Strategic Restructuring:
Partnership Options for Nonprofits

Retaining Brand Equity in Strategic Restructuring

What is your brand?

On a very simplistic level, your organization’s brand refers to your logo, name, tag line(s), and “look.” But, your brand is really much more than this. For those on the outside of your organization, your brand is the services that your organization delivers, and the impact that it makes in advancing its mission in the community. From the inside of your organization, your brand is everything that your organization does to deliver its services to the community. It is reflected in the way your staff and volunteers deliver these services, and how they interact with each other and with external stakeholders.

What is brand equity and why is it important?

Brand equity refers to the intrinsic value of your organization’s brand. Essentially, it’s the reputation your organization has built up over time for the work it does. Brand equity can be measured by the type of reaction people have when they see your organization’s name and logo. If your organization’s reputation is good, people will have a positive reaction when they hear your name and see your logo — i.e., your brand equity is high. If, on the other hand, your organization’s reputation has been weakened due to bad publicity, a crisis or other negative event, or poor service delivery, people will have a negative reaction to your brand — i.e., your brand equity is low.

Your brand is important because it allows people to quickly associate your organization’s materials (brochure, website, letterhead, etc.) with your organization’s services and the impact these have on the community. With a few simple words and/or an image (e.g., your logo), you can elicit a response from people. Brand equity is particularly important in marketing, public relations, and fund development where you want your organization to stand out from others and cause people (funders, donors, clients, members, potential partners, the media) to act favorably towards your organization.

Organizations put great effort into building positive brand equity. Often, it takes many years to do this. However, in a blink of an eye, brand equity can be destroyed or severely compromised by negative publicity, a crisis poorly handled, and/or services ineptly delivered.

What are the issues related to brand equity in strategic restructuring?

Most organizations have positive (or at least neutral) brand equity — that’s why they are still in operation! Typically, brand equity is strongest and most positive among those closest to the organization — particularly those internal to the organization: (board, staff and volunteers); those who directly support it (funders, donors, and members); and those who use its services.

When organizations consider strategic restructuring — and particularly when they consider merger — the question of what to name the new organization (or program, joint venture, etc.) often becomes one of the most difficult issues to resolve. Note: We focus on merger because this is where issues related to brand equity are most challenging. In most other types of strategic restructuring, there is not an imperative to change the names of the partner organizations.

Because of the loyalty stakeholders often have towards an organization, it is very difficult to consider giving up their organization’s name. This brings up a multitude of emotions related to loss and the fear of the unknown—emotions that are broadly associated with strategic restructuring. The feelings on both sides can be so strong that they can stymie the negotiations process.

How should you address these issues? What are the considerations?

It’s important to begin the discussion of the new organization’s name (and overall branding) as soon as possible. By the end of the negotiation period, and prior to the announcement, there should be a decision as to what the new organization will be called, at least for the interim.

There are many considerations in selecting this name. Among these are:

• What is the brand equity that each organization brings to the table?
• Does either partner have a negative image? If so, this can make the decision easier.
• Does either partner have a very positive image that should be capitalized on? For example, does one organization have a large and loyal donor and/or member base, while the other organization doesn’t? If so, it might make sense to keep the name (or a part of it) that is recognized by the donors and/or members.
• Does either partner have a name that reflects a specific focus that will no longer be applicable after the merger? This focus may reflect a service offering that is limiting, a constituency that is not reflect of the total population to be served by the new organization, and/or a geographic focus that is too narrow
• How easy is the name is for stakeholders to say and understand?
• Is the name easily confused with other organizations?

Phases of the branding process

Oftentimes, the naming of the new organization takes place in two phases. In the first phase, the name used is a combination of the two organizations’ names. This allows time to consider different names and to “test” them (see below). It also gives time for stakeholders to know and accept the change. There’s nothing worse than having loyal donors receive an annual appeal letter only to toss it because they don’t recognize the organization’s name!

In the second and final phase, often a year after the actual agreement to merge, the new organization announces its new name and look. This is a great opportunity to celebrate the new organization and what it has accomplished since the decision to merge, and to gain positive publicity.

Stakeholder input

It is very important to obtain stakeholder input into the name and overall brand decision — both from internal stakeholders and external ones. Many times an organization will be unaware of how a particular name and/or image may be interpreted by others. Choosing a name is a long-term commitment; you’ll want to obtain as much feedback as possible before making a decision.

How have others addressed this issue?

It’s helpful to learn how others have addressed this issue. The following case studies, found on the Strategic Solutions website, provide some real-life examples:

• Law Center for Families: An Interview with John Hedges: http://www.lapiana.org/resources/cases/mergers/11_2001.html
• Merger Implementation Case Study: Asian & Pacific Islander Wellness Center: http://www.lapiana.org/resources/cases/mergers/05_2002.html
• The Family Tree: http://www.lapiana.org/resources/cases/mergers/familytree.html

See also: http://www.lapiana.org/resources/faqs/12_20_01.html, for a tip on how to rebrand your organization and launch a new name.