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 sound.

In supermarket aisles, drug stores, and department stores, you'll see 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 brand 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, jewelry, 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 Amos 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, CA-based consulting firm.

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. Charities 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 to support? 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 example, publishes a detailed report listing the exact amounts that each local charity receives through its Charge Against Hunger program.

Unfortunately, American Express is more the exception than the rule. "Consumers have to 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 profiting 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" products.
  • 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 dollars annually.
  • 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. Aother source 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, Clinique donated its profit margin (about $2.25 out of a $7.50 selling price) to breast cancer research.

Federated 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, which distributed 80 percent of the money to oncologist at eight major medical institutions, including the Mayo Clinic in Rochester, MN, and Memorial Sloan Kettering Cancer Center in New York City.

Starbucks - Contributing $2 of its $21 CARE coffee sampler, Starbucks 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 three cents 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 period, it 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 that 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, MasterCard, 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 billings, 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 Fund.

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 people 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, this 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 nonprofit club.

(Updated 9.4.16)