Vol. 7, No. 2, May 2006

Cause Related Marketing: The Gift that Keeps on Giving?

by Inger L. Stole
University of Illinois at Urbana-Champaign

Since the 1980s, consumers have witnessed the rapid proliferation of a new form of marketing: a hybrid between product advertising and corporate public relations. Cause Related Marketing (CRM) aims to link corporate identities with nonprofit organizations, good causes, and significant social issues through cooperative marketing and fund-raising programs. As a tax-deductible expense for business, this form of brand leveraging is an attempt at connecting with the consuming public beyond the traditional point of purchase and to form long lasting and emotional ties with consumer constituencies. However, what might seem like a fair exchange between corporation in search of goodwill and non-profits in search of funds also raises a range of troubling social, political and ethical questions.

What is CRM?

Most CRM efforts fall under six broad headings. The first four relate to standard corporate practices. These are: advertising (where a business aligns itself with a particular cause and uses its advertising to communicate the cause's message); public relations (attracting press and public attention to the a strategic partnership between a business and a non-for profit group); sponsorship (corporate sponsorship of a particular program or event); licensing (the corporation pays for the license to use a charity logo on its products or services); and direct marketing (both business and non-profit raise funds and promote brand awareness).

A fifth type of CRM is facilitated giving, where the business partner help facilitate customer donations to the charity....or to themselves! The ongoing effort by Ameren, an Illinois energy supplier, is a good example of this practice. Included in their monthly bills Ameren customers receive a plea for donations to the corporation's "Warm Neighbor" program, a fund established to help Ameren customers who are unable to pay their utility bills and/or weatherize their homes. While the energy supplier contributes an unspecified amount, its good deed is largely to facilitate the generosity of its customers by mailing out information, collecting and distributing the funds (www.ameren.com, 2006). Lost (or deliberately obscured) is the fact that customers are asked to help other customers settle their debts to Ameren. Other utility companies use the same strategy. A few years ago, then SBC Ameritech, launched a program called "Bridge the Digital Divide," to provide people with basic computer knowledge using the same collection strategies (SBC Ameritech, 2002).

The sixth and most widely used CRM practice is purchase-triggered donations. This is where a company pledges to contribute a percentage or set amount of the purchase price from a product to a charitable cause or organizations (Adkins, 2001). A campaign to restore the Statue of Liberty and Ellis Island that American Express undertook in 1983 is credited as the blueprint. Promising to contribute one cent for every card transaction and $1 for every new card issued during the last quarter of 1983 to the cause, American Express collected $1.7 million for the restoration effort. The causes were not the only benefactors, however. The 28 percent increase in use of the American Express cards and the massive press coverage and free publicity bestowed on the company as a result of the campaign were nice benefits (American Express, 2003). The results were not lost on others. Between 1990 and 1999, American companies spent increasing amounts on CRM and the total annual sum has now passed the one billion dollar mark (Bishoff, 2000/2001; Good Deeds, 1999).

Due to their largely non-controversial nature, certain causes attract more than their share of attention from businesses. Among the early and well-known national campaigns of national significance was Visa's 1997 "Read a Story" campaign where Visa pledged a donation to a group called "Reading Is Fundamental" for each cardholder transaction (Pringle and Thompson, 2001). Today, CRM efforts involving the educational arena have become more elaborate. Take, for example, Upromise, a program involving major companies like Exxon Mobile, Coca Cola, McDonald's and New York Life Insurance. Each time a parent, grandparent or other caring adult patronizes one of the over 20,000 grocery or drug stores, more than 40,000 retail stores and services, more than 8,000 restaurants and over 350 online retailers affiliated with the program, rents a car from Avis, or buys or sells a home with one of the real estate companies affiliated with Upromise, he or she can request that a portion of the amount be deposited to college savings account established in a child or grandchild's name. The size of the contributions varies. While a few participants pledge as much as 10% of the purchasing price to the program, most donate 1 percent. Thus, in order to earn $1,000 for college, relatives and friends must purchase close to $100,000 of goods and services and provide the participating companies with a great deal of valuable demographic information in the process (www.upromise.com 2006).

