1. Introduction
Banishing the myth that good causes alone are sufficient to compete for the consumer pound is proving difficult. Charities need to recognise the power of brands in today's competitive environment and invest in their own brands accordingly. Consumer decision-making is no different whether choosing which brands of chocolate, car or watch to buy or which charity to support. The process is the same. This report helps to show the relative weight of charity brands in financial terms - a key measure of their effectiveness.

Income growth from the 100 most valuable charity brands in 2006 dropped 1%, to 7% compared with last year's performance. The average growth in brand value also fell from 12% in 2005 to 3% in 2006. This study aims to highlight the value of charity brands so that their owners and their stakeholders can reverse this trend to generate additional funds to benefit their objectives.

The industry dynamics between commercial and not for profit are of course different, but the methodologies that can be applied to both leveraging a brand's value and in calculating its value, are the same.

2. Methodology
Brand values are a reflection of a brand's ability to generate future income. For a charity this is highly relevant because it generates more resources to do more towards their charitable income. This is a forward looking study that uses historic performance and future trends to predict future activity. Five years of historical sales data were used to help forecast each charity's growth. To determine the strength of the brands, each brand was also scored on twelve measures of brand strength.

Definitions of components of brand strength

Hard measures
Legacy income: a measure of a charity's reliance on legacy income
Donations: a measure of a charity's reliance on donations
Voluntary income: a measure of a charity's reliance on voluntary income
Non charitable trading: the current level of a charity's commercial trading
Efficiency: a ratio of direct charitable expenditure as a percentage of its income
Share of market: volume based measure of market share
Support base: the size of its number of volunteers and/or members
Market scope: number of markets in which the brand has a significant presence

Soft measures
Brand awareness: a combination of prompted and spontaneous awareness
Brand relevancy: capacity to relate to the brand and a propensity to support
Brand heritage: a brand's longevity and a measure of how it is embedded in local culture
Brand perception: loyalty and how close a strong brand image is to a desire for action

Calculating brand value
The actual brand valuation calculation is relatively straight forward. It attempts to derive the amount the charity would be willing to pay for its brand if it did not already own it. This approach is called the relief from royalty methodology as it calculates how much the brand owner is relieved from paying by virtue of owning the brand. The more complicated parts are the components that contribute to the calculation. These three stages illustrate the process, simply:

1. Forecast sales
These charities have been given indefinite lives as they are all well established brands, steeped in heritage and financially robust. The compound annual growth rate (CAGR) is adjusted to reflect the brand's long term ability for growth. For example, Age Concern's five year CAGR is 26%. As this is unlikely to be sustainable indefinitely, its growth rate has been adjusted to a more realistic 5%. This reflects more accurately a brand and its sector's long term growth prospects based on current and historical performance.

2. Royalty rate
Each brand is given a score out of ten based on the measures identified above, 0 = low, 10 = high. This results in relative brand strengths for each brand as a percentage. This score is then positioned within a royalty rate range to determine a royalty rate for each brand.

The royalty rate appears to be a simple percentage but in fact this hides the depth of understanding required to determine a rate that reflects accurately the profit/cash flow generated by the brand alone - separate from other elements of product delivery.

3. Discount rate
Future sales are then multiplied by the royalty rate. Tax is not deducted as charities are exempt from paying tax. They are then multiplied by a discount rate to calculate the net present value of those future cash flows. The discount rate reflects the time value and risk attached to those cash flows and for the purpose of this exercise has been left at a flat 12.38% as these are reasonably low-risk, established brands in a stable economic environment and market.

Testing
Results are tested and verified by sense-checks, such as to comparable commercial licensing agreements and referenced to proprietary information on the value of leading brands, which all share similar characteristics of value cash flow generation.

3. Key Issues

Obstacles to brands and brand building
One of the biggest obstacles encountered when discussing leveraging a charity's brand is senior management or trustees. They claim it is counter to the charity's purpose to act commercially and profit from revenue streams derived directly from their brand. They feel their membership would baulk at such commercial activity. This internal reluctance is at odds with what consumers think and only restricts the charity's ability to further its objectives.

A cohesive brand development campaign would have the effect of a virtuous cycle. It would increase the charity's awareness and understanding which would logically translate into increased income. This would then provide more funds to carry out the charity's objectives and enable it to fund further brand development projects. And so the cycle would continue.

While some charities have adopted a more commercial approach to their marketing, if this was taken further then there would be more resource available to achieve the charitable goals.

Minnows eaten by big fish
While the overall market for charitable giving is likely to increase with more fundraising activity from the biggest charities, it is also likely to be at the expense of smaller charities. With brands dominating consumers' lives, small local charities are less and less likely to be considered for legacy donations, sponsorship or donations as they lack the consumer familiarity. Consumers' budgets for charitable giving are likely to be reserved for the brands they know well - those with big budgets.

