The Democratization of Corporate Philanthropy
This article originally appeared on the Forbes.com Corporate Social Responsibility Blog.
These days, there are few things getting more attention in the cause-marketing field than the trend of directing corporate philanthropy dollars by crowd sourcing. The retailer Kohl’s today joined the trend after it announced its Kohl’s Cares 10th Anniversary promotion. The program stands on the shoulders of the giant $20 million Pepsi Refresh Campaign. Refresh followed the first major initiative in this space, the million dollar American Express Members Project.
All of these campaigns share positive and negative traits that we’ll explore in greater detail below. But it is now undeniable that this trend has become a powerful tool in cause-marketing.
THE DEMOCRATIZATION OF CORPORATE PHILANTHROPY
Corporate giving campaigns are known for their secrecy. In fact, that is one of the primary complaints nonprofit fundraisers have of corporate donation programs. Unlike Foundations, companies aren’t legally required to disclose detailed information about their charitable giving. Most corporate giving programs are set up to control the number of requests that come in from nonprofits throughout the country. Having been on the “inside” of a corporate giving program, I can tell you that this is absolutely necessary because of the sheer number of requests corporate giving officers receive.
Philanthropic contests such a Refresh, Kohl’s Cares, and the Members Project turn this philosophy on its head. By using social media, the general public is in charge of dictating a company’s giving. For sure, this can be a positive thing. Charities with solid missions that haven’t received the support of major foundations can now have access to the brand building awareness that these highly visible programs offer. Not to mention potentially accessing much-needed cash.
VOTER BURN OUT
But these programs are not without their problems. I recently received a solicitation from a nonprofit in the Chicago area that shall remain nameless. They requested that I log-on to Pepsi Refresh to vote for their charity. Every day.
I’m exhausted just thinking about it. While I wouldn’t mind doing my part to help a charity I care about, there are only so many times I can hear such a pitch before I either a) tune out the charity and have a passive interest in their mission or b) get frustrated to the point where I no longer want to engage with the organization at all.
Keep in mind, this is a competition for “only” $50,000. Sure, that’s a lot of money for most charities, but it’s not an insurmountable amount that couldn’t be raised by a professional fundraiser.
THOU SHALL COVET THY NEIGHBOR’S NETWORK
The inherent problem with these contests is that they reward an organization with the largest and most active network. There are no requirements for these organizations to be well-managed or effective in achieving their purpose. True, one would hope that through natural selection, the effectiveness of crowd sourcing will only promote those charities worthy of money to eligible positions. But this is not guaranteed.
This economy has been tough on everyone and nonprofits are not an exception. Nonprofits across the nation have seen donations fall and have cut back on staff. Resources are tight. In the current grant cycle for Pepsi Refresh, over 1,100 organizations are vying for $1,300,000 in funding. This means that a lot of charities are devoting time, talent, and potentially treasure to chase wind. Not everyone will win which isn’t that much different than Foundation or traditional corporate fundraising. But rather than emphasizing effective management and fundraising techniques, these contests reward nonprofits that put resources behind being an effective communicator.
MARKETING-CAUSE, NOT CAUSE-MARKETING
These programs are exceptional marketing tools for a company. The Kohl’s Cares Facebook page has surpassed one million “likes.” This gives Kohl’s an effective way to engage people with its brand, a permission-given way to communicate with these potential customers, and very valuable demographic information.
To some extent, the benefits for the few selected charities that actually receive the scarce financial resources (even in a well-funded $20 million campaign) are outweighed by the marketing benefit the company receives. This reverses the traditional order of cause-marketing and puts the interest of the company first. That’s not necessarily a horrible thing as long as there are real resources put behind the effort, but it’s an undeniable facet of these programs.
WAVE OF THE FUTURE?
These programs are popular and based on the trajectory after the initial Members Project, we are likely to see more of them. What’s your take, would you like to see more of these initiatives? Democracies aren’t perfect, but is this better than other ways of structuring corporate giving programs?
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The author is president of Do Well Do Good, LLC.