[Nettime-bold] Jonathan Peizer: The Trusted Source Relationship

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From: "Jonathan Peizer" <JPeizer@sorosny.org>
Sent: Wednesday, May 30, 2001 5:26 AM
Subject: The Trusted Source Relationship -- For-Profit Partnerships &
Promotion in the Non-Profit Environment

(requested posting)

Online version: http://www.soros.org/internet/trusted.htm
All articles of Jonathan Peizer can be found at:
http://www.soros.org/internet/index.html

The Trusted Source Relationship -- For-Profit Partnerships & Promotion in
the Non-Profit Environment
By Jonathan Peizer

The dot com crash has spawned a rather interesting phenomenon. Internet
players like Rhizome, Culturefinder and Viatru that did not find success in
the commercial marketplace, are reorganizing themselves as non-profits.
Ostensibly, these organizations are returning to their value-based
objectives, which they hitherto felt could be marketed commercially. The
challenge for these new non-profits is significant. They must convince their
constituents that the brand recognition and loyalty they spent significant
capital to establish are not simply the products of marketing and sales
savvy. Rather, they flow naturally from a value-based mission now defined as
their prime objective.

The challenges faced by these "new" non-profits are not unique to our
changing economy. In fact, the challenges are similar to those that
for-profits have always faced when attempting to partner with non-profits.
They need to establish a "trusted source relationship," which is necessary
to develop credibility in the non-profit environment.

The Trusted Source Relationship Defined

The trusted source relationship is both a simple and sophisticated concept.
Its definition implies establishing relationships of trust and credibility
with various constituencies (including non-profits, the public, government
institutions and for-profits) that share similar values and missions.
Implementing this relationship has stymied many savvy for-profits in their
drive to help the non-profit community through a variety of product, service
and branding initiatives. While they may make real attempts to "talk the
talk" in assisting the non-profits, they find it hard to "walk the walk"
because of learned marketing and sales behavior required to be successful in
the for-profit world.

The premise of the trusted source relationship dictates that if a company's
largess is put to enough good use, people hear about it through the
long-standing trusted source networks established by the public sector. The
reality is, most people learn who is funding what projects, what projects
are really making a difference and who is good to work with through a vast
informal network of trusted source relationships that literally span the
globe. One can make the argument that companies promoting their goodwill
projects are marketing to consumers and not the public sector. Here's a news
flash: Those consumers are very much a part of the public sector. They are
the affiliates, the donors and the volunteers these value-based
organizations rely upon. And they are the employees and consumers of the
same organizations promoting these projects. In short, the trusted-source
relationship network extends well outside the non-profit environment.

Defining a mission and carrying it out credibly are crucial to developing a
trusted source relationship. It cannot be bought, and, by its nature, must
be earned. Once earned, a trusted source relationship must be protected at
all costs because losing it can diminish the real value an organization has
accumulated both in terms of credibility and its financial worth. For
example, Firestone could afford to advertise on television in prime time
about what it's doing to correct its tire problem. The United Way, on the
other hand, could ill afford to do so when it had its well-reported
problems. What would donors have thought of it using their money to
advertise in that way instead of meeting mission objectives?

A good non-profit trusted source relationship can influence other
non-profits, government and commercial actors to want to partner with and
promote it. It influences constituents to trust in its products and services
even though it spends minimally on establishing brand recognition and
loyalty. It influences the media to promote its activities free of charge in
the form of public service announcements, because its mission is in line
with the values and interests of the constituents they serve. Finally, it
more effectively fosters successful requests for discounts, donations and
grants for the initiatives it implements.

The trusted source relationship is viral in nature. Often people and
institutions adopt a positive view on a particular project, and de facto,
the organization managing it through first hand dealings or, very often,
through other trusted sources informing them of it. The "branding" of the
organization managing the project flows directly from how effectively it
carries out its mission and the number of trusted sources it accumulates.

For-Profit Marketing Techniques vs Non-Profit Promotion

I have written previously about the different contexts in which for-profits
and non-profits work. Commercial entities operate with forthright, focused
profit-based missions. Non-profits operate with subjective, interpretable
value-based missions. If these two disparate missions define the context,
then how each approaches marketing and promotion defines the different
languages the two cultures use to accomplish their objectives.

When for-profits market themselves and their products, it is completely fair
game to convince the potential consumer that he needs something he didn't
know he wanted in the first place. An excellent example is the way oil
companies market higher octane fuels to consumers in order to convince them
their cars run measurably better if they purchase the higher priced fuels.
Self-branding is also important in the for-profit context, because it sells
more products. In the US, Kleenex has become synonymous with tissue, and
Xerox with photocopying. Numerous product examples of this exist throughout
the world.

