How to calculate the value of your brand

When you talk about your brand, do your Board Members eyes’ glaze over?  Do they understand that the brand is an asset, just like a physical asset?

In for-profit enterprises, the value of a brand is part of goodwill and is crystallized at the time of sale.  Even though your non-profit is not up for sale, it is a worthwhile exercise to internally value your brand.  Why?  The journey is more important than the destination.

Don’t get hung up on trying to get consensus on any particular value.  Drivers of brand value are famously difficult to quantify.  Different people will choose different emphasis.  Instead, get consensus on:

  • the brand is an asset that has value (pick a range of values to avoid conflict)
  • the Board has the power to increase and decrease that value (so they need to understand the drivers)
  • brand value can help make decisions on investment spending e.g. buy a new truck or build the brand.

What drives brand value?

It’s basic marketing.  Are your messages clear and concise to all your audiences?  Is your messaging consistent across all the public “faces”.  What is your expenditure – the more you put in, the more you will get out.  How engaged are your audiences with you?

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Calculate your brand value

The formula is quick to calculate because the goal is to promote discussion on the drivers, not any particular value.  The following formula is designed for small to mid-sized non-profits.  The formula for large nonprofits would be different.

The factor is multiplied by annual revenues:  the best brands are worth 100% of annual revenues.  Average brands are worth 50% of annual revenues.   Include revenues from both donors (brand value with donor audience) and government grants (brand value with client audience).

Brand Value =  $revenue X  y% clear messages X  y% consistency  X y% fundraising costs  X y% engagement.
$7172 =  $612,000 X  25% X  25% X  75%  X  25%

So the next time your Board is comparing the benefits of investing in operational improvements vs investing in marketing, use this formula to quantify what is typically an un-quantifiable discussion.

 

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