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Another holiday season laden to the gills with Cause Marketing/Embedded Giving—those gimmicks where purveyors of some retail product promise to give “a portion of the proceeds” to some cause—is upon us. The use of the word “gimmick” probably betrays my sentiments toward these programs, but if you’re in any doubt see here and here and here and here. Or you could head over to Lucy Bernholz’s blog and read her latest on the topic: “Embedded Giving: Bad for You, Bad for Change”

This year I’ve decided to do something a bit more than just point out the questions, flaws and issues with cause marketing and embedded giving. I’m going to attempt to start a crowdsourced certification of cause marketing programs based on conformance with minimum standards of disclosure. Essentially, I’m asking you to 1) help me form a set of minimum, easy to judge standards for programs that are more than just gimmicks, and 2) start pointing out and rating cause marketing programs that meet those standards.

In terms of standards, let me suggest some ground rules and then a working prototype.

Ground Rules:
a) the system has to be simple, 5 standards or less (see Hope Consulting’s Money for Good study for why)
b) the system has to be as objective as possible
c) the system has to be able to distinguish between programs at a finer than binary level (e.g. not “good/bad”, but “dubious, questionable, OK, tolerable”—there I go giving away my priors again).

The Working Prototype:

My prototype is a five-star system based on meeting five basic standards. In my mind, any program that doesn’t meet all of these standards should be shunned, but I know that’s not realistic. So in the meantime, we get a ranking of zero to five stars based on whether the program conforms to each starred standard. The five standards:

1) The program says exactly what charity will receive the funds, with enough information for a person to find and investigate the charity on their own.
2) The program says exactly how much money the charity will receive (either in total or from each purchase with a projection of the total and any minimum or maximums built-in.) Note that percentages, especially such nebulous percentages as “2% of the profits”, do not meet this standard. Tell me the money.
3) The program says when the charity will receive the funds.
4) The program says what the funds will be used for or if there are any restrictions on the use of funds. This is especially important when brands link up to very large charities that do lots of things in lots of places (e.g. Save the Children, United Way, World Wildlife Fund). This star isn’t about the good or bad of restricted funds, it’s just asking for full disclosure on the terms of the funds and what they will be used for.
5) The program says why the charity was chosen. I don’t expect any program to meet this criteria, but I think its important to push corporations with charitable programs to using the resources at their disposal to help the general public find good charities. Corporations invest millions of dollars in these cause marketing campaigns. The least they could do is spend some of that money doing due diligence on the charities and telling the public what they find.

To show the system in action, here are initial ratings of three cause marketing programs which I selected simply based on being the first ones I stumbled across when I went looking for examples today.

1) Spunky Sprout and Reach the Children. 1 Star.
Spunky Sprout, an on-line children’s clothing retailer rated “Best of the Web” in 2009 by InStyle magazine, provides the full name and a link to the charity’s site (shockingly rare). Other than that, nothing. No information about how much money, when, for what or why Reach the Children was chosen.

2) Jared/Pandora and Susan G. Komen for the Cure: 1.5 stars.
Pandora is a jewelry maker. “Ten percent of the proceeds” from the sale of certain items will be donated. So in my scoring, they get one star for clearly identifying the charity and half-a-star for at least mentioning what the money will be used for: “to help support the organization’s research and community-based outreach programs”. That’s only half a star because its difficult to figure out exactly what Komen spends money on (see this post from GiveWell) and because it doesn’t specify whether there are any restrictions on the funds or that they are for general operating support. While the ad does mention a specific percentage as a donation, it uses the nebulous “proceeds” failing to specify what proceeds means (given that Pandora is sold through retailers, is proceeds the retail price or the wholesale price?) or clarifying if there is a minimum or maximum donation. Finally, we get no information on when the money will be given to Komen or why Komen was chosen.

3) The Body Shop and ECPAT: 1.5 Stars.
While ECPAT is clearly identified and easy to find with Google, why not just link to the site? Very similar to Pandora’s promotion, the ad nominally tells us what the funds are for but “combat and raise awareness of sex trafficking of children” is very vague and could mean almost anything. This campaign also commits the sin of telling us that “100% of the net proceeds” go to the charity, there’s no way of knowing what the net proceeds might be. Does the charity get a penny or a dollar? We also don’t know when the charity gets the funds or why The Body Shop chose ECPAT versus the many other anti-trafficking organizations out there.

So what do you think? Are these the right standards to demand of a cause marketing program? What would you change, add or replace?

Just as important, tell me about a cause marketing program that meets 3 or more of these standards. And just for fun, tell me about cause marketing programs that meet none of the standards. While I look forward to praising a good program or two, I can’t deny that it will be fun to ridicule the worst of the programs and expose them for the cheap and tawdry trick that they are.

