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The Patina of Philanthropy

Corporate altruism has shrunk as corporate avarice has grown.

The Product (RED) campaign tells us that by shopping, we can help Africa cope with HIV/AIDS. In reality, it’s just one more example of the corporate world aligning its operations with its central purpose of increasing shareholder profit, except this time it is being cloaked in the patina of philanthropy. Buy a (RED) product and a portion of the purchase price goes to charity. But there is a question about what charities will lose in the long term.

Over the past decades, we have seen the demise of independent corporate foundations as business leaders bring them in-house, merge them with marketing and communications departments, and shut them down. Today’s corporate philanthropic activities are guided less by what is good and necessary for local communities and larger societies and more by the corporation’s own interests. So, too, is cause-related marketing: It ties consumers’ desires to see a social good with the corporations’ desires to see higher profits. Corporate altruism has shrunk as corporate avarice has grown. 

According to the pro-business Conference Board, although the dollar value of corporate contributions to charity increased in the post-Katrina year (the last for which we have data) – including funds generated by cause-related marketing – the percentage of pretax revenue donated to worthy groups and causes actually declined.  Based on their income, corporations are becoming stingier. 

Many profits are up, in part, because of businesses’ association with charities. Studies show that people (about 89% of them) are more likely to buy from companies with cause-related arrangements. That’s why corporations spent more than $100 million advertising their association with (RED) while raising under $18 million for charity.  In fact last year, in the U.S. alone, corporations spent over $1.34 billion generally on cause-related schemes (a figure equivalent to about 25 percent of their 2005 U.S. cash donations). 

What’s wrong with all of this ostensible “corporate generosity”?  First, it is self-serving, further diminishing true altruism in the corporate world. We live in a society where values are threatened, and avarice and greed need to be better balanced by a sense of the greater good – the commonweal. If values erode further in the market, nonprofits and the rest of us are all in deeper trouble.  Second, all of us need to understand that, in the words of Buy(Less), shopping is not a solution.  We cannot consume our way to charity and to a better world.  Doing good sometimes requires sacrifice, and we ought not allow ourselves to be convinced that we’ve done our part because of the color of what we use.  Third, we generally don’t know how much goes to the cause and how much goes to profit for each sale or in the aggregate; there is no true transparency or accountability.  What do direct and secondary benefits add up to for the corporation?  Are charities being fairly compensated for those benefits?  Fourth and last, we need to remember that there really is a profound difference between doing well and doing good.  To the degree that we confuse the two, we substitute ourselves for the other and are diminished rather than enriched. 


image Mark Rosenman is a public service professor at the Union Institute & University, where he has long worked in various roles. He sees his 20-plus years of initiative to strengthen the nonprofit sector as an extension of earlier professional efforts in the civil rights movement, urban anti-poverty work, international and domestic program development, and higher education.

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COMMENTS

  • danpallotta's avatar

    BY danpallotta

    ON April 12, 2007 07:54 AM

    I don’t understand what it is you are proposing to eradicate the great problems of our time.  Tradition?  Those who worry about the morality of the marriage of corporate interest and charity should worry first about the morality of staying on a course that offers the poor and the needy nothing but the hope of a woefully inadequate resource stream of $260 billion a year in “self-sacrificing” donations.  It is time for new ideas.  Lest anyone forget, the attack of new ideas is a very old idea.

  • Mark Rosenman's avatar

    BY Mark Rosenman

    ON April 12, 2007 08:36 AM

    I’d be considerably less troubled by cause-related marketing if I believed it significantly augmented corporate altruism rather than substituting for it.  The behavior and data I see don’t suggest that it enriches the “inadequate resource stream,” it just changes its generative source and increases the secondary dividends.

  • danpallotta's avatar

    BY danpallotta

    ON April 12, 2007 09:17 AM

    One cannot look at these things in the short-term or on small scales and draw conclusions.  Advertising builds demand.  This was Galbraith’s central thesis.  It will build demand for philanthropy as well.  If the general public were exposed on a mass scale over extended periods of time to advertising messages about social change the way they are to messages about sugar water and music players then we would see people buying tremendously more charity.  If corporate partnerships can help achieve that, we should welcome them.  Where else are the advertising dollars going to come from?  God knows, not from charity.  The current philosophical construction prohibits them from spending any money on it under the argument that it is somehow immoral.  It is immoral not to.

