Is There Such a Concept as “Good Will” in Reality and is it Transferable?

Is There Such a Concept as “Good Will” in Reality and is it Transferable?

After thinking about it for a while I started to think about charities for some reason or another. Red Cross in particular. Perhaps the word itself had something to do with the association I began to think. It became apparent to me that good will does in fact exist as an intangible asset as I began to think about other charitable organizations in relation to Red Cross. If we were to compare XYZ charity who started up this year and had all the tangible value of Red Cross it would be logical to say that these companies are of equal value. But in fact they shouldn’t be. No not in a world where image, rapport, and reputation do have value.
Now I am imagining there may be some confusion in talking about the good will of companies that do good will work but I hope to alleviate that potential confusion. My basis of comparison is more based on trust in an industry where there are charitable companies that are trusted more than others when it comes to who we choose to donate to when disasters occur.
There are times when people donate to random charitable organizations (XYZ in this case) when disasters occur. But after a number of controversies came about that some charities are scams it began to change the way people donated, at least it did for me. But there was one charitable organization that I never doubted through the drama. Isn’t that worth something in and of itself? For example when I heard that there was something I could do to help with the disaster in Japan I instantly responded to the Red Cross’s ad even though I had seen plenty of other organizations ads for support that I had never heard of or if I had were obscure. I think that had a lot to do with the fact Red Cross not only has been around the block but it has also lived up to its brand. Though these other charities claim to be about good will the line that separates them from Red Cross begins to emerge.

In talking about the good will of companies I think that the discussion of good will companies is a logical one. Red Cross has built its name on good will, trust, and sacrifice, and the vast majority of donations going to places that need it. When it comes to those fundamentals I don’t think that anyone would argue that they don’t live up to those values. And I know it is because of their untarnished record as an organization that I don’t hesitate one bit when it comes to giving money to them for them to appropriate. If XYZ came around all of a sudden not only would I hesitate I would look deeper into them to discover just who they were and how they would be helping, but chances are I would just donate to Red Cross and not even give them a second glance. XYZ would have far to go in building the rapport Red Cross has achieved and though they are of equal tangible value they are far apart in overall value. Now the point I make is made without me showing one bit of tangible evidence to support my claims but I know this isn’t a discussion of tangible facts but instead on the intangibles. I don’t need to because I know you feel the same way. We all do for that matter and it is because of Red Cross that we feel this way. That’s the point of this question because without facts (overall assets), how do we feel about the relationship we have with that company and what they represent to us.

The transferability of good will from the original ownership to new ownership is speculative and conditional. It would be perfectly fine to use Red Cross as an example that yes that good will would carry over. I personally don’t know who is responsible for the good will of Red Cross over the decades and I’m sure top-level management has changed yet Red Cross is still held in high regards if not more so today. But that may be because Red Cross is in itself that which we have a relationship with. If Joe’s Plumbing who had a tight and amiable relationship with his customers and clients and known for going the extra mile was to retire and sell his company I do not believe good will would be transferrable, at least not completely. Why exactly this is the case I cannot explain with any certainty but I have a feeling you may agree. As to the exact nature of how Red Cross and a man named Joe share the same feelings by their customers is a peculiar psychological association. I think that the new owner of Joe’s Plumbing would have a better chance than someone Joe didn’t vouch for that was just off the street. But if that new owner didn’t live up to what Joe’s Plumbing had lived up to prior than that good will would depreciate much faster than it would have for Joe. Now I leave you this, if Red Cross changed their name to Green Square would that not have the same effect?

3 Comments

  1. Hey,
    Goodwill is about perception which is built over period. It was your perception of good about Red Cross which made you respond to its ad and not of others’. When we talk about goodwill we associate with some name. Changing that name is bound to affect goodwill. So changing Red Cross to Green Square is not going to be same until Green Square delivers continuous good work like it did prior under Red Cross name. It will be interesting to know how would you perceive this change.

  2. I found your take on goodwill for “Goodwill” very interesting. Sometimes non-profits can build up a lot of goodwill over the years and lose it in one misappropriation or misplaced action of a well- intentioned leader. A good example happened a few years ago in a regional branch of the United Way. It took many years for them to recover from the disastrous actions of a previous leader. It just goes to show you that good business is good and bad business is bad, regardless of whether or not the business is for profit or not for profit!

  3. You made an interesting point at the end with the Joe’s Plumbing name. If a company’s name incorporates the owners name, I think the idea of goodwill is slightly changed. I would not want to pay as much for a company named Smith’s Tires as I would for something with a more generic name like Mountain Tires. But I know goodwill is often taken into consideration when a purchase is made of an existing business.
    I wonder if they are treated any differently?