“A portion of proceeds” of adorable wild pony Christmas ornaments by Roost go to Return to Freedom, a wild horse sanctuary. “One hundred percent of profits” of a special Smock card supports the Pesticide Action Network.
According to Consumer Reports, the end of the year – which accounts for, on average, 41 percent of Americans’ charitable giving – is often a prime time for cause-related marketing: when companies push items with the promise that part of the purchase price will go to a nonprofit.
Also known as cause marketing, this phenomenon has grown into a $1.78 billion, year-round way for companies to support charities using your dollars.
But is it really the best way for you to support your favorite cause?
Cause marketing has been around since at least 1983, when American Express offered to donate a portion of a particular credit card’s revenues to the renovation of the Statue of Liberty. Today, countless companies link up with charities.
Nonprofits “are always short of cash,” says Renee Irvin, director of the Nonprofit Management Program at the University of Oregon. “The need is always outstripping their resources.”
But Consumer Reports notes that as the number of cause-related campaigns has risen, so too has consumer skepticism. After all, companies don’t do cause marketing solely to give, but also to get more of your business.
Surveys show that almost 90 percent of consumers say that given similar price and quality, they’re likely to switch to a brand associated with a good cause.
That’s why consumers get upset when campaigns are not quite as generous as they seem at first glance. One source of dismay is the common practice of a company capping its total donation, no matter how many products are sold. And you might object to your $10 ending up in the company’s coffers instead. (Conversely, some companies agree to a minimum donation, regardless of how many products are sold.)
Charities are subject to laws that forbid false or misleading advertising. And the Better Business Bureau includes, among its 20 standards for charities, one that addresses cause marketing. It requires disclosure at the point of appeal that identifies the amount of the purchase price going to the charity; if applicable, the duration of the campaign; and any maximum or minimum that will be donated. Charities violating BBB standards don’t receive their charity accreditations.
According to the Wise Giving Alliance, the two charities at the beginning of this article fail to meet the BBB’s standards because neither specifies the actual portion of the purchase price going to the organization.
Others violate the BBB’s guidelines by sending consumers to a website where it is difficult to find the disclosure, or that use vague language such as “net proceeds” or “some of our profits.”
Even if the donation-with-purchase charity is doing everything right, you still might want to reconsider that buy – especially because all of that in-store giving might actually cut into the amount that we, as individuals, allocate to our pet causes.
A 2011 study by Aradna Krishna, a marketing professor at the University of Michigan Ross School of Business, found that people gave less money in direct donations to charities when they made cause-marketing purchases.
“People may mentally assign their cause-marketing expenditure as their charitable giving,” Krishna reported.
She also found that cause-buying had a tendency to decrease happiness, probably because we realize that buying, say, a $40 necklace, is more self-serving than donating $40 directly.
Consumer Reports points out another advantage to giving straight to the charity: A donation is tax-deductible, unlike a cause-marketing purchase, for which the company selling the product gets the tax deduction for charitable giving.
So what should you do when you’re faced with a cause-marketing item at the store?
“All other things being equal, buy the product that helps a cause,” Irwin says. “But all other things are not usually equal.”