Founded in 1982 to "eradicate breast cancer as a life-threatening disease." the Susan G. Komen Foundation has developed into one of the most visible fund raising organizations for cancer research and has become a favorite charity for CRM efforts. Its annual "Race for the Cure," has evolved into what might be the largest ongoing sports/fund-raising event in the country. More than most non-profits, the Komen Foundation is actively involved in marketing the event to companies in search of CRM ventures. This year, close to twenty large companies, including Kellogg's, Yoplait yoghurt, Pier 1 Imports, Re/Max Real Estate, and American Airlines are members of the organization's Million Dollar Council. In addition to paying a million dollars for the right to serve as official sponsors in connection with the annual race, they are also devising separate CRM efforts to highlight their connections to the cause. Yoplait, for example, has pledged to donate 10 cents for each of the first 30 million yoghurt lids it receives from customers to the Komen Foundation. Not to be outdone, Kellogg's promises to send a pink ribbon heart pin to every customer who donates 5 dollars to the Komen Foundation and mails proof of the contribution along with two purchase labels from specially marked cereal boxes. Also partnering with Komen is BMW. The automaker has developed an elaborate scheme to benefit the Susan B. Komen Foundation (and possibly itself). As part of a campaign called "Ultimate Drive," BMW promises to donate $1 to the Komen Foundation for each mile of test driving during a particular period and to donate a percentage from the sale of its "Pink Ribbon Collection" of watches, T-shirts and notebooks to the Susan G. Komen Breast Cancer Foundation. (www.komen.org, 2006). For anyone doubting the marketing power of breast cancer awareness, I recommend a trip to any department store during October "the official Breast Cancer Awareness month." The sheer number of manufactures who adorn their products with pink ribbons (the official symbol) and offer to donate a share of the profits from their transactions to the cause is overwhelming.

Sometimes a company deliberately ties its identity so closely with its CRM efforts that, by design or pure coincidence, it appears akin to a non-profit outfit. The activities of Working Assets, a for-profit company headquartered in San Francisco, is one example. As a self-described "socially responsible long distance telephone and credit card company," Working Assets donates one percent of customers' telephone charges and 10 cents for each credit card transaction it processes to nonprofit organizations working for peace, human rights, economic justice, or the environment. An annual ballot listing participating organizations is sent to customers who determine the ultimate allocation of the unrestricted general-support grants. In 1986, during its first year, Working Assets donated $32,000. Eleven years later, donations had reached nearly $3 million annually and by 2005 about $4 million. Today, the company claims to have donated a total of $50 million to various causes thorough its CRM efforts. (www.workingassets.com).

As new technologies emerge, CRM efforts follow. One example is various "giving malls" that have sprung up on the Internet. Since 1997, for example, iGive.com has offered customers the opportunity to shop from the over 400 merchants connected with its site and to direct up to 39 percent of every purchase (although typically around 3 percent) to more than 18,000 causes that often are local chapters of larger national non-profit organizations. Considering their numbers, the individual checks are often small but the small checks have a geographical reach. The chance to be associated with a good cause is not lost on retail giants like Amazon.com, L.L Bean, Barnes & Noble, Office Max, eBay and Dell computers, who all participate in the program. During its 9 years in existence iGive.com has helped distribute nearly two million dollars to a total of 30,000 charitable causes (iGive.com, 2004).

CRM: a win-win arrangement?

