Buy a Lipstick and Better the World
by Patrick J. Kiger
You're told you'll help cure a painful disease or feed a hungry family
or save the rain forest. How to know which
deals are as charitable as they
In supermarket aisles, drug stores, and department stores, you'll
products that promise a special kind of bonus if you buy them: the chance
to do a good deed. Shop for ice cream,
and Ben & Jerry's Chocolate
Chip Cookie Dough will help you aid battered women. Choose a certain lipstick
and some of your money will go toward finding a cure for breast cancer.
Use your American Express card to make a
purchase and you'll be giving
to the poor.
Welcome to the world of "cause marketing." The concept is simple:
A company joins forces with a charity or
a nonprofit organization to market
a product or service. A manufacturer such as Procter & Gamble may advertise
that when consumers buy its toothpaste or shampoo, it donates a share of
the proceeds to Special Olympics. A financial-services
company may offer
a credit card that bears the name of an organization such as the Sierra
Club, which will get a
share of the money whenever the card is used. Or
a charity licenses its name and logo to manufacturers of clothing,
or household wares, in exchange for royalties, such as CARE's lines of
African-influenced dinnerware and
Peruvian-inspired home furnishings, and
the American Red Cross's line of wristwatches.
Cause marketing's roots date back to the early 1900's, when a New York
City candy maker spurred sales by offering
to donate a portion of its proceeds
to a local orphanage. In the 1970's, Wally Amos built his chain of Famous
cookie stores without paid advertising; instead, he got news coverage
by donating a percentage of revenues to literacy
programs. By the 1980's,
there were scores of imitators.
"Corporations used to give to charities because they were philanthropically
driven. Now, when they give, sometimes
they want something in return,"
says Christine King, president of The Marketing Group, a Santa Monica,
Indeed, in these tough economic times, both companies and charities see
cause marketing as a
win-win situation. Companies get to improve their
images and distinguish their products from those of competitors.
get new sources of revenue, and advertising and publicity that can help
them attract new members and donors.
But do consumers, trying to sort out products and prices, win? Research
certainly shows that cause marketing is
a powerful lure. According to a
study, one in five consumers had purchased a product or service benefiting
a cause in the previous year, and 66 percent said they'd consider switching
brands to support a charity. More
than half said they'd be willing to pay
more for a product that benefits a worthy cause. It's estimated that U.S.
and Canadian consumers buy $680 million worth of products that generate
royalties for nonprofit groups.
Which Charities to Support?
In general, cause marketing is a pretty good deal for consumers since it
makes donating almost effortless. But
now that there's an explosion of
charity-product pitches, how do we decide which companies and charities
Where will our dollars do the most good? And when we buy a
product, how much of the money we spend actually goes
to the nonprofit
organization? Who really benefits the cause or the company?
Explanations that companies offer
aren't always clear. "The phrase
'a portion of the proceeds' can mean anything under the sun," says
Bennett M. Weiner, an official with the Philanthropic Advisory Service
(PAS) of the Council of Better Business
Bureaus (CBBB). "The fact
is that companies sometimes don't want the public to know the exact amount,"
says Weiner, "because they're afraid Consumers will be less influenced
to buy the product."
Watchdog groups such as PAS and the National Charities Information Bureau
(NCIB) encourage companies and charities
to disclose enough information
so that consumers can make an informed decision. American Express, for
publishes a detailed report listing the exact amounts that each
local charity receives through its Charge Against
Unfortunately, American Express is more the exception than the rule. "Consumers
realize that it's unlikely they'll really know how much money goes
to the organization of their choice," says
Boston University Associate
Professor Roberta Clarke, Ph.D., a marketing specialist. "Even if
a company says
it gives x percent of its profit, that can really depend
upon how costs are accounted for and how it figures its
overhead." To judge whether you're actually being a charitable consumer when you buy
a certain product,
here's how to evaluate cause-marketing pitches.
- When the difference between brands is a few pennies, it makes sense
to pick the one that gives to a charity
you support. If that brand is significantly
more expensive, though, it may be a sign that the company is
more than the charity.
- Make sure you understand the relationship between the charity and the
store where you're buying the product.
For instance, a T-shirt or hat bearing
the name of a charity may cost more than a comparable nonlicensed item,
yet only a fraction of what you pay for the product ultimately goes to
the cause; the department store or
retailer generally gets the lion's share
(up to 50 percent of the selling price) and the manufacturer gets much
of what's leftover. A small percentage, agreed upon ahead of time, goes
to the charity. The Sierra Club,
for example, receives 5 to 8 percent of
the selling price, which means when you buy a $30 hat at the Nature Company,
about $1.50 to $2.40 is sent to the Sierra Club. CARE garners between 3
and 10 percent of the wholesale price
of its "Made With Care"
- Be wary of "affinity" credit cards, which may carry higher
interest rates. While the nonprofit
cause gets a share of each transaction,
it doesn't get a cut of the interest, which can amount to hundreds of
- Good campaigns use the product as a way to inform consumers, either
by providing literature with the
packaging or through an 800-number.