Non-profits by contrast "promote" their values and their missions. Selling a
value is somewhat of an oxymoron. Non-profits don't start out trying to
convince constituents about the perceived need. The need is already implied
by their very existence and mission objectives. You don't start an NGO soup
kitchen unless there are people that need feeding. People buy into the
mission because it resonates with their values. Self-promotion of an
organization over its mission is not viewed favorably by other non-profits
partners or its constituents. On the other hand, there are numerous examples
of high profile, non-profit organizations that carry out their mission
successfully and that are well known in their specialty areas locally,
nationally or internationally. This despite marketing budgets that pale in
comparison to their for-profit counterparts.

How is this promotion accomplished? More importantly, how can non-profits
and for-profits1 cooperate more effectively to bridge the disparity between
meeting value-based mission objectives on the one hand and satisfying
profit-based objectives of branding and sale of products and services on the
other? The two goals do not have to be mutually exclusive and a win-win
situation only benefits both, facilitating future cooperative ventures.
Corporations need goodwill and non-profits need sustainable paradigms. These
type of partnerships facilitate both.

Partnership Practices to Adopt

For-profits wishing to partner with non-profits need to look at the
relationship in the same way they would enter into a new, developing
marketplace. This market is vast, international and lucrative. Most
importantly, this market is extremely loyal if an entity takes the time to
understand it and "localize" its methodologies to best serve it. When a
company enters a new market, it generally understands that product makeup,
branding, sales, distribution, etc. have to be localized in order to be
successful. Kentucky Fried Chicken didn't sell in Japan without the addition
of a soy taste. Johnson & Johnson oils needed to be less oily. The major car
companies didn't have much success pushing their autos until they created
steering wheels positioned for the opposite side of the road. Similarly, ad
wording and branding needed to be modified. The Japanese liked the idea of
life size figures of KFC's "The Colonel" in front of their outlets. It fit
better into the kawai (cute) cultural context and lent credibility to the
person standing behind the product.

The languages of commerce across national borders are more similar than the
language differences between for-profits and non-profits operating in the
same country because they operate in different contexts. It follows then
that the concept of localizing to fit the non-profit sector is even more
salient because of this contextual difference. � Leveraging trusted source
relationships is the key to localizing and adapting for-profit methodology
to the non-profit marketplace. It is at the core of how non-profits deal,
trust and partner with other sources. It is multi-functional in that it
accomplishes a combination of objectives that for-profits spend significant
budgets on including creating constituent brand loyalty, partnership
affiliations and distribution networks. It is also essential to an
organization's real value in both a mission-based and financial context.

Non-profits need to better distinguish the marketing and sales tactics
conflicting with their missions from those that help them achieve a level of
sustainable independence. They cannot afford to brand all forms of marketing
as inapplicable or incompatible with mission. Strategies they share in
common with for-profits include better branding their value through
successful projects and more creatively defining saleable products and
services.

Partnership Practices to Avoid

Certain elements of self-promotion and branding that for-profits use as a
staple of success in their environments are an anathema to non-profits and
the trusted source relationships they need to protect. This is often where
the disparate languages of for-profit marketing and non-profit promotion
come into conflict. In the non-profit environment, the following marketing
tactics are not effective because they negatively impact trusted source
relationships:

Marketing a product or service that is not credibly believed in
Self-promotion over mission promotion
Creating need versus satisfying one that truly exists
Disparaging one organization to distinguish ones product or service as
better

Non-profits must avoid limiting their cooperation with other organizations
to promote similar values and programs. This article paints the
trusted-source relationship in its purest form with non-profit organizations
always reaching out to each other. In practice, this is not the case, due to
competition for limited funding dollars, issues of time, lack of perceived
importance or simply personality issues existing between two organizations.
The Internet is shifting the playing field. It continues to convert a more
vertical world of relationships to a horizontal forum in which institutions
must reach out to collaborate in order to best leverage offerings and
achieve a critical mass of constituents. A for-profit is far more likely to
forge a relationship, even with its most significant competitors if doing so
helps it meets its bottom line. Non-profits need to reject extraneous
reasons for not partnering and consider partnership as a significantly
useful promotional tool if it better serves the mission objectives.

Case Studies

Recently a major cigarette manufacturer ran prime time TV ads trumpeting its
do-good projects, such as supplying funds to fix the roof on a shelter. In
the view of many of their critics, they made the mistake of enhancing their
reputation by using self-promotion and the same slick product marketing that
got them into trouble in the first place. It was not the most effective
strategy to change people's perceptions. Advertising good works that cost a
fraction of the ad itself is never the best approach. The company would have
done better to save their ad dollars and focus on funding more such
projects.

Cisco provides a great example of a successful, high tech commercial entity
adapting to the needs and language of the non-profit (primarily educational)
marketplace with its Networking Academies initiative. The initiative
promotes network knowledge and training throughout the developing world.
It's obvious that having highly trained networking people globally benefits
Cisco given its predominant market share as the equipment supplier to the
Internet. However, Cisco has done a number of intelligent things to limit
naysayers who would accuse it of pure self-interest:

It has relied upon trusted source local entities to develop the
institutions, and programs. These entities already have credibility and
trust in their locales. Cisco's job was to establish credibility with them
and then let them implement the project.

