Making A Profit With Charity – Cause Marketing

COMMSTORM

One of the most challenging aspects of doing marketing for a charity is the apparent conflict of interest the role represents. When donors give money to a charity, they want to know that their money is going directly to the people in need.  This means that when organizations are considered for giving, donors will often ask what percentage of their gift will go directly to programs and services and what percentage will go to administration. The bigger the percentage going towards administration the less appealing the charity becomes. Makes sense right? Well, not always.

The problem of course is that in order for a cause to generate the level of support it requires to be truly successful, it needs to be highly visible.  It’s not enough to do good if no one knows you’re doing it. There has to be awareness and buy in. In order to get those donations, you need to be seen, in order to be seen you have to invest in marketing. You have to advertise and you have to have people in place to do those things. If your revenues are small you may think in order to do any good you have to spend the lion share of it on your cause. The thing is, if you spent 25% of those revenues generating awareness, you’d have more revenues. Your reach would go further and you’d have more money for your cause.  So while a larger percentage of money would go to promotion (administration), a greater number of people would be served.

This is the principle at work behind for profits and it has served them well.  However, people expect charities to behave in a very different fashion from for profits.  While some charities have learned to work around this baffling expectation, most continue to struggle in a world that expects them to get something from nothing.  Despite overwhelming evidence to support investing in marketing, most people don’t want their charities spending money this way and sometimes the charities convince themselves not to do it. I think Dan Palloto delivers an eloquent explanation of this in his TED talk, called, “The Way We Think About Charity is Dead Wrong”. 

What I find appealing about cause marketing is that it essentially looks at this challenge and then avoids it all together.  By blending the charity or cause with a for-profit activity, the dynamic changes for everyone. Donors also become consumers. The distinction matters because consumers don’t care if you spend money on marketing, in fact, they expect you to. Consumers don’t penalize you for getting attention and they don’t care about your overhead. The best part is, consumers feel good about getting something they value and having some of the profits go to a good cause.

In a 2013 Neilson study, 43 percent of global respondents said they had actually spent more on products and services from companies that have implemented programs to give back to society. Men were slightly more likely to have done so than women and younger respondents were more likely than older respondents to spend more. Not only do you get the engagement of more people, but you get the engagement of a younger demographic which is one of the tougher sells in the charitable sector.

The Neilson Company also noted that 66% of respondents prefer to support companies that give back to society and the Cone Millennial cause study found that a cause will prompt over 60% of shoppers to try a product.  What that means is that not only is this good sense for the cause, but it’s great sense for the company.  Consider that in even the competitive brand markets over 80% of consumers would switch brands to one of equal quality if it was associated with a cause.

It should be clear though, the quality of the product matters. With cause marketing  your product  isn’t a convenient excuse to give, it is why you give. As Terry O’Reilly, author of “The Age of Persuasion: How Marketing Ate Our Culture” and host of numerous radio shows so eloquently put it, “You can’t put mission before margin.”

It doesn’t matter how great the cause is, if the product lacks value or if the quality is questionable, then donors and consumers will walk.  It is the profit that makes the cause sustainable. If you’d like to learn more about how to engage in cause marketing, Arleen over at Garrett Specialties had a great post that shared five ways to do cause marketing.

Have you ever bought a product associated with a cause? What do you think of cause marketing or marketing a cause? Do you remember Bono’s RED campaign? What about the causes supported by Starbucks, Armani or Nike? 

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About Debra Yearwood

Experienced communications and public relations executive who manages challenges with an eye on outcomes and a sense of humour. Learn more about how I think at https://commstorm.com/ Learn more about my experience at ca.linkedin.com/in/debrayearwood/
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31 Responses to Making A Profit With Charity – Cause Marketing

  1. hello; i am more likely to think favorably of a company doing cause marketing if they implement it on their own as opposed to those companies that initiate cause marketing to overcome negative publicity. thanks for th post, max

  2. Haley Gray says:

    Great point! Look at all of the people who buy things with pink ribbons on them. I’m sure that we spend billions on pink-themed items to “raise” money for charity.

  3. Diana says:

    What a great post, Debra – thanks for the food for thought.

    I don;t think i have ever bought a product associated with a cause… Unless of course my “don’t drink and drive” bumper sticker counts… I think it’s a cultural thing – in my home country cause marketing isn’t really popular. Businesses are just starting to pay attention to being social and all.

