Why Should Nonprofits Care About Trademarks?
By: Kenneth E. Liu

Your brand is your corporate message. This is even more true for a nonprofit organization, whose goodwill and reputation is its lifeblood. A nonprofit relies on its goodwill and reputation for success in advancing its message, raising funds, and fulfilling its charitable, educational, or religious purpose. This goodwill and reputation, which can take years of effort and investment to establish, are encapsulated in its trademarks.

Trademarks embody the goodwill and reputation of an organization. A trademark of a for-profit helps consumers identify and remember characteristics of its products or services. When a consumer sees large golden arches, for example, he immediately knows that he can obtain two all beef patties, special sauce, lettuce, cheese, pickles, and onions on a sesame seed bun of a particular taste, and he is willing to pay a certain price for such a product.

In a nonprofit context, the recipient of a product or service is not necessarily the one who provides payment. One constituent may receive a product or service (e.g., a homeless person receives a free meal) for which a different person (i.e., the donor) provides the funds. This indirect exchange often leads to a misconception that nonprofits’ trademarks are not important on the theory that donors do not look to a brand to know the characteristics of the product or service.

In reality, however, the public does rely on a nonprofit’s brand. Trademarks serve as a shortcut to judge the quality of charitable services, the caliber of programs, and the credibility of information. Simply by the reputation embodied in the trademark, a donor may forego research and give money to a group like World Vision® knowing that the funds will be effectively used to clothe and feed needy children all over the world.

Constituents, too, rely on brands to assess an organization’s goods or services. Those who rely on information from educational, advocacy, and research groups depend on such organizations’ reputations to determine the credibility of their messages. Information from the Heritage Foundation® or the ACLU,® for example, is likely to be judged trustworthy by people of particular political persuasions even before it is read, based solely on the sources’ brands.

Trademarks generate revenue. Nonprofits generally rely on public donations to fund their activities. But in today’s tight market, organizations also use program fees and product sales to generate additional revenue. Religious ministries, advocacy groups, and associations often sell branded books, CDs, and DVDs. Educational organizations such as Sesame Workshop generate tremendous revenue from the sale of Sesame Street® branded educational toys and games. For such purposes, the protection of nonprofit marks is no different from that of for-profits. Both types of entities benefit from strong, well-protected trademarks, guarding their name, programs, services, and products. This protection, in turn, preserves public recognition and may result in greater sales.

Many nonprofits are also discovering that licensing and co-branding of their well-known trademarks to for-profit companies can be a valuable supplemental revenue source, as well as another means of developing goodwill. For example, it is a natural fit for nature groups to license their logos on the sale of outdoor clothing and products. A strong license or co-branding agreement is critical to a nonprofit’s brand placement on other companies’ products.

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