Philanthropy Action

News & Commentary

Archive

A year ago I wrote a piece on Beyond Philanthropy entitled “(Red) Takes a Beating”, which analyzed the criticism being slung at the time at Bono’s (Product)Red. Red is an embedded giving initiative, the aim of which is to raise funds for AIDS programs in Africa sponsored by The Global Fund to Fight AIDS, Tuberculosis and Malaria. Red funds come from partners such as Gap, Motorola, Converse, Apple and others; partners pay a licensing fee to use the Red brand and then donate a percentage or a fixed dollar amount from sales of its Red-branded items. Last year the initiative came under significant criticism because of an Advertising Age report which claimed that Red partners had collectively spent up to $100 million in advertising and raised only $25 million in Global Fund donations (Red says the spending was closer to $50 million). At the time I defended the discrepancy, not because I think Red is a particularly good idea (I don’t), but because of Red’s stated intention to be a business proposition whose aim is to create a stable source of donations for the Global Fund. If Red is a business opportunity for its partners, I argued, than it should be analyzed with the same criteria we have for businesses. Namely, we should look at the five-year plan and allow for significant upfront investments that will take many years to return.

Still, some recent news articles raise new, conflicting questions about the campaign. In February the Wall Street Journal reported on a Red effort to raise money through an art auction run by Sotheby’s, with support by the Gagosian gallery. Bono elicited the help of British artist Damien Hirst, who donated a number of pieces. In total, the auction raised $42 million through the sale of mostly celebrity art to a mostly celebrity audience, surpassing in one night the $34 million in Red donations given through retail sales since the launch of the campaign in 2006. Also in February, the New York Times wrote a piece about the impact of Red on the Global Fund as a whole. Among other points, the Times reported that Red donations amounted to only two percent of the total donations given to the Global Fund (the rest of the funds for the organization come mostly from governments).

Together, these two stories suggest something of an identify crises at the brand. In the case of the art auction, a move into Sotheby’s territory and the sale of artworks valued in the millions is a far cry from the dollars and cents amassed by taking a cut from mass market t-shirt sales and RAZR phones. This suggests that Red is trying to move into the luxury goods market and breed more celebrity chic for its brand (and possibly thereby escaping the middle class pinch that comes with economic malaise). The conflict is that Bono didn’t choose to move up-market by wooing Miuccia Prada or BMW; he chose to do it by launching a charity auction. And charity auctions are…well…charity auctions: one-time fund-raising tactics used frequently by nonprofits to benefit a cause. What they aren’t are replicable business practices, nor are they stable, sustainable sources of cash. Red may have doubled its total donations in one night, but when viewed as part of the whole it is certainly not enough to make or break the Global Fund if its other donors fail their commitments.

Some may argue that the source of funds does not matter to people living with AIDS in Rwanda, Ghana and Swaziland who are on ARVs only because of Red funds, and they may be right. (Product)Red co-founder Bobby Schriver was quoted after the auction saying that thousands would be able to take ARVs for at least ten years as a result of the funds raised that night; that’s a legitimately laudable achievement. But its not necessarily one that can be replicated every year for as long as AIDS exists.

Perhaps it is too much to ask for consistency from a brand, especially one that is not attached to one company. Is it mass market? It is high-end? Is it a business or is it a charity? Recent events have only made these questions less answerable. But they do confirm something: that Red is well on its way to being remembered in five years as an initiative with outsized publicity and niche impact.

Comments

To the Editor:

I would like to address the questions raised and inaccuracies about (RED) in Ms. Starita’s op-ed (The Global Fund Not Seeing Red, April 29th).

(RED) was designed to raise awareness of the AIDS crisis in Africa and deliver a sustainable flow of money to The Global Fund to fight the pandemic.

The (RED) Art Auction was an enormously successful awareness-raising event that reached hundreds of millions of people around the world with this important message AND delivered over $40 million dollars to The Global Fund, bringing the total contributions to over $100 million dollars.

When we have an offer of help to raise awareness and funds under the (RED) banner from friends, stars and non-celebrities alike, at bake sales, walkathons, and yes, art auctions, we will gladly accept that support to help prevent 4,400 people from dying every day from a preventable and treatable disease.

Sincerely,

Susan Smith Ellis
CEO
(RED)

May 01, 2008

You can measure the success of (RED) in many ways; one of them is how it benefits the Global Fund. It is meaningless to compare (RED)’s contribution to the Global Fund against what governments contribute. After all, the Global Fund is the largest multilateral funder of health programs with payments of nearly $2 billion last year and a projection of disbursing $6 billion a year by 2010. No-one expected that (RED) would raise such a large amount, relative to all other private sector initiatives to date, so quickly - even if this seems small compared to governments’ contributions.

The relevant point is that, with more than $100 million contributed so far, (RED) is by far the largest private sector contributor to the Global Fund. It is arguably already the most successful private sector contribution to a humanitarian cause ever, barely 18 months after it was launched in the United States. Private sector initiatives rarely bring in large cash amounts. Take “Change for Good” Unicef’s brilliant concept for engaging airlines in collecting funds for children and among the most well-known initiatives that exists: since 1987, it has collected a total of $70 million – barely two thirds of what (RED) has done in two years.

What Laura Starita misses completely is that for an organization which is largely dependent on public sector funding, being visible and popular among the people who elect the governments which allocate the billions of dollars we need is crucial. The association with (RED) provides publicity beyond anything the Global Fund could afford to do on its own. The (RED) auction was important in that it provided lots of money, but so much more so, because it continued the buzz around (RED).

Far from being directionless, (RED) is a truly 21st century brand, which uses celebrity-power, the surprise factor and intelligence to constantly engage and interest the consumer. With Dell and Microsoft as the latest partners and more to come, (RED) is truly establishing itself as a leading, modern brand, and a concept which can bring ever more money to a great cause.

May 02, 2008

Remember my personal information

Notify me of follow-up comments?

Comments may be edited for length. Inappropriate comments will not be published.