MARKET FOCUS: All for a good cause

Nonprofit clients may not be money-spinners, but they still play an important part in a firm's roster.

Nonprofit clients may not be money-spinners, but they still play an important part in a firm's roster.

While it's tempting to say nonprofits aren't about money, that's obviously not the case, since charities must raise money to fund programs. But with their traditionally frugal marketing budgets even more constricted these days, PR agencies that enjoy working for good causes may be hard pressed to find profit in them. Agency leaders report mixed goals and mixed results in their nonprofit efforts. Most large firms don't devote practices solely to nonprofit clients. Accounts may be scattered among other practices depending on what types of issues the clients address or where they are located geographically. Washington, DC, for example, is a nonprofit vortex. The nation's capital boasts a high concentration of national headquarters, especially for groups that aim to influence policy. Corporate social responsibility (CSR) or cause-marketing practices often coordinate agency nonprofit work. While corporate clients sometimes influence which causes a firm will serve, executives uniformly report serving some nonprofits independent of corporate programs. Porter Novelli places a large emphasis on nonprofit business compared to many of its competitors. While its CauseWorks isn't a full-blown practice, president David Zucker specializes in CSR, strategic philanthropy, cause marketing, and nonprofit work. "It really functions as kind of a consultancy within the agency," Zucker says. He advises colleagues who work for Big Brothers Big Sisters in New York, the American Cancer Society in Washington, Rock the Vote in Los Angeles, and the Arthritis Foundation in Atlanta. Zucker himself leads the new Alzheimer's Association account. Smaller nonprofit specialty shops also often work on CSR and cause-marketing campaigns for corporate clients. "Having our hands in different pots is better for the nonprofit clients," says Jackie Herskovitz, founder and president of Teak Media Communications in Boston. Agencies focusing solely on nonprofits may miss chances to partner their clients with private-sector companies, she notes. Balancing philanthropy with profitability While some PR folks serving nonprofits admit leading with their hearts instead of their balance sheets, others say they approach charities like any other client, taking them on only if the budget profitably covers the work requested. "In the nonprofit world, there's a big difference between the haves and have-nots," notes Stacy Palmer, editor of The Chronicle of Philanthropy. "There's nothing about nonprofits that makes them inherently less profitable from an agency perspective," Zucker says. "But then again, there are nonprofits and there are nonprofits. These large, national organizations are financially sound, well-funded, well-run organizations." As with any other sector, large agencies seek large accounts with ample budgets and may refer smaller charities to smaller agencies. With fewer overheads, boutiques sometimes can serve small causes more profitably. Or, Zucker notes, large firms may take on small, local groups as pro bono community service projects. Herskovitz admits she sometimes thinks of for-profit accounts as subsidizing pro bono work. She befriended Ben & Jerry's cofounder Jerry Greenfield while promoting ice cream fundraisers for the Jimmy Fund, which supports research at the Dana-Farber Cancer Institute. Herskovitz sought Greenfield's advice when deciding whether to take on a lucrative tech account. "He said if I needed to take on a tech client to make my firm work so I could do the work for nonprofits, then that's what I had to do," she recalls. "He made it feel like it was my obligation." One difference in serving nonprofits lies in managing expectations, says Barbara Lohman, SVP of Devillier Communications. "Nonprofits see a need and they ask, and sometimes it's hard to say no," she says. Agencies must clearly define expectations and services up front. "Don't be pulled in other directions that strategically don't make sense," she warns. Lohman says her agency often gives more generously of its time to nonprofits. Other execs agree emotional ties to charities and causes may encourage staff members to work more than time sheets reveal. "I think working with nonprofit clients is very satisfying," says Nancy Hicks, director of Ketchum's Washington healthcare practice. "They are the clients that wear the white hats." "Their commitment to what they are doing for us is driven more by emotion than it is by the dollar," Salvation Army Major George Hood says of Burson-Marsteller, which is helping the organization launch a branding campaign this month. "There is certainly a personal reward for all of the people who are assigned to our account, and they do get emotionally involved in making sure they represent us extremely well." Nelson Fernandez, MD of Burson's corporate practice, concedes nonprofit work isn't always about money for his agency. "There are so many other things taken into account," he says. Working for a good