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This is a re-publication of a piece we wrote last year. As the holiday spending season begins, buyers should be aware of the issues surrounding retail/charity marketing partnerships—even more so in this environment of scarce resources.

In today’s New York Times, Stephanie Strom explores the very public, but very opaque, world of “embedded giving. “Embedded giving” is a term used by Lucy Bernholz, a philanthropy consultant who writes the blog Philanthropy 2173, to describe all of the products and services which now are marketed with a claimed association with a cause or charity. Think pink ribbons, little panda bears, and the claim “A portion of the proceeds will go to X” printed on the price tag. As Strom’s piece shows there are no standards and very little data associated with this type of marketing—and some of the charities don’t know that their name is being used to market a consumer product.

It may seem to clash with the spirit of the holidays to ask probing questions about any form of charitable giving. After all, many would contend that embedded giving means some money is going to good causes, and that’s certainly better than none. Yet there are a number of problems with embedded giving that are not immediately obvious:

First, as we’ve written before about (Product)RED, embedded giving makes philanthropy subject to the retail cycle. In consumer retailing, products are consistently relaunched with claims of “20 percent more” or “new and improved”. Anything new must be part of some hot new trend. If embedded giving continues to grow, charities may increasingly be subject to the retail marketing cycle, which will only further pressure their fund-raising departments, to the detriment of their programs. If the product-seller isn’t committed to the cause beyond the immediate marketing benefits, it won’t matter if the charity has the most effective program serving the neediest people—it will have to be “new and improved” to remain front and center.

Second, embedded giving may further erode donor trust and perceptions of effectiveness. Because the “donor”/buyer generally has little idea of how much or where the donated portion of their purchase goes, there is the risk that she will conclude that nothing was accomplished with the money she “gave”. Without feedback on how much was given, to what charity and most importantly, what was accomplished with the money, buyers are likely to conclude that the charity was ineffective, regardless of what actually happened.

Third, in conflating buying and giving, embedded giving can corrupt the innate human instinct for generosity. There is a big difference between making a personal choice—and the necessary budgetary sacrifice—to help someone, and buying a product primarily designed for one’s own personal satisfaction, no matter where a portion of the proceeds go. Giving, being truly generous, is an important part of being human. Buying is not a substitute.

Last, a products’ association with a worthwhile cause may cloud other issues associated with that product or manufacturer, such as damaging environmental practices or unfair wages for workers. For instance, a recent report from the World Wildlife Foundation grades the social and environmental practices of the major luxury brands, and finds all of them seriously lacking—some of these companies use embedded giving marketing techniques. Buying a product from a profitable, well-run company that provides good jobs for its workers ultimately does much more to help people than any charity-earmarked portion of the proceeds could. Embedded giving can distract from corporate practices that matter most.

Buyers should insist that an embedded giving program provides transparent information about how much is given from each purchase, how much is given total from the program, who it goes to, and on-going reporting about what was accomplished with the funds.

New York Times: Charities Share from Shopping Raises Concerns

World Wildlife Federation: Deeper Luxury

Comments

Embedded Giving, or what used to be referred to as cause related marketing, is not in and of itself a bad thing.  It can have major downside consequences if not part of an integrated corporate strategy,  however, it can also be incredibly powerful for a company, its employees and stakeholders, as well as to a charity, if it is part of an integrated plan.  Companies should be encouraged to give.  Because they have a financial charter, their gifts need to integrated with their corporate strategy.  Cause related marketing can be part of a corporate strategy.  When there is a consistency between the corporation’s strategy, the charity being supported, and the marketing or embedded giving then 1 and 1 equals 3.  In fact, it equals more than 3 because the giving is coming out of the marketing budget versus the company’s foundation budget, which is usually quite a bit larger. The issue is not embedded giving, it is strategic corporate social responsibility.

Randall Ottinger
http://www.beyondsuccesslegacy.com

January 06, 2008

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