- Write to the company and ask how much the charity is actually getting.
The Council of Better Business Bureaus recommends that companies issue
a financial report at the end of each
campaign detailing how much money
has been collected and how much the charity actually receives.
- You can visit the Philanthropic
Advisory Service of The Council of Better Business Bureaus website to get information on
most major U.S. nonprofit organizations, including salaries of top executives
and what portion of revenue
actually is contributed to further the cause.
of information about charities is the Wise
Giving Guide published by the
Better Busibness Bureau.
Of course, while cause marketing provides
a convenient opportunity to
do good, it doesn't absolve us of responsibility to support causes we believe
in. According to the American Association of Fund-Raising Counsel Trust
for Philanthropy (TFP), corporate donations-
including cause-marketing campaigns-amount
to only about five cents of every dollar that charities receive. Roughly
90 cents on the dollar still comes from individual donors, who take time
to write checks and put them in the mail.
"If you switch brands to
support a cause," says TFP Research Director Ann Kaplan, "there's
no harm in feeling good about it. But if you really want to support a cause,
you should realize that when you buy
a product, only a percentage may go
to the cause. When you send them a check, they get to keep every penny."
Clinique - This cosmetic company marked Breast Cancer Awareness Month
last October through a promotion involving
its top-selling lipstick, Berry
Kiss Long Last. For each tube sold at the designated department stores,
donated its profit margin (about $2.25 out of a $7.50 selling
price) to breast cancer research.
Department Stores - the parent company of the 187 participating
retailers such as Bloomingdales and A&S kicked
in an additional $1.50
per tube. The result: $187,000 went to the Breast Cancer Research Foundation,
80 percent of the money to oncologist at eight major
medical institutions, including the Mayo Clinic in Rochester, MN,
Sloan Kettering Cancer Center in New York City.
Starbucks - Contributing $2 of its $21 CARE coffee
also gives $100,000 each year toward CARE projects in coffee-producing
countries, such as an educational
magazine for school children in Kenya.
Since 1991, it has raised more than $675,000.
American Express - Over the past
two holiday seasons American Express
raised more than $10 million to fight hunger by donating first two, then
that ultimately went to local food banks, soup kitchens, or
school-breakfast programs each time a consumer used its card.
Proctor & Gamble - P&G's recent campaign was aimed at benefiting
the Special Olympics. The company offered
discounts on three dozen brands,
with an added enticement: For every coupon redeemed during the promotion
agreed to give ten cents -- up to $750,00 -- to the Special
Olympics. After the cap was reached, P&G asked retailers
to make their
own grants, and then matched those, for a total of $1.25 million raised.
Ben & Jerry's - A veteran
cause marketer, Ben & Jerry's contributes
7.5 percent of its before-tax profit -- in 1993, that amounted to $808,000
to various causes. About half the money goes to Ben & Jerry's Foundation,
which doles out grants for such things as
programs to curb domestic violence
and an environmental museum for children. The rest goes to employee committees
decide what local and corporate programs to help fund. The gourmet
ice cream maker also strives to do good in the course
of regular business;
the brownies in its Chocolate Fudge Brownie flavor, for example, are bought
from a Yonkers, NY, bakery
whose mission is to create jobs for the poor.
Working Assets - When customers sign on for this company's Visa,
or long-distance calling service, they're set to vote on which environmental
or human-rights organizations
their money should benefit; the company contributes
ten cents per credit card transaction and 1 percent of its telephone
before it takes any profit. Last year, Working Assets gave $1.5 million
to 36 different groups, from Amnesty
International to the Children's Defense
McNeil Consumer Products - This pharmaceutical manufacturer, and the
nonprofit Arthritis Foundation have joined forces to market the Arthritis
Foundation Pain Reliever brand of ibuprofen,
aspirin, and acetaminophen
tablets. The Arthritis Foundation is putting 100 percent of its share toward
research for an
arthritis cure; McNeil promises to donate a minimum of
$1 million a year. "We saw it as a way to reach millions of
who need to know about the Arthritis Foundation, and the services we offer,"
says Arthritis Foundation
President and Chief Executive Officer Don L.
Riggin. "Because of our limited resources, we could never do the kind
of marketing that McNeil could do for us."
In the first five
months after the products reached drugstores,
the foundation received more
than 10,000 calls to an 800-number on each package of pills. Included inside
is an offer
for a free one-year trial membership to the foundation. Because
it bears the name of a respected institution, some
consumers might assume
that Arthritis Foundation pain reliever is somehow superior to the other
products. But McNeil
readily admits that the pills are identical to generic
versions of the same drug.
The Sierra Club - By licensing
some 20 different products, from straw
hats to endangered species plush toys to computer screen-saver software,
environmental organization raises about $2 million annually. The club
also has a deal with a credit card company, MBNA
America, to market a MasterCard
that turns over a small percentage of the amount cardholders charge each
month (but not
of the interest); since 1993, it's earned $650,000 for the