    As a marketer, i have never been involved in any type of cause marketing initiative but i’d be interested to. Here’s a post idea – i suppose there is a difference between those big well funded causes (e.g. breast cancer awareness, and so on) and some small local ones (e.g. help an orphanage get a new roof, or something – that type of cause). A post differentiating different type of causes and how it impacts the way you market the cause – that would be very interesting to me.

    heading over to Arleen’s blog to read more🙂

  4. becc03 says:

    I have to admit to sticking with the tried and true charities. The ones that have been around for ages because they are doing something right. They are also high profile as they do spend money on certain marketing activities as well as being visible.
    I also buy things because I know something will go to charity. Obviously not if I really don’t want it, but if I am undecided on the purchase, it will certainly throw me over the line.

  5. Leora says:

    Makes a lot of sense, that charities need to do more than just support in need – they need to broadcast their own organization, for one. When I think of one charity in particular that we support, they do produce a wonderful brochure with good PR. This charity has an excellent reputation, but I’m sure they have overhead as well – beautiful brochures are not cheap.

  6. You have some really good points. I had to send this to a friend.

  7. The cynic in me likes to question the motives behind the backing. Maybe it is irrelevant if they are donating to a worthy cause, but I have to wonder do they actually support the cause or are they doing it because it is the thing to do of the moment.

    When the winds of change come in are they going to switch to the next big thing that brings in money?

    Not that profit is a bad thing but profit at the expense of subterfuge and deceit can lead us in many wrong directions.

    • Jon I have no doubt that there are organizations that get involved with charities for no other reason than to look good or sell more product and to those I say, so what? If the charity benefits and more people in need get served, I don’t feel compelled to look too closely at motivation. There are individual donors that I don’t like, but that doesn’t mean their money didn’t do good. I’m afraid when it comes to social profit I’m more pragmatic than idealistic.🙂

  8. 2 issues here. I object to non-profits with a high operating cost b/c they get involved in causes outside of their original mandate. They’re taking members’ and donors’ money and directing it outside their mission- just to look good?

    And then there’s the situations you’ve described where a for-profit takes the opportunity to use their name & clout to help advance a cause. I’m all for that. It’s the same as me hoping that someone of influence will discover my book and decide to help me to spread the word to a larger audience. Nothing wrong with using our influence to help others!

    • Doreen when any organization loses sight of it’s objectives it’s a wasteful and frustrating experience for all involved, it is even more so in the case of charities. I’ve definitely encountered groups where the scope of the work they were doing kept expanding until they were simply spread too thin.

      As for your book, I find it amazing no one has seen the brilliance of putting together travel and chocolate…we have a significant boomer population gearing up to retire, I’ve got to think there will be some who will see the chocolate tour as the new wine tour and pretty easy sell for those with kids.🙂

  9. It does seem like a win-win, especially to the consumer. I remember choosing a red iPod because then the profits would go to an Aids-related cause. But I also happen to like red! Still, there’s no question the “cause” made my decision seem less frivolous, and more worthwhile. Having worked in the non-profit sector, I know how much money can go into an event. It’s almost scandalous!

    • Planning an event can be brutal and they often do not present the most efficient ROI unless they get overwhelming participation. What the events do more than anything is raise awareness…presuming people know they are happening.

  10. Glynis Jolly says:

    I have to admit that I like getting the return address labels and note cards with envelops that I receive when I donate to a Native American organization in western Wyoming. They ask for donations twice each year, April and October. The timing works well for me. In April is when taxes are due but that is on the 15th. I know what I can donate on the 16th. In October, I don’t have any extra bills yet, like for Christmas gifts. Their marketing strategy works on me.

  11. “Doing well by doing good” always seems like a win win, but it means the for profit gets to choose the “winners” of their largesse. I’m not sure what the answer is for small non-profits You presented their conundrum very clearly.

    • For small not for profits (or social profits) it’s very challenging. They can sometimes find local sponsors who can help, but cause marketing doesn’t work for every charity. In the case of the very small charities they don’t even have enough resources to launch the awareness raising and then it really does become a creative challenge.

  12. Cause-related marketing is very big in the U.S. Many years ago I started the first Women and Heart Disease campaign in New York when I was on the Board of the New York City Affiliate. Merrill Lynch underwrote an educational video because many women still don’t know that heart disease is the leading killer of women. At the time the national AHA had 56 affiliates (since pared down) that were located in cities where Merrill Lynch had offices.They had a big push on to attract women investors so this was a situation where the needs of the nonprofit and the business needs of the underwriter were both met because the video was used in informal receptions for women investors. They got to know Merrill Lynch while also learning about heart disease.

