate range, specific to nonprofits, to determine a unique royalty rate for each brand.
  3. Discount Rate: Future sales are then multiplied by the royalty rate – tax is not deducted as nonprofits are exempt from paying tax under section 501(c)(3) of the Internal Revenue Code – and finally multiplied by a discount rate to calculate the net present value of those future cash flows. The discount rate reflects the time value and risk attached to those cash flows.

 

Why should a nonprofit care about brand value?

A brand valuation helps transform an intangible idea­­ – a brand – into a concrete asset. By placing a dollar value on the nonprofit brand, organizations can begin to understand just how much a powerful brand can contribute to overall revenue. A compelling brand is an invaluable tool in the arsenal to generate funds, secure corporate and government partnerships and appeal to consumers, employees and volunteers.

 

Valuing a nonprofit brand gives organizations a license to demonstrate to companies and other partners that there is an established and justified cost to aligning with nonprofits. By using a for-profit methodology, nonprofits and companies – future partners – can effectively speak the same language when it comes to creating programs that align with the needs of both brands.

 

Why does it seem like brand value is more affected by an organization’s revenue than its brand image?

Brand value is ultimately a reflection of the amount of revenue a brand contributes to an organization, and is therefore inherently a financial measure. Nonprofits with large revenues will often have well-known brands that contribute a great deal of revenue to their organizations, in turn giving them high brand values.

 

What is a brand image rank, and what does it mean?

Eight separate measures were used to determine brand image – the intangible qualities that help draw stakeholders to a brand. The first two measures were collected via a nationally projectable online survey fielded by Opinion Research Corporation on July 17, 2008. Each organization was surveyed by 1,000 American adults age 18+. Consumers were asked to rate each nonprofit based on their:

  • Familiarity with the organization
  • The organization’s personal relevance

The six additional measures used were:

  1. Share of Voice: an audit of press coverage among the top 50 U.S. daily newspapers
  2. Geographic Reach: the presence of organizations throughout the U.S. (i.e., ease of physical access to the nonprofit) gauged through a telephone survey of each nonprofit
  3. Support Base: self-reported size of organization’s volunteer base gauged through a telephone survey of each nonprofit
  4. Direct Public Support: the percent of total revenue that resulted from direct public support
  5. Nonprofit Efficiency: the percent of each revenue dollar put toward program service expenses
  6. Growth: the rate of revenue growth year-over-year between 2003 and 2007

Intangible Business represented the brand’s image as a percentage, known as the image score, using these eight measures of image strength. Brand image rankings are a reflection of their total image score.

 

What is a revenue rank?

The revenue rank is based on 2007 total revenue. All 100 nonprofits were ranked one through 100 according to the amount of revenue earned in 2007.

 

What income is included in nonprofits’ total revenues?

The total revenue figure, as captured on the IRS Form 990, includes:

  • Contributions, gifts, grants and similar amounts received
  • Program services
  • Membership dues and assessments
  • Interest on savings and temporary cash investments
  • Dividends and interest from securities
  • Gross rents
  • Other investment income
  • Gross amounts from sale of assets other than inventory
  • Special events and activities
  • Gross sales of inventory, less returns and allowances
  • Other revenue

How did you determine the nonprofit sector (e.g., domestic social needs) to which each organization belongs?

Nonprofit sector categorizations were identified from the 2007 Forbes 200 Largest Nonprofits list.

 

Why did you exclude certain nonprofit sectors, such as cultural, arts, public broadcasting nonprofits and hospitals as well colleges and universities?

Cultural, arts and public broadcasting, as well colleges and universities, were excluded because they are largely regional nonprofits that do not have national or international brands.

 

We also excluded non-secular organizations that do not have identities distinct from their religious affiliation and hospitals that do not engage in national marketing strategies.

 

Why is Cone conducting this study?

As a leader in partnering companies and nonprofits for the past 28 years, Cone has worked with some of the world’s leading charities to build and leverage their brands to reach broader audiences and generate greater revenue. In seeking to better understand this unique relationship between nonprofit financial performance and brand image, we’ve noticed a lack of marketplace research that focused on these two forces working together to affect a nonprofit’s bottom-line.

 

Are any of Cone’s clients in the study? Why?

Yes. Once filtered through the nonprofit selection criteria, two organizations currently working with Cone emerged – the American Cancer Society and the American Heart Association. Each is designated with an asterisk “*” in the report. No preferential treatment was bestowed upon these organizations, and Cone turned the consumer perception survey and valuation calculation over to independent third-party companies, Opinion Research Corporation and Intangible Business, respectively.

 

Who is Intangible Business, and how was it involved?

Intangible Business is a U.K.-based brand valuation company. A leader in valuations since 2001, Intangible Business has produced detailed valuations of for- and nonprofit organizations and leading industry sectors. In 2005 and 2006, Intangible Business released “The UK’s Most Valuable Charity Brands,” which, through its brand value calculation methodology, ranked the top 100 most valuable U.K. nonprofit brands.

 

Seeking an established company to lend its valuation expertise, Cone partnered with Intangible Business to replicate its UK charity valuation methodology for U.S. nonprofits.

 

If I’m not among the top 100 nonprofits, should I still read this?

Yes. This study is not only informative for the organizations featured, but provides insights from which all charities can benefit, including:

  • Discover opportunities for enhanced revenue production, brand power and sustainability by following the valuation framework and best practices of the U.S.’ most valuable nonprofits
  • Gain a better understanding of brand building and protection as a business proposition. Your sponsorship levels may shift to create partnerships that accomplish synergistic brand building and/or revenue opportunities.

How is this ranking useful for companies?

Companies should certainly take the time to read the report, especially if they are looking to, or already, engage nonprofit partners. Key insights include:

  • Identify strong potential partners with top brand and/or financial staying power
  • Identify nonprofit leaders within specific sectors that align with the business
  • Discover the nonprofit brand that will resonate most with consumers and employees
  • Better understand the complex, and sometimes pricey, sponsorship levels of nonprofit partners

Where can I get a copy of the full report?

You can download a full copy of the report or Top 100 chart, plus view an FAQ and the media release by visiting the Cone Web site at www.coneinc.com/nonprofitpowerbrand100.

 

How can I get in touch with Cone?

 

Please contact:
Andrea List
Insights Associate
alist@coneinc.com