Corporate America has reframed charity as a consumer proposition. Instead of writing a check or volunteering our time, more and more Americans are donating to charities by buying products adorned with a pink ribbon or by inputting a code to an online site in order to generate a donation. Consumers do so because they believe they are making a difference in terms of fighting breast cancer or improving the lives of the poor and hungry. The reality is that charity attached to consumer goods is the least effective means to truly make a difference in the world. The glare of consumerism hides the reality that corporations are expected to help pay for social services because many governments have gutted much of the social safety net — something that started in the 1980s and continues, unfortunately, today.
Attaching a charitable donation to the purchase of a product is known as cause-related marketing (CRM). CRM began in 1983, when American Express (Amex) helped raise money to restore the Statue of Liberty. Amex promised to donate one penny for each card purchase and one dollar for each new account opened during the final quarter of the year. The campaign was successful in generating much-needed funds for the statue while simultaneously increasing Amex card usage and garnering considerable positive press for the company. It took almost 20 years for this marketing strategy to take off; then, companies began to tie their campaigns to product branding and corporate profits. Companies had long known that donating to charity and giving back to the local community generated incremental good will. By the turn of the millennium, and in particular after September 11, 2001, corporations learned that consumers would pay more for a product if it was tied to a charity.
While these campaigns have generated charitable donations (often costing more to produce than the money they ultimately raise), the proliferation of marketing initiatives that wed charity to commerce has led to two negative outcomes.
First, connecting corporations to charity has shifted the focus from the beneficiaries of charity — the hungry, the homeless, the poor and sick — to the providers of largesse, that is, you and me. Take, for example, Livestrong. This corporate-charity-cum-marketing-campaign — created by Nike and developed with racing cyclist Lance Armstrong, the seven-time winner of the Tour du France — is supported through the sales of sports gear and yellow rubber wristbands. Those yellow bands — and, subsequently, different colored bands for everything from living drug free to fighting child abuse — draw attention to the purchasers rather than to the needy. Think about it this way: If you sit at home and write a check, no one knows that you donated to charity — exactly how it is supposed to be done according to Jewish tradition. With Livestrong, however, you buy a bracelet that announces that you’ve made a donation to a foundation doing research on cancer. And, unlike a T-shirt that can only be worn perhaps once a week, the wristband becomes an established part of one’s wardrobe that communicates the wearer’s benevolence to the world each day.
Perhaps of more concern, at least in the short run, is the second downside to this form of philanthropy: Researchers have found that as an increasing number of companies partner with charities — and, as one insider I spoke with said, “It (using charity as a promotional tool) has become the price of admission” — consumers are less likely to donate money in traditional ways; they believe they have already given. More important, researchers are becoming concerned that with so many “cause campaigns,” individuals will begin to experience charity fatigue.
Beyond these issues is a lack of transparency. In most cases, consumers are not aware of how their charitable dollars are spent, or how much of the purchase price is designated as charity. In most cases, corporations announce a figure, a cap, on how much money they will donate. For example, “we will donate $50,000 from the sale of these T-shirts to breast cancer research.” There’s only one problem: How do consumers know when the $50,000 cap has been reached? Consumers may think that buying T-shirts will continuously result in donations.
The bottom line is this: Buy products you want to buy. Don’t assume, though, that you have done anything within the consumer transaction to make the world a better place.