  • Mark Rosenman's avatar

    BY Mark Rosenman

    ON April 12, 2007 03:24 PM

    While a few major causes (breast cancer and HIV/AIDS come immediately to mind) have been assisted by such arrangements, philanthropy and significant social change certainly have not been the beneficiaries of these corporate advertising campaigns.  People are not being educated about needs, generally don’t have deep caring evoked, nor are they being sold on responsibility, not in the ads I’ve seen.  The pitch is a lot simpler and may even work against inculcating true altruism:  It’s “We’re a nice corporation - come and buy our product.  You can enjoy consuming, you can have some fun, and you can do a bit of good at the same time.”  It’s all nice for what it is, but let’s not pretend that it’s an appropriate substitute for corporate philanthropy or for true corporate social responsibility.

  • BY Peter McKinley

    ON April 13, 2007 09:41 AM

    “The pitch is a lot simpler and may even work against inculcating true altruism:  It’s “We’re a nice corporation - come and buy our product.  You can enjoy consuming, you can have some fun, and you can do a bit of good at the same time.”

    In fact, in launching the campaign, Bono explicitly stated that people no longer had to give their money away - they could just shop instead.

  • R Buell's avatar

    BY R Buell

    ON April 14, 2007 02:06 AM

    The historical implication of this trend is important.  If we look at where the funding came from for some of the major social change work of our lifetimes, we can look to the major corporate foundations (Ford, Macarthur, Hewlett, Kellog) who were behind the civil rights movement, the green revolution, much of the human rights work of the past decades.  They have made the major investments in institutional development of social processes that can’t be branded or associated with a particular company.  This “old-style” corporate philanthropy hasn’t gone away entirely.  Gates, Soros, and others are creating a new generation of independent foundations.  Unlike the product-driven philanthropy, these foundations are driven by a sense social purpose, not a constant checking on contribution to brand value.  Making the distinction between the short-term brand-oriented philanthropy and the long term investments in social, political and technological change is important—-one is not the “modern” version of the other.  The first is more of an expression of current public aspiration; the second holds a view to creating a better future.

  • Perla Ni's avatar

    BY Perla Ni

    ON April 16, 2007 10:38 PM

    Mark,

    This is a fascinating discussion.  On the one hand, it’s great that corporations are waking up to the fact that their consumers care.  On the other hand, as you correctly point out, it ties consumers’ desires to see a social good with the corporations’ desires to see higher profits.  This certain kind of “strategic philanthropy” - doing well while doing good - begs the question - is it philanthropy at if you expect to be paid back?  But maybe that question is really moot, because a corporation, under the American laws at least, have a duty to make money for their shareholders.  And until that definition is changed, and there have been attempts to change it to include social as well as economic impact, we can’t expect more than self-interest to guide corporate philanthropy. 

    The plus side is that I think cause-related marketing can be effective in raising people’s awareness of social problems.

    So the practical work-around that I see is a cause-related camapign asks people to do anything more than buy something.  Does it provide them with other ways that they can get involved, if they don’t want to buy anything?  I’d love to hear of any examples of any corporate ad campaigns that offer people a choice -  saying here’s the issue we believe in - you can help by buying our liptstick or, donate to any of our partner nonprofits, or sign an online letter. 

    Perla

  • Joe Cerrell's avatar

    BY Joe Cerrell

    ON April 20, 2007 05:19 PM

    Maybe I’m a bit more simplistic but $30 million raised to date Global Fund to Fight AIDS, TB and Malaria is nothing to scoff at.  This represents a larger commitment than received from the nations of Ireland and Denmark—all in less than one year.  It’s the kind of skepticism that I read above that dampens creativity and exploration into other novel, innovative new mechanisms for mobilizing new sources of funding for issues like global health.

  • BY Richard Potter

    ON April 21, 2007 05:00 AM

    There is a very worthwhile discussion of cause-related marketing and the RED campaign on The Agitator (http://www.theagitator.net/index.php?/archives/570-Optimistic-Bob.html).  The gist of it is found here:

    “We agree absolutely with Bob’s goal of moving people to concrete action (by which we think he means contributing money, becoming politically engaged).  But not everybody is an activist (actually the data consistently confirms that very few are). And even if there’s latent activism in their bones, people don’t generally move from zero to 90mph in an instant when it comes to changing their attitudes, priorities or behavior.  Social psychologists say that the key hurdle to jump in moving people from inattention on a public issue to taking action is to get them to publicly profess their interest in the issue. That’s why paraphernalia like bumper stickers, wrist bracelets, label pins, tee-shirts etc. are important.”

