Written by Karla Estefania Luz Oliva
Social Media as Ally for the Third-sector Branding (nonprofit)
Abstract: The proliferation of third-sector organizations has been notorious, it is estimated that over 1.5 million and in the UK over 170,000 charities and 220,000 voluntary organizations are registered. With the growth of this sector the competition to attract donators has been intensified among nonprofit organizations resulting in the professionalization and ´commercialization´ of the third-sector; within this context marketing practices and specifically branding has gained attention. However, transferring commercial practices to the third-sector represents a great difficulty due the fact of the substantial differences between for-profit organizations and organizations that in general do not pursue profits. There are 3 barriers for branding the third sector: 1) the lack of literature, tools and expertise in this field; 2) the complexity to identify the true target of branding activities due the diverse nature of stakeholders and; 3) Consists in the slow acknowledgement of the benefits of branding and brand equity. The advent of social media represents an unprecedented era of opportunities for third-sector organizations to communicate and interact with each type of stakeholders in a differentiated way on a global scale and with low costs. The third-sector has a great challenge in adopting a brand-orientation and social media can be the perfect ally in this quest for its scope and low costs but only if is used strategically.
In the past few decades the proliferation of third-sector organizations has been notorious, it is estimated that over 1.5 million of nonprofit organizations operate in the US generating $804.8 billion in 2010, which was equivalent to the 5.5% of the country’s gross domestic product in that year (Roeger, Blackwood & Pettijohn, 2012). In the UK over 170,000 charities and 220,000 voluntary organizations are registered (Roper & Fill, 2012). With the growth of this sector the competition to attract donators has been intensified among nonprofit organizations resulting in the professionalization and ´commercialization´ of the third-sector; within this context marketing practices and specifically branding has gained attention as a mean to differentiation (Vestergaard, 2008). Hankinson (2002) claims that fundraising organizations with a strong brand orientation and recognizable brand symbols such as name, logo and motif attract more volunteering donations than those with low-brand orientation; for instance the Red Cross brand displays a distinctive red cross motif in a white background. However, branding in the third-sector (as in privet sector) aims to go beyond the establishment of visual identity, aspiring to create a bond between the donator and the organization through communicating not only the ´cause´ but the set of values that each organization represents, Hankinson remarks that
This unique combination of charity cause plus values enables charities within the same sector to achieve a distinct and unique identity, allowing donors, both private and corporate, to associate with and choose those charities whose values most closely reflect their own (Hankinson, 2002, p. 31).
Thus one of the fundamental objectives of the third-sector branding is to communicate those values and causes while fomenting the interaction between the organization and its supporters. Although traditional media has helped to create awareness in the nonprofit organizations such as the TV-spots of Amnesty International (Vestergaard, 2008), the scope of diffusion has been limited to certain geographical regions and its use has been restricted only for largest organizations due the costs involved. The advent of social media represents an unprecedented era of opportunities for organizations to communicate and interact with their stakeholders in a global scale and with low costs (Lovejoy & Saxton, 2012). This has profound implications in the interaction between individuals and organizations in all sectors (public, private and third) and as Stuart & Jones (2004) argue even the organizations that decided not to embrace the marketspace are affected. Increasingly, social media practices are being integrated in the communication of the third-sector, it is pointed out by Arroyo, Baños & Van-Wyck (2013) that among the NGOs (Non-governmental organizations) 93% use Facebook, 74% Twitter, 66% YouTube, and 32% Flickr (Nonprofit Social Network Benchmark Report, 2012). The purpose of the present research is to make a literature review regarding how social media various practices has favored the third-sector branding. The first part of this document is related with the definition and relevance of the third-sector, branding in the third-sector and its challenges is covered in the second part and lastly a review of how social media practices has favored the branding of the third-sector is addressed in the third part.
What is Third-sector and why is it important?
The name of ´third-sector´ is in reference to the organizations that do not belong to the public nor the private sector. This term was coined for Etzioni in 1973 to define the alternative sector separated from the two main sectors of the economy: private (businesses) and public (government), characterized by being operated with the commitment of several individuals and taking value-driven actions (Corry, 2010). There are various definitions and theorizations regarding the third-sector, in respect of what is incorporated and what is excluded two main orientation can be identify: the ´American´ notion delineates it as the private, nonprofit, voluntary and organized separate sector while the ´European´ orientation defines it as a hybrid sector in which other sectors (state and market) converge; the main difference between this two approaches is that the former one allows the inclusion of for-profit organizations such as social enterprises as well as certain state bodies like the ones related with the welfare (Corry, 2010). The Sandwell Metropolitan Borough Council (UK Government) marks out that third-sector organizations can take a variety of forms including community interest companies, mutuals, industrial and provident companies, not-for-profit trade associations, charitable trusts, companies limited by guarantee and unincorporated groups; more information about the diverse range of organizations can be consulted in Sandwell Council: Third-sector organizations types.