cause not only brings personal gratification, it can boost a firm's reputation and lead to valuable contacts in the for-profit world. Making money on nonprofit accounts also can be difficult because spending a lot on PR and marketing can lead to bad PR for charities, unless those expenditures support mission-related public-education campaigns. Some watchdog groups grade charities on the percentage of donations spent on administration and fundraising. The Better Business Bureau's (BBB) Wise Giving Alliance guidelines suggest an organization shouldn't spend more than 35 cents to raise a dollar. Alliance president Art Taylor, however, notes numbers can be easily manipulated, so his organization considers 20 criteria. The BBB's reports on charities are widely available in print and on the internet, but since September, organizations also may pay licensing fees to include the BBB's Wise Giving Seal on their promotional materials, Taylor says. Post-September-11 skepticism of the American Red Cross and other organizations, combined with spillover suspicion from corporate governance scandals, has placed more attention on nonprofits at a time when donors have less money to give. More than a third of those polled by the Brookings Institution in October said they lacked confidence in charities to deliver services and spend money wisely. "The tentative signs of an economic rebound notwithstanding, nonprofits have been hard hit by the triple whammy of slashes in government funding, lower contributions from individual donors and foundations, and increased human need," says Sloan Wiesen, communications director for the National Committee for Responsive Philanthropy. Thus, increased competition and scrutiny drives nonprofits toward more sophisticated PR and marketing. "In the nonprofit culture, 'competition' is seen as a dirty word," Zucker observes. Shauna Cook, who came to Clean Wisconsin (CW) from the for-profit world, was surprised to find collaboration among nonprofits. Her cause recently shared a focus group with other environmental advocacy and conservation organizations. "People are willing to share things because they know it's really hard to get funding," says Cook, CW's communications director. Cook adds that a PR firm that can help find grant opportunities and other funding sources earns extra marks in her book, a point not lost on savvy agencies. Devillier, for example, worked with producers to solicit support from medical, consumer, and purchasing organizations when helping develop the upcoming PBS documentary Remaking American Medicine, Lohman says. And PN's sister agency, Changing Our World, specializes in nonprofit fundraising. The two are joining with direct- marketing firm Rapp Collins Worldwide, another Omnicom agency, to launch an integrated campaign for the Alzheimer's Association next month. Nonprofits become more PR savvy Nonprofits are also wising up about CSR and strategic philanthropy, observes Eric Borsum, CSR director for Hill & Knowlton in LA. "I think that we've seen some refocusing on what they can give back to corporations for corporate support," he says. Other signs of rising sophistication in nonprofit PR include improved use of electronic communication, along with media relations campaigns targeting business pages. "That's where a lot of the donor base is," says Bob Witeck, CEO of Witeck Combs Communications in Washington. "Businesspeople are deeply committed and invested in philanthropy." Nonprofits also increasingly embrace integrated marketing and branding concepts. Maintaining a consistent brand image can be particularly difficult for national nonprofits with local chapters, Hood notes. The Salvation Army employs some 75 PR directors in division headquarters and large US cities. While Hood's staff develops and distributes national campaign materials, local communicators sometimes put them on the shelf and design their own programs. To achieve more cohesion, Burson and Young & Rubicam are working with The Salvation Army to launch an integrated campaign with the tag line "The Army of Compassion." Research found Gen-Xers and younger baby- boomers held positive impressions of the organization, but didn't know what services The Salvation Army provided and hadn't seen its officers in uniform. "We are the only army known to man that operates out of compassion as opposed to violence and warfare," Hood says. "We are trying to reestablish the visual of The Salvation Army, with the uniform, fighting the ills that impact people's lives." The campaign is so integrated that the 1-800-SALARMY phone number will also become a URL for a fundraising web page. Times may be tough for organizations that are asking for money instead of making it, and questions may linger about how PR firms can make money representing them, but The Chronicle of Philanthropy's Palmer sees signs of better communication. Nonprofits are becoming more open to conversations with journalists and seem to be turning to outside help more often. "There seems to be a lot more use of professional PR firms as opposed to people who work [on staff for] charitable organizations," she says.

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