    Mark, I completely agree with your statement, “We cannot consume our way to charity and to a better world.”  And I think that is where we need to focus our efforts: on the consumer.  It goes way beyond buying less.  It has to include educating people on the stewardship of resources, budgeting income, and including in the budget a percentage to contribute to charity on a regular, consistent basis.

    Buying RED is not philanthropy any more than handing a dollar to the street-person on the corner.  These may serve as a salve to help sooth the guilt we feel for the extravagant lifestyles we enjoy, but they are not philanthropy.  See Andrew Carnegie’s “Gospel of Wealth.”

    In McKinley’s 4/13 post above he states: “Bono explicitly stated that people no longer had to give their money away - they could just shop instead.”  That may be true but I am curious as to the context of the statement.  I have heard Bono blast the evangelical Christian church for sitting on its fat ass and not doing more (i.e. give more money) to fight poverty, AIDS etc.  I don’t believe he really thinks buying more crap is the solution.

    Individuals in the USA give only 2.2% of our income to charity (and the lion’s share is NOT for relief of extreme poverty).  That percentage has remained unchanged for at least half a century, while our standard of living has increase manifold.  If American citizens could be motivate to make just a slight change in lifestyle and direct regular, consistent financial contributions to well-managed charities, extreme poverty could be eliminated in our lifetimes.

    I agree that doing the RED thing alone is not enough.  But if it can be leveraged to move people toward true philanthropy, it can’t be all bad.

    Richard

  • BY Peter McKinley

    ON April 25, 2007 08:51 PM

    “In McKinley’s 4/13 post above he states: “Bono explicitly stated that people no longer had to give their money away - they could just shop instead.” That may be true but I am curious as to the context of the statement.  I have heard Bono blast the evangelical Christian church for sitting on its fat ass and not doing more (i.e. give more money) to fight poverty, AIDS etc.  I don’t believe he really thinks buying more crap is the solution. “

    It was on the Product Red launch on the Oprah Winfrey show. You might want to check out video on the Oprah website of Bono swanning along Michigan Avenue with Oprah, shopping instead of giving.

    Of course, both Bono and Oprah have exhorted others to give on numerous occasions, although Oprah’s personal example migt be more useful than Bono’s (I am sure we don’t want to turn this blog posting into an examination of Bono’s/U2’s tax evasion techniques, now do we?), so they warrant the benefit of the doubt I suppose.

    None of their other efforts were supported by the marketing heft of the companies involved in Product Red however. The message that seems to have survived is that everybody should purchase an additional iPod, with incremental dollars going to a worthy cause, rather than donating the total equivalent amount to charity, and making do with only one colour of music player.

  • Carolina's avatar

    BY Carolina

    ON May 17, 2007 08:06 AM

    Let’s put things into perspective. (RED) is not philanthropy….is just marketing embedded in CSR. It is a great idea from a business point of view and has done some social good ($30 million raised to date Global Fund to Fight AIDS, TB and Malaria).
    We cannot forget that corporations exist for economic profit; without it they cease to exist. Corporate Social Responsibility and the triple bottom line show us that corporations should and can pursue more than just money…However; we cannot demand corporations to be “altruists”. Corporations are not and will never be “altruists”...that is not their characteristic. Humans have to be altruists…
    We should stop being hypocrites demanding corporations to change the world. We can’t expect more than self-interest to guide corporate philanthropy. Of course, corporations must do their share of work to improve society and alleviate social problems…but we cannot forget our responsibility as consumers. We (consumers) are the ones who must be “altruist” and change the world. We cannot stay still expecting corporations or governments to give us incentives to change our way of living. We as consumers are the agents of changing. So, we should change the debate from whether (RED) is self-serving or not to how can we consumers change our way of living…consuming less, donating more, recycling and helping others.