It has provided program criteria but has not dictated the nature of program
implementation, relying instead on local sources to shape it to local
contexts.

It has indicated it will focus on generic networking techniques versus
concentrating on Cisco-based products.

It has defined one of the objectives of the program as minimizing the brain
drain by providing technically minded individuals the ability to pursue both
education and experience in their own countries.

It has resisted its own proclivity to market its success, and rather has
focused on the program marketing itself. While I don't see commercials
during dinnertime lauding the success of the program, I have heard from
trusted sources all over the world about its positive impact locally. The
money has been better spent making the program a success than on advertising
it. Branding has still been achieved.

Cisco has reached out to other partners including local institutions to
contribute a share of the project costs with both in-kind and cash subsidy
support. This has helped establish local stakeholder ownership. The method u
sed is intelligent as well. Cisco funds the establishment of the primary
country center and others are expected to contribute to local hubs once the
central hub has proven itself.

Microsoft is positioned to score a similar success with its early support of
NPower (the NGO technology support and training organization). NPower is in
the early stages of nationalizing local organizations with the help of a
number of regional funders. This is a well-defined sustainability plan and a
very intelligently crafted franchise grant from the Microsoft Community
Affairs Department, which promotes buy-in from others.

The only early misstep Microsoft made was in announcing the NPower grant in
connection with its own 25th anniversary. In doing so it combined its own
corporate promotional activities with that of a grant to a deserving NGO
technology provider. As is so often the case with media announcements
related to large corporate giving activites, the media didn't completely get
it right. It preferred to focus on the sensational "big company giving away
big money" aspect of the story rather than on the more mundane real terms
and conditions of Microsoft support for NPower. This left two incorrect
impressions with many:

Microsoft was completely underwriting NPowers all over the country

Npower was promoting only Microsoft products. It has taken NPower a
significant amount of time and energy to correct this misperception to
potential partner funders whom they need, some of their NGO peers who felt
alienated and their client NGO's whose requirements are satisfied based on
need and not a preordained product set. It provides an excellent example of
a corporation trying to do good, but mis-stepping in the marketing area by
relying on standard for-profit promotional activities to relay a message
about their funding support. Often the focus, context and real breakdown of
the funding activity is misinterpreted. The NGO's benefiting from this
largess are left explaining the real terms of funding while their peers and
the general public are left with a perception that their needs have been
completely satisfied. Companies also leave themselves open to criticism if
an effort they have promoted comes to naught in terms of impact on the
ground. It is always better in these instances to concentrate on promoting
results after the fact.

NPower's success is doing more to promote Microsoft's early support than any
slick marketing campaign ever could. Through a grant, Microsoft products
will be a part of the offerings of NPower, (just as Cisco makes equipment
grants for its academies). However, NGO's will deploy them based on their
trusted source relationship with NPower, who advises them on the right
solution for their needs. (Similarly, the networking academies will help
their graduates with their networking issues.)

Conclusion

Returning to the reorganized Internet players Rhizome, Culturefinder and
Viatru, their transition from for-profit to non-profit begs another
question:

If an organization run by entrepreneurs can take up a value-based mission
successfully by re-establishing its credibility through trusted source
relationships, isn't it more feasible for a non-profit with its credibility
and constituency already intact to be successfully entrepreneurial? The
ingredients for success already exist in the unique products and services
some non-profits offer and in the loyal constituencies that they serve. A
non-profit poised to exploit this possibility would more than likely already
be successful in accomplishing its value-based mission. The answer lies in
non-profits adapting some of the more transferable marketing strategies of
their for-profit counterparts. Partnerships with for-profits that abide by
this give-and-take rule provide an excellent learning opportunity, so long
as the for-profit partner also understands the context in which it operates.

In short, each must better understood the other's language of marketing and
promotion. The reality is that more successful and sustainable non-profits
already adapt transferable marketing principles to their environments while
maintaining their trusted source relationships.

I would like to acknowledge Dr. Richard Rogers of the Jan van Eyck Akademie,
Laurie Geronimo, Executive Director of securesponsorship.org, and
independent consultant Ann Green, formerly of the Benton Foundation. They
assisted, through discussions in evolving my thinking in this area. I wish
to also thank Melissa Hagemann and Chip Winston of the Open Society
Institute for their review and editorial support.

1. For-profits are defined in this context not only as pure commercial
ventures. Extensions specifically created to help or seek partnership with
non-profits such as public affairs departments or corporate foundations may
often have the same cooperation issues to contend with as their commercial
parent if they carry most of the same methodologies, products and services
into their non-profit relationships.

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Jonathan Peizer is CTO, Open Society Institute. For further comment and
other related issues, e-mail jpeizer@sorosny.org.




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