More income at lower cost
The Holy Grail of fundraising is coming up with ways of increasing revenue at lower costs. Two such methods are frequently under-utilised:

Legacies
One income stream for charities has much less competition and greater potential than other fundraising activities. £49 billion is inherited each year in the UK. 91% of this is handed down to friends or family, the government collects 6% and only 3% is given to charities. This 3%, however, represents 18% of charities' voluntary income so a small increase in national legacy donation would make a disproportionately large difference to charities across the board.
Targeting legacy donations is a long-term remedy and an uncomfortable message for charities to be communicating. Recipients of such communication, however, are quite happy to receive it although they are unlikely to respond in the traditional manner due to the private nature of the issue.
Half of charities' legacy donations come from people unknown to the charity during their lifetime which makes targeting legacies notoriously difficult. However, because the income can be considerable, it is unrestricted and also cost efficient, it remains an attractive area with significant potential.

Licensing
Some charities have embarked on successful licensing campaigns, such as The British Heart Foundation. However, many charities miss out on this additional, minimal cost income stream due to internal reluctance to be seen to be profiting from their brands.
The British Heart Foundation, through its licensing deals with products such as George Foreman Lean Mean Fat Reducing Grilling Machine, Radox bath products and Shredded Wheat, is not only generating extra income but is also causing another important and often over looked function: it is furthering its charitable objective of helping hearts to be more healthy.
Such arrangements increase a charity's relevance. Few charities in the top 100 lack awareness but many are not fully understood or perceived as relevant. This creates a gap which licensing can fill.

4. Biggest movers: Going UP

CAFOD
CAFOD, Catholic Agency for Overseas Development, benefited from the average 26% increase in revenue experienced by religious based charities in the top 100. It reported revenues up 67% from £28m to £47m in 2006. There have been several disasters recently which CAFOD has campaigned for, such as Typhoon Durian in the Philippines, an earthquake in Java and the conflicts in the Middle East. Such disasters are brought to the public's attention by the media and organisations such as CAFOD, increasing the public's awareness and feelings towards them and consequently CAFOD.

Battersea Dogs & Cats Home
Although its income is small compared with many other charities, Battersea Dogs & Cats Home's fame enables it to punch well above its weight. By income it is the 343rd largest charity in the UK whereas by brand value it is 83rd. The positive feelings the public has had towards it has enabled Battersea Dogs & Cats Home to increase its revenue by 24% in 2006 to £13m. Its 140 year old heritage means that generations of pet owners have supported it and are likely to continue to do so for many more years to come.

ChildLine
Childline has experienced uninterrupted growth over the past five years at an annual rate of an impressive 12%. It enters the top 100 most valuable charity brands for the first time this year and if it is able to sustain its growth, it will be here to stay. Its brand promise is clear and enables it to clearly differentiate itself from the competition. It operates in the second most valuable sector by brand value, children's charities, and in this its 20th year, has joined forces with the NSPCC, broadening its infrastructure and support base so it can continue with its valuable work.

The Institute of Cancer Research
The cancer charity sector is the most valuable by brand value in the top 100. The Institute of Cancer Research is the smallest of the four cancer charities to make the list with revenue of £64m in 2006, but it grew the fastest. Revenue increased by 13% year on year in 2006 whereas growth from its major competitors remained largely static. To some extent, The Institute of Cancer Research is able to ride the wave of cancer's sad pervasiveness but its clear positioning and communication support enables it to leverage its brand to punch above its weight - nine places above its ranking by income.

Christian Aid
Following four years of relatively inert growth, Christian Aid recorded a 33% increase of income in 2006, from £60m to £80m. Revenue from religious charities as a whole in the top 100 grew by an average 26%. Reducing world poverty has been a big issue over the past couple of years. Christian Aid has been able to capitalise on this problem and draw on its large UK support base to increase its relevancy with the UK public. As such, its brand has increased in value by 5%.

5. Biggest movers: Going DOWN

RNLI
Last year, the RNLI reported its busiest year. It rescued nearly 20,000 people directly with its life boats and life guards and saved countless more lives through the dissemination of preventative information. Unfortunately, however, the volume of income was not as forthcoming as the growth number of victims. Income since 2001 has fallen at an annual rate of 1% to £117m in 2006. This is also reflected in the strength and value of the RNLI brand which also fell by nearly 1% between 2005 and 2006.

