Consumers who buy scented pink candles at retailer Pier1 Imports are supporting breast cancer research. Those who purchase bottled Ethos water at Starbucks are funding clean water projects around the globe. The buyers of certain RED products at The Gap are investing in the fight against AIDS in Africa.
Shopping for charity — also known as cause-related marketing — has become an increasingly important way for some philanthropies to raise funds. In most cases, some or all of the money a consumer pays for designated products or services is donated to a charitable organization.
The practice also become a way for big retailers to suggest they’re good corporate citizens, committed to social causes.
But some experts worry that the trend is sending the wrong message to people about charitable giving.
“There’s no question but that it’s an alternative revenue source for some nonprofits,” said Dwight Burlingame, associate executive director of the Center on Philanthropy at Indiana University. And if the campaign has an educational component, it also “can increase the public’s understanding of the nonprofit’s mission,” he said.
‘Donors feel they've given’
“The big negative is the idea that potential donors think that by buying a bottle of water or participating in a particular race ... that they’ve done their philanthropy, when only a portion — and often a small portion — of their contribution is going to a cause,” he said.
“The danger for the nonprofit is that potential donors feel they’ve ’given’ and don’t have to sit down and make a real gift,” he added.
Still, because corporations find that sponsoring social causes can help their image, they have been eager to participate, Burlingame said. He estimated that about $7 billion a year — or half of the money contributed by corporations to philanthropic causes in the United States — comes via cause-related marketing.
Charities that get the proceeds say the funding can become a significant portion of their budgets.
Susan G. Komen for the Cure, the breast cancer charity known for its ubiquitous pink ribbon logo and “race for the cure” marathons, raises 10 percent to 12 percent of its revenue from corporate partnerships, according to Katrina Drake, director of cause marketing for the Dallas-based nonprofit.
Last year, $36 million of the group’s $267 million in revenue came from the 130 corporate partners. Some, like the manufacturer of SunChips, donates 25 cents for each proof of purchase tag from specially marked chip bags, others like Pier1 donates 25 percent of the purchase price of its special candle to Komen.
“It not only generates revenue that can be invested in our mission, it’s also a platform to reach people we might not reach through traditional messages,” Drake said.
Trent Stamp, president of Charity Navigator, a nonprofit based in Mahwah, N.J., that evaluates some 5,200 charities, said companies use cause-related marketing to differentiate their products from competitors.
“There’s a certain amount of, ’Let’s align our for-profit product with a nonprofit so people feel good about what we’re selling,”’ Stamp said.
This means, however, that most tie-ins are with big, recognized charities, not small local ones — even if they’re deserving, he said.
“And, it can be an extremely inefficient way for people to give to charity, because generally only pennies on the dollar actually to the nonprofit,” he added.
Some corporate sponsors also are unclear in their promotions about who’s going to get what, Stamp warned.
“It’s not good enough for the corporation to say that ’a portion will go to charity;’ you want to know exactly how much and to which charity,” he said.
There also are a growing number of online portals that promise to rebate as much as 3 percent of purchases made through a Web site to charities. The consumer, Stamp said, “needs to weigh whether buying a book through one of these sites beats going directly to Amazon.com.”
Stamp’s main concern about the special marketing programs is that consumers will begin to think that buying a product here or signing up for a service there constitutes charitable giving.
“You cannot shop your way to being an effective philanthropist,” he said. “The No. 1 way you can help a charity is to sit down and write a check.”