Update: Joe Waters from Selfish Giving has written a thoughtful response, even going so far as to rate his own current cause marketing program, iParty and The Kids Fund at Boston Medical coming in at 3 stars . I won’t quibble with his rating for now, though he has introduced 1/4 stars. This is what I get for allowing 1/2 stars. Regardless, its an excellent post, well worth reading. Feel free to challenge Joe’s rating in the comments. Anyone out there got a program that beats 3 stars? 

Update 2: After several requests, I’ve applied the methodology to TOMS Shoes after a cursory review and awarded 2 stars. Please take a look at my logic in the comments and let me know if I’ve gotten anything wrong.

Comments

Thanks for hitting on this issue. I too dislike these cause marketing campaigns ad they seem to be proliferating exponentially while corporate giving is actually decreasing - according to my sources in corporate giving. Essentially they have become just a marketing campaign. They need to be far more transparent in their operations.

October 11, 2010

I agree with your philosophy as well, but see another factor that should be included in our analysis of cause marketing: proper fit between the nonprofit & corporate partner.  Does the product/service the company sells work against the mission of the NP, or work against those served by the NP?  Is the company a good donor but bad actor? 

Nature Conservancy and BP are the most recent example, Susan Komen & KFC fried chicken were another, but the one that got me was Miller Lite and Iraq and Afghanistan Vets of America.  Considering the number of vets the IAVA serve that have problems involving alcohol, accepting money from a company that sells the product linked with this problem is a headthunk indeed.

October 11, 2010
Editor

Brigid,

I agree that this is a very valid point, but its a tough one to measure objectively all of the time. I guess one option would be to simplify it to “direct conflict of interest”. That would ignore link-ups that are immaterial to each other, e.g. Buy a sweater and save a pony!, but it would also ignore tie-ups that actually might make some sense. Or perhaps we can have a “Special Warning” or some other way of assessing whether the tie-in makes sense.

Tim

October 11, 2010

I responded to this post at my blog Selfishgiving.com. Here’s the link.

http://selfishgiving.com/cause-practices/lets-get-rid-of-witches-pitches-cause-marketin

Joe
@joewaters

October 12, 2010

I applaud Tim in proposing a new system to rate cause marketing campaigns. The proposed rating recommendations centers on improvements to making cause campaigns more transparent. I think we could all agree that transparency is a necessary goal to achieve. But, do the recommendations go far enough in setting new standards that partners in cause campaigns must adhere to and does it place unnecessary restrictions?

Take for instance the recommendation to “Tell me the money.“ While clearly articulating the actual dollar amount may work in certain conditions (a company giving $5 back to a cause for each sale of a particular product, or a large company giving a max of $50k towards a cause), it fails to work for all too many companies wishing to give back to a cause they care about. Businesses work on profit margins and are more likely to give a percentage of product sales, than a dollar amount per each item sold, especially for retailers with 100s of products. While I am suspect of companies that give only 2% of the “profits” (AKA, only a few cents for each product sold), I am more suspect of a recommendation that prohibits a percentage of the product price going to a cause. Limiting the percentage feature altogether would simply discourage companies and nonprofits from forming or maximizing the potential of cause campaigns altogether. A better recommendation would be to encourage companies to articulate the amount of funds raised (regardless if they use a percentage of product sales) at POS, on receipts, online or simply training employees to tell each customer dollar amount their purchase today made for the cause.

I think there is a huge opportunity to set standards on the tactics used in cause campaigns, especially when confronted with the language used. Two examples come to mind. In the above example, we could recommend the use of “product sales” as opposed to “profits” or “proceeds”. Likewise, in place of “100% of net proceeds” going to the nonprofit, we could set the standard of using “100% of funds raised” goes directly to the nonprofit.

But, as Brigid points out, transparency is not the only issue. Equally important, and probably more critical to the integrity and long-term sustainability of the cause marketing “industry” altogether, is the corporate misuse of the cause to enhance a tarnished image/brand or, as you put it, conflicts of interest partnerships. Determining the legitimacy of a partnership within a cause campaign is highly subjective. A KFC/Komen campaign could be highly successful in the future if KFC would ever offer free-range, organic, non-fried chicken to its menu offerings (great tip for KFC to consider!). And, I could envision a host of cause campaigns that may on the surface be considered conflicts of interest, but are successful in solving a social dilemma by righting a wrong (e.g.: WeWOOD’s campaign to plant a tree for every purchase of its wooden watches).

Tim’s recommendations are a step in the right direction and we should all join the discussion to ensure the sustainability of cause campaigns in the future.

