Is It Philanthropy or Marketing?

Cause-related marketing, in which some or all of what a consumer pays for designated products or services is donated to a charitable organization, has become an increasingly important way for some organizations to raise funds, the Associated Press reports. However, some experts worry that the trend is sending the wrong message to consumers.

People who buy scented pink candles at Pier 1 Imports, for example, are also supporting breast cancer research, while those who purchase bottled Ethos water at Starbucks are helping to fund clean water projects worldwide. Similarly, purchasers of (Product) RED clothing at the Gap are investing in the fight against AIDS in Africa. The practice has also become a way for big retailers to suggest they're good corporate citizens.

But is cause-related marketing philanthropy or is it just another marketing technique? "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, he added, it also "can increase the public's understanding of the nonprofit's mission."

Burlingame estimates that nonprofits receive about $7 billion a year via cause-related marketing efforts. For example, Dallas-based Susan G. Komen for the Cure, the breast cancer charity known for its pink ribbon logo and "race for the cure" road races, raises 10 percent to 12 percent of its revenues — $36 million in 2006 — from corporate partnerships, said Katrina Drake, Komen's director of cause marketing. Not only do the partnerships generate revenue to support Komen's mission, she noted, they also provide a platform to reach people the organization might not reach through traditional messages.

The problem, said Trent Stamp, president of Charity Navigator, is that consumers will begin to think that buying a product or signing up for a service constitutes charitable giving. "You cannot shop your way to being an effective philanthropist," he added. "The No. 1 way you can help a charity is to sit down and write a check."

Eileen Alt Powell. "Experts Worry About Shopping for Charity." Associated Press 05/23/2007.