  13. jacquiegum says:

    Truly great food for thought. I think many folks assume that administrative costs equal salaries for the administrators. I think it rare that they even tune into the marketing aspects of what a charity has to do to get seen. I’m with Jeri though, in that I think they should forgo the SWAG..it smacks of money ill spent! I don’t think there would be as much negative reaction to flat out advertising via TV, radio, traditional and online press.

    • Jacgueline, there are definitely costs that go towards salaries and I’ll be honest and say I don’t have a problem with that either. I find it difficult to expect someone who is doing good to also sacrifice their lifestyle while someone who is contributing nothing to society is allowed to make as much as they would like. It doesn’t take any less skill or ability to run a large charity than it does to run a large for profit and in the case of the charity there are always less resources. So essentially, the administrator of a charity is expected to be smart, efficient, resourceful and self-sacrificing. It’s an idea that works in theory, but the reality is that those people burn out and it becomes increasingly harder to find capable people willing to sacrifice themselves.

  14. I consistently support the humane society, but I stopped giving at the national level and instead donate directly to the local shelter. I always felt guilty about the t-shirt, tote sack, and whatever else they dreamed up to give those who donated. If I want to give, I don’t expect to get anything in return. I would rather they use that money for marketing efforts, though I guess it can be helpful if I wear something with the logo of the charity I am supporting.

    • Jeri, my husband had the same reaction you did, he didn’t want the charity to waste money on the paraphernalia, but as you noted, when you are out and about with those items you are raising awareness. Years ago i learned of the challenges in East Timour because of the eye catching design on the t-shirt donors received.

  15. There are charity that contribute to on a regular basis. I do realize that in order to provide a greater good, moneys do need to spent on various things in various ways to promote what they do. What I found interesting in what you had to say was the for profit, providing a product that consumers want and with the benefit of supporting a cause. I can see how that would and could be the best of both worlds for companies or individuals who are concerned about how the moneys are spent. This si a very thought provoking post (as usual) my friend.🙂

    • It’s a challenging sector to operate in Susan. Cause marketing can’t come close to addressing all of the issues that most charities face and there are some causes that are simply not “sexy” enough for this kind of partnership, but it can help many. I think the bigger challenge is thinking about how we care for those who need the support of charities. If nothing else, I’m glad the post gives us all a moment of pause to think about the challenge.🙂

      • I have always admired the individuals who have devoted their career for a cause or charity. I know how difficult it must be at times and the many sacrifices they make in order to do what they know is right. It really is a good reminder that it’s not all about the money and where it goes for what.🙂

  16. I wonders sometimes where my money is going, but I tend to donate to either grass roots organizations or big one’s like The American Cancer Society or one’s associated with mental health issues. I guess I trust that they know how to market and if it takes my money to do so to spread the word, I am OK with that. PS The TedTalk was very good!

    • Laurie many people keep their giving local in order to ensure that their money is going to a trusted source, it’s not a bad strategy. Many if not most national charities are built on local grassroots organizations for just that reason.

  17. In the early 90’s Somalia was going through hell, remember? At the time I lived in London and contacted the Red Cross there to donate quite a lot of money. The Red Cross then sold my name and contact details to all other charities in the UK and I was flooded by requests for money. That stopped me from giving again.

    Anyway, the main problem with charities is that far too many people abuse them for money laundering or simply fill their own pockets. Criminal gangs, such as people smugglers, normally have a lot of charities. And we shouldn’t forget charities funding extremists.

    Agree with you that charites need promote themselves to be able to do any good. But how do you know how to chose the right one? When even established ones like the Red Cross take advantage of you when you donate? Admittedly that’s nothing compared to helping criminals with money laundering, but still:-) Would be interesting to know if there is any country where charities have not been abused by greedy people and criminals.

    • Catarina that’s unbelievable, what a way to repay generosity, by breaching your privacy. Little wonder we have developed legislation to restrict anyone from sharing personal information without explicit permission.

      It’s a shame that charities are a target for unscrupulous behaviour, the legitimate ones often do life changing and life saving work. Unfortunately the very fact that there are those who want to do illegal things makes it that much harder for the real charities to get the resources they require to do good. While we may always find those willing to take advantage there are some steps you can take to determine the legitimacy of a charity before giving. The Canadian Anti-fraud Centre offers some advice and I’m sure there are other places on the web that do the same.

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