English Heritage
English Heritage's growth last year was a static 0%, which is 2.5% below inflation so a decline in reality. The value of its brand also fell by 3% with a brand score 7% lower than 2005. English Heritage faces stiff competition from other environmental charities such as The National Trust which, with its membership base being seven times larger at well over 3m, enjoys the dominance its superior size allows to the detriment of English Heritage.

Great Ormond Street Hospital Children's Charity
A new entry to the top 100 most valuable charity brands, Great Ormond Street's brand enables it to generate £32m a year of income in 2006. This, however, was 8% lower than 2005. With 43% of its income being donated, the Great Ormond Street brand is still very valuable, worth nearly £6m.

The British Red Cross Society
The Red Cross is one of the most recognised brands in the world. Despite its heritage and brand recognition The British Red Cross Society reported no discernable growth in income in 2006. Affected by this plateau of income growth, the value of The British Red Cross brand fell by 3% from £111m in 2005 to £108m in 2006.

6. The Top 10

1. Cancer Research UK, £209m
Cancer Research is the third largest charity in the UK by size of income. It generates over £380m a year of which 25% is from legacies, 7% more than the national average. Unsurprisingly, cancer is the most valuable sector within the top 100. It has over 30,000 supporters in the UK and, largely due to its name, has an almost equally high level of understanding as it does awareness.

2. The National Trust, £192m
The National Trust is one of the largest membership bodies in the UK with 3.4m members and is the tenth biggest charity by income. 43,000 people volunteer for it and more than 12m people visit its pay for entry properties with a further 50m visiting its open air properties. It is this huge and loyal support base helps drive its brand value of £192m.

3. Oxfam, £172m
Over the past five years, Oxfam's income has increased by an average of 8% a year to over £250m. The value of its brand increased 4% in 2006 and is now worth £172m. The volume of tragedies throughout the world which are broadcast to the UK ensure a constant steam of causes for Oxfam to campaign for. This, combined with its national retail network and communication campaigns, ensures that Oxfam is never far from the public eye.

4. The Salvation Army, £113m
The Salvation Army, United Kingdom with the Republic of Ireland, has experienced uninterrupted growth over the past five years and grew by 4% in 2006. Innovations such as the prayer discussion room on its website builds loyalty among its large support network and has contributed to a 5% increase in its brand value in 2006.

5. The British Red Cross Society, £108m
Despite an income that has reached a plateau and a brand value that fell by 3% in 2006, The Red Cross is still a very valuable brand, worth £108m in the UK. It trains 150,000 people each year in the UK in first aid and its 35,000 trained volunteers alongside its considerable international network give The British Red Cross Society access to a large support base to call upon for fundraising activities. This is most evident in times of emergency both in the UK and internationally.

6. Wellcome Trust, £104m
The Wellcome Trust is the world's largest medical research charity, funding research into human and animal health. It enjoys a prominent position on the world stage and with annual income in excess of £300m at its disposal it has a considerable amount of influence. This influence is embodied in its well recognised brand which, in 2006, was worth £104m.

7. Royal Society for the Prevention of Cruelty to Animals, £94m
The RSPCA has probably been one of the most loved charities in the UK since its establishment in 1824. Someone calls the RSPCA every 25 seconds for help about preventing cruelty to animals and it successfully rehomes nearly 70,000 animals each year through its network of 174 branches. This substantial support increases the RSPA's relevance to the UK public and helps drive its brand value of £94m.

8. Barnardo's, £94m
Over 120,000 children are helped each year by Barnardo's. Its strong brand and popular, worthwhile, cause have helped increase its income by an average 9% a year since 2001. Since 1867, Barnardo's has helped children become free from poverty, abuse and discrimination and has become synonymous with impactful advertising that supports and enhances its vision. The value of its brand has also grown with the charity and is now worth £94m.

9. The Arts Council England, £89m
For sixty years The Arts Council England has been supporting the arts in England. It believes that the arts have the power to change lives and communities, and to create opportunities for people throughout the country. This belief is supported by an income of £379m from various sources including The National Lottery, government, voluntary income and other fundraising activities. Its brand is the vehicle through which it is able to both generate and disseminate its funds and is worth £89m.

10. British Heart Foundation, £85m
The British Heart Foundation has developed a sophisticated licensing programme which has seen its brand endorse relevant products such as water, bath bubbles, tea and breakfast cereal. This activity strengthens the charity's values of preventing heart disease. It also increases awareness of the charity which translates into increased funds. Income has increased by an average 8% since 2001 and 2006 was no exception with income up to £156m. It has a powerful and relevant brand which, through support from advertising and its licensing programme, has increased in value by 5% since 2005 to be worth £85m. An evaluation of its licensing programme may be necessary, however, to ensure continued relevance and effectiveness.