At first glance, CRM appears to be a win-win situation for businesses and non-profits alike. Charities get needed funds, while businesses get to bask in the glory of having performed good deeds. Judging from its popularity, business has clearly embraced the concept and few non-profit organizations are turning the private sector away. This does not mean that a practice of merging marketing and social problems is without problems. Although cause-related marketing may do a wonderful job in collecting funds for the affiliated charities, it should not be forgotten that social causes, in desperate need of funding, may venture into partnerships that are far from equal and sometimes hold the potential of harming more than helping it. Because cause-related marketing is driven by the need to increase a firm's return on its investment, it goes without saying that causes are not always selected on the basis of the potential good that can be achieved but, rather, on the free publicity and increased sales a particular affiliation might bring to a company. In fact, and this is particularly true when it comes to business alliances with the larger non-profits, cooperation can bring free publicity and many public relations opportunities, thus saving advertising and promotional expenses for the business involved. The latter may also gain access to the non-profit's clientele, staff, trustees, and donors, all of whom are potential customers. Such access makes non-profits with large memberships especially attractive to many companies (Andreasen, 2001). Not-for-profit groups that serve valid social functions but do not fit a corporate profile or appeal to the customer group that businesses want to reach, may be ignored while other causes, because they serve as better marketing vehicles, receive a disproportional amount of interest (Polonsky and Woods, 2001). Working Assets is the exception that proves the rule.

The commercial imperative behind CRM is well known in marketing circles. In February 2006, "The Luxury Institute," an outfit claiming to represent "the sole independent voice of the wealthy consumer," surveyed households with over $5 million in personal wealth and $200,000 in annual income to determine which non-profit organizations these people liked. "Habitat for Humany;" "America's Second Harvest." and St Jude's Hospital topped the list followed by a slew of charities, most of them involved in health related work and research. The findings were not lost on The Cause Marketing Forum, a New York outfit designed to facilitate partnerships between business and non-profits who responded enthusiastically to the survey findings. As in all other forms of marketing, companies desire to reach the most affluent group of consumers and it will be very interesting to see how this study might influence the choice of causes to be targeted for CRM efforts in the future (www.causemarketingforum.com).

The practice of leaving support for non-profit organizations to a market driven system where their chance of funding is hinged on their ability to complement sales messages leaves a lot to be desired. Often, the most controversial charities, with the least chance of being adopted for cause-related schemes, may be conducting some very important work. Think, for example, what a difference it might have made if American Express in 1983 had chosen to highlight AIDS, then a serious but also controversial disease associated with homosexual lifestyles, instead of the much admired restoration project of the Statute of Liberty and Ellis Island. And what, if in addition to of selling pins, cute teddy bear and collecting yoghurt tops to fund breast cancer research, companies would highlight the basic lack of healthcare; a situation that prevents many from detecting this terrible disease in its early, and most curable, stage. Generally, there is a tendency for business to focus on symptoms, as opposed to core problems. For example, while cause related marketers have latched on to illiteracy as an issue (Pringle and Thompson, 2001), none appears particularly eager to raise awareness about the more fundamental issues of poorly funded schools or growing economic inequality. Likewise, while many businesses eagerly solicit funds for breast cancer research, they not devote much attention to the possible links between certain industry practices and cancer and rarely, if ever, do they focus on the lack of affordable and adequate healthcare for women as one of the missing links in the fight against (breast) cancer. In fact, cause-related marketing, can, in some instances, be seen as just a cleverly disguised ploy to mask some of the fundamental problems that the very same marketing forces, are directly or indirectly responsible for. "As companies appear to fill the gaps they have helped create," one critic suggests," they can present themselves as indispensable vehicles for social provision, enabling them to argue for a further reduction in state services" (Monbiot,2001, 2).

By transforming their generosity, compassions and charitable inclinations into a well functioning branding strategy, companies have arrived at a very successful formula and their future looks bright. Viewed from the public perspective, however, the future is far from silver lined. What will be the ultimate outcome of turning the non-profit sector into a marketing tool for business? Non profits have traditionally served the needs of people unable to obtain goods and services in the marketplace but given recent trends it would not be surprising if money-starved non-profits might try to change their approaches (and services rendered) in order to present themselves as attractive CRM partners. My personal opinion is that hinging the fate of the non-profit sector to the whim of the marketplace is very problematic. The partner most often asked to compromise is the non-profit. In a fair society, business should pay a higher share of taxes and help fund education, health care and research with no strings attached. But don't expect that to happen soon. Right now, business is having its cake and eating it too.


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