October 12, 2010

Is your ranking system only based on companies that give a portion of their profits to a charity?  What about a social business like TOMS Shoes?  It’s very clear that when you buy a pair of shoes, another person gets a pair that otherwise wouldn’t.

October 20, 2010
Editor

Josh,

Allow me to quibble on the semantics of your post for a moment before turning to the substantive issue.

It is by no means clear that when you buy a pair of TOMS shoes that “another person gets a pair that otherwise wouldn’t.“ What is clear that another person gets a pair of TOMS shoes, not that they would not have gotten shoes otherwise. It’s worth reading this very long post about shoe giving when thinking about TOMS program: http://bit.ly/ciKMq5

More to the point, I think TOMS shoes does qualify for a ranking because the important thing we are looking at is not giving to an external organization but the idea that you are giving while buying.

So here’s my quick rating of TOMS but I would encourage other more familiar with the program to chime in with better information:

1) It’s clear what TOMS is going to do: give a pair of TOMS shoes away. There is some relatively detailed information on the site explaining the program. 1 Star

2) It’s not at all clear what the value being given is. The price of shoes obviously builds in the cost of the donated shoes but we don’t know what that is. Is the wholesale value plus deliver cost $5 or $15 or $30? 0 stars.

3) As far as I can tell from cursory examination there is no information on the gap between when you buy a pair and when a recipient gets a pair or how specifically tied those efforts are. 0 Stars.

4) While its clear that a pair of shoes will be given rather than cash, its not clear where the shoes will go across a range of countries. 1/2 star.

5) As indicated in the post linked above, TOMS Shoes does very little to actually engage on the issues of why giving shoes is important or a good choice among the various possibilities. While it provides more information than many programs, the most important issues are ignored or glossed over. 1/2 star

Total: 2 Stars

October 28, 2010

I enjoyed your thoughts on what you believe constitutes a good cause marketing campaign.  Working in the nonprofit sector, I’m interested in how to better incorporate this process.  I would, however, disagree with your rating of TOMS Shoes overall.

Criteria 2: I don’t disagree that it’s a bit hard to find the monetary value of what is given to children, but that in and of itself is a lot more than expecting a company to disclose how much money including maximums and minimums a company is giving to a charity.  That is usually a simple, hard and fast number, unlike for TOMS, which would be considering how much do the materials of a shoe cost, the labor, the plane trip for the shoes and people, the admin time of people to go over and deliver the shoes, etc.  With something like TOMS Shoes that is giving goods rather than money, I feel you have compare apples to apples and oranges to oranges.  In this case, you would want to expect the company to disclose what is given with a purchase and what minimums and maximums are.  TOMS Shoes has made that clear: with a purchase of a pair of shoes (in addition to other products such as shirts and hats that are clearly marked), a pair of shoes is donated to a child in 1 of 23 countries.  What are the minimums and maximums?  None.  It’s one for one.

Criteria 3: The TOMS website states that there is approximately a 4-6 month gap between the purchase of a shoe and the delivery of its pair.  This process is stated to include the purchase, making the shoes, travel time on a boat, travel time through the villages on a truck/jeep, and then the delivery.

Criteria 4: There are 23 countries that TOMS Shoes currently has a partnership with.  Customers of TOMS Shoes have the option of choosing exactly which country their shoes go to including the States, countries in South America, and countries in Africa to name a few.  When you purchase a pair of shoes, you are given a code that can be used on the website to demarcate what country your shoes you want your shoes to be sent to.

Criteria 5: There is a plethora of information available on why giving shoes is important and the cause of choice for TOMS shoes.  Off the top of my head from my previous research of the company, I can remember reading about the prevention of diseases including one where worms enter the body through the foot, podoconiosis, requirements for going to school that children must have shoes, tetanus, and rough and dangerous terrain, none of which I would consider “the most important issues [being] ignored or glossed over.“

Much of the information you seek is available not only directly on the website, but the Annual Giving Report is also linked on the website: http://www.toms.com/giving-report (PDF at http://images.toms.com/media/content/images/giving-report/TOMS-Giving-Report-2010.pdf).

I believe that TOMS Shoes is an organization that is very transparent and lives its cause through and through and that uses its business model to be sustainable.  As of September 2010, in just 4 years, TOMS Shoes has given 1,000,000 shoes to children around the world.  The business model is constantly evolving to better suit the needs of the children including donating often (the annual report states that children outgrow shoes every 6 months), tailoring the type of shoe for children’s school needs (most require a simple black shoe), and developing cold-weather shoes.  Great company, exemplary use of cause marketing.  5 stars from me!

March 28, 2011

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