7. Top sectors

8. Notable absences:
As with most methodologies certain restrictions exist. One such restriction for the methodology used in valuing these charity brands is that one of the key factors is size of income. If a charity does not have a sizable income then by definition it cannot have a valuable brand - a brand's value is defined as its ability to generate revenue.

The charity sector is different from the commercial sector as the motivation is not profit but the furthering of the charity's objectives. A few charities stand out as not featuring in the top 100 most valuable charity brands in the UK, due largely to their incompatibility with the principles of valuing brands.

Remember a Charity
Remember A Charity does not qualify for inclusion in the list for two main reasons: it is hosted by another charity, The Institute of Fundraising, and therefore does not report its income separately; and, even if it did this would not reflect accurately its considerable financial contribution to the charity market.

Remember A Charity is a consortium of over 140 charities that works to increase legacy income to UK charities. Following a campaign in March to April 2006 prompting charitable legacy giving, its awareness among the key 45+ age group increased to 49%. Importantly, the propensity to leave a gift to charity in wills increased from 22% to 26%. If this 4% difference translated into legacies directly, then Remember A Charity's financial contribution would be nearly £2bn each year. Remember a Charity is clearly a charity with a considerable voice, influence and leverage.

Calculating Remember A Charity's actual financial contribution is nigh on impossible. This is due to the legislation in place restricting information on wills becoming public and because any income that could be attributed to the work of Remember A Charity is given directly to other charities, bypassing Remember A Charity. Its brand, therefore, defies valuation with the traditional methods and so is excluded from the list.

Greenpeace
Greenpeace is a household name in the UK where it has 221,000 supporters. It is also 100% reliant on donations from its supporters to retain its independence from government, companies or political parties. It is also a high-earning charity with a global turnover of over £150m.

However, as it does not report revenue from the UK separately from its global income, its brand value in the UK can not be isolated. Its inclusion in the list would be invalid as all other brand values are UK specific.

Samaritans
Samaritans enjoys near 100% awareness in the UK and has an impressive heritage. It has an important role and is in competition with few other charities. It has also experienced impressive annual growth of 15% since 2001. However, despite having touched the lives millions of people in the UK and having nearly 18,000 volunteers, Samaritans has been unable to generate income sufficient to warrant inclusion in the top 100. It generated £10.2m in 2006 and its brand was worth £4m - 10% higher than 2005.

Others
Many other charities which are well known and supported in the UK have also failed to make the list. Such brands include Sight Savers International, Diabetes UK, Concern Worldwide, WaterAid, Royal Academy of Arts and Asthma UK. These are all brands which have the potential to compete with the much larger charities but lack the ability to generate income to achieve this goal. They all offer valuable services and contribute to worthy causes but their value is not yet large enough to compete with the top 100. Other charities may not appear in this list because their finances are not publicly available.

9. The Top 100

10. Conclusion

Potential criticisms

As with most research studies of this nature, confusion can arise as to the basis of valuation. The most frequent questions are:

1. You can't value a charity's brand.
As charities are not-for-profit organisations a common misconception is that the principle of valuing their brands is flawed. Charities compete in a commercial, competitive environment not only with other charities but with everything from DVDs to holidays. Also, like any profit-focused organisation they depend on revenue to fund their causes.

As such, they exist and compete in a similar way as commercial brands and consumers respond to them in the same way. Therefore, the same principles of brand valuation can be applied.

2. Why isn't a particular charity included?
There could be a number of reasons. The charity's income may be too small to register in the top 500 which was the sample base. The charity's income may be insufficiently small and as brand value is a reflection of a charity's ability to generate revenue, it would be excluded. The charity may not publish its finances separately in the UK. The charity's brand may face stiff competition and therefore not be valuable enough to warrant inclusion.

3. Why is this charity above this other charity?
The point of ranking charities by their brand value is not so much to gauge which is doing better than another but to appreciate the actual value of these brands. If this is understood then charities will be able to leverage this value to generate more funds to benefit good causes. Also, there is an element of subjectivity in valuing brands which, despite a robust methodology, cannot iron out all possible nuances of brand value. This is especially true when access to internally held information is not accessible.

Understanding that a brand's value is not aligned to its income is an important step in appreciating the power of brands. A brand can punch above its weight, like Battersea Dog & Cats Home, Childline or Amnesty International which are ranked 343, 309 and 218 positions above their ranking by income respectively. Or they can be underperforming like Scope or Sense which are 19 and 17 positions below their income ranking respectively.

Appreciating what generates value for a charity is important for leveraging its value to generate additional income. With a greater competitive and commercial attitude towards their brands, charities will be able to secure their position as some of the UK's most valuable brands while remaining sensitive to stakeholders needs and furthering their objectives.