Roper & Fill (2012) pointed out that the third-sector is defined by The European Social Research Council as the “Non-governmental organizations that are value-driven and that principally reinvest their surpluses to further social, environmental or cultural objectives” (Roper & Fill, 2012, p.173). However, it is discussed by Corry (2010) and Evers & Laville (2004) that allocating the term of third-sector organizations purely as a ´non-governmental´ identities might lead to categorize them directly within the range of privet sector as well as the exclusion of welfare state bodies. To illustrate the composition of the third-sector and its relation with other sectors Evers & Laville (2004) present the following scheme:
For the purpose of the present research the ´European´ orientation is used in which different types of organizations are included such as cooperatives, self-help groups, non-governmental organizations, non-for-profit identities, faith-groups, charities, clubs, social enterprises, state bodies and networks.
So far this document has presented conceptualization and theorization regarding the third-sector, in this part a review of its relevance is addressed. Since the 1970s the increasingly importance of the third-sector in advanced economies has been investigated by the international community of scientists due its ability to meet social needs that the private and public sector are unable to satisfy either for lack of resources or interest (Amendola, Garofalo & Nese, 2010). The scope of performance that has been covered by the third-sector is expanding. In many countries third-sector organizations provide a significant portion of the welfare services; within the financial and production industries the third-sector organizations have been increasingly involved to generate social credits, cooperatives, microfinances and social entrepreneurship ((Amendola, Garofalo & Nese, 2010). In the economy, third-sector contributes significantly in the Gross Domestic Product (GDP) and employment, for instance in the US it is estimated that 5.5% of the 2012 GDP was generated by nonprofit organizations as well as 9.2% of the total of wages and salaries in 2010 (National Center for Charitable Statistics, 2014) more statistical information regarding the third-sector in the US can be consulted in Quick Facts About Nonprofits in the US.
Third-sector branding: The challenge.
With the proliferation of third-sector organizations the competition to attract both private and public supporters has been intensified, “as economists would say, everything comes down with the allocation of scarce resources. Just as private companies compete for customers, so charities compete for donations” (Roper & Fill, 2012, p.173). This might be the origin of the attention that this sector has shown in the adoption of business practices as a mean of professionalization and ´commercialization´ in the last two decades (Vestergaard, 2008). However, implementing business practices constitutes quite a challenge for organizations that in general do not pursue profits; McLeay, Roberts & Yoganathan (2012) highlight that transferring commercial practices to the third-sector represents a great difficulty due the fact of the substantial differences between organizations that focus primarily in generating profit and the third-sector organizations which have as utterly goal a ´cause´.
Despite this difficulties the third-sector has gradually embraced commercial practices due the fact that it has been identified that the adoption of these has had a positive impact on the performance of organizations not only in their internal management but also in increasing awareness and thus raising of funds (McLeay, Roberts & Yoganathan, 2012; Hankinson, 2002 & Vestergaard, 2008). Hankinson (2002) states that fundraising organizations with a strong brand orientation and recognizable brand symbols attract more volunteering donations than those with low-brand orientation, Hankinson based this information on the outcomes of a quantitative study conducted on 500 fundraising organizations in the UK.
For the purpose of the present literature review, the advantages and challenges for the third-sector branding are addressed based on the contributions of Stuart Roper and Chris Fill who dedicate a specific section for the third-sector branding in the book Corporate Reputation –Brand and communication (2012) as follows:
The first barrier for branding the third sector is the lack of literature, tools and expertise in this field. Although the third-sector and international scientists communities have recognized the importance of embracing commercial practices and specifically marketing strategies overall, the literature of branding for the not-for-profit sector is under represented and in comparison to the privet sector it is presumable a lack of marketing expertise (Roper & Fill, 2012; McLeay, Roberts & Yoganathan, 2012). The second challenge is the complexity to identify the true target of branding activities due the diverse nature of stakeholders, it is a difficult task to choose which of them should be prioritized: the donors, recipients, society? And the complexity is even more stressed because each stakeholder should be approach with different messages. Another barrier consists in the slow acknowledgement of the benefits of branding and brand equity which according to Roper & Fill (2012) might has its roots in two facts 1. The members of the organization such as volunteers, board members or leaders face a moral conflict because of the deviation in the nature of the organization towards a ´too´ commercial entity; 2. Jeopardizing the reputation and credibility of the organization from its supporters due the fact that donations can be mismanaged in superficial marketing expenses instead of being used in the ´cause´.
Despite of the complexity to adopt a branding orientation into the third-sector, the nature of this sector have great advantages over commercial brands. Since the ultimate goal of the third-sector organizations is often related with the benefits for the humankind or for a specific group, the general perception of them is mainly positive. Likewise, third-sector organizations are associated with certain set of values which attract (practically effortless) people who want to collaborate, interact and spread the cause because they shared the same values. Although there have been some cases of discrediting, the third-sector still have better reputation in comparison with the public and private sectors; and in general is associated with authenticity and credibility which help to appoint brand ambassadors and advocates and thereby obtain a massive investment in donations, this is illustrated by Kaplan & Grossman (2010) who highlighted that in the US over $300 billion of donations were given in 2008, representing more than 2% of the GDP in that year.
The second part of this blog post and the bibliography will be published on 1st of May.