  • I couldn’t agree more with Carolina.  However, all of us including companies are part of the overall equation.  Certainly, it’s people individually and collectively who are at the vanguard of any social change.  To me the new face of change will look at to new paradigms that demand more from us a a people while expanding our knowledge and participation in philanthropy. 

    The thread here is the same paradigm / discussion that has gone on for decades and it is an antiquated way of thinking and acting.  In other words. though very much true, we must be offered an incentive in order to give.  Effective?  Well of course, yet shallow and less potent than a self-less act that is void of any incentive.

  • The New York Times covered this story in early February (http://www.nytimes.com/2008/02/06/business/06red.html?_r=1&scp=1&sq=Global+Fund&st=nyt&oref=slogin) and as someone who has worked in international public health, I am torn. On the one hand, I am sure that the $30 million made a real difference in some people’s lives. However, it is not clear whether this was additive or a substitution for money the GFATM might have already spent. From what they say, it sounds additive, but we don’t know.

    On the other hand, I share the concern that as donors and supporters, we become accustomed to the idea of if I give, what is in it for me? Isn’t that why I get requests for donations along with mailing labels? Because at least some organizations think that I will only give if I also get something tangible in return.

    It is an unpleasant fact that often the only way to motivate people to give is to make sure that they get something in return.

    Bea

  • BY Policybusters

    ON February 28, 2008 06:46 PM

    This stream of responses seems to miss a fundamental point that needs to be addressed by all who profess to be interested in promoting philanthropy and new ways of increasing it, as both Rosenman and Pallotta suggest they are: 

    All professions of CSR and campaigns like Product (RED) are little more than apologetics for preserving an exploitative economic system that keeps reproducing extreme inequities in wealth UNLESS such professions and marketing campaigns ALSO encourage and empower citizens to engage in more direct forms of social and political activism to CHANGE THE STRUCTURE OF THE SYSTEM that continues to reproduce these gross inequities. 

    As Rosenman’s article appropriately noted: “although the dollar value of corporate contributions to charity increased in the post-Katrina year . . . the percentage of pretax revenue donated to worthy groups and causes actually declined.  Based on their income, corporations are becoming stingier. “

    If we really want to promote philanthropy, we need to be sure we are also promoting a social and economic system that requires all corporations to become less stingy and more socially responsible, not less….

    For example, what would happen if Product (RED) would include with all its branded product sales a small tag noting in one or two sentences that if you really believe in helping the poor, you will not only buy this product but join people in other organizations working to change the policies that continue to produce structures of poverty in the world?

    This is why I’ve often argued that those wealthy individuals and corporations who wanted to be truly philanthropic would begin by committing themselves to paying more taxes, while making sure those taxes are used wisely to address the real structural causes of social problems by helping all citizens to become involved in advocating and implementing more just social and economic policies and laws. 

    If real philanthropy is about bringing together private and public enterprise with new ideas and the passion to change the world, then it’s time professed philanthropists and those who make their living by promoting philanthropy begin to talk about the need for promoting a more “philanthropic” social and policy structure in this country.

    So here’s my modest proposal for any CSR campaign or future Product campaigns that wish to be taken seriously by those of us concerned with addressing the sources of national and global poverty, disease, and climate change:

    Any individual or corporation that self-promotes as philanthropic should be asked:  Do you also structure your entire corporate program and promote policies that are just and humane, or do you use philanthropy as a cover for business strategies and the support of policies that continue to produce inequitable impacts?  Any individual or corporation that cannot answer this kind of basic question honestly and directly should be highly suspect in its use of philanthropy. 

    Responsive and Responsible Philanthropy cannot be used as a cover or whitewash for business practices that preserve and continue to produce inequitable structures of power and policy.

  • BY Donald Cummings

    ON March 6, 2008 01:43 PM

    Roseman’s statement “although the dollar value of corporate contributions to charity increased in the post-Katrina year . . . the percentage of pretax revenue donated to worthy groups and causes actually declined.  Based on their income, corporations are becoming stingier. “ implies that less money is bad and more money is good…when in fact it is the efficiency of that money that is most important. We all can imagine a case where more money produces less good…as well as imagine a case where less money produces more good.

    Measuring SROI (Social Return on Investment) is extremely complex, and even produces anger in some. The request for an NFP to be more transparent and accountable, and to show the metrics of its results is often met with the retort that such a request lacks the warmth and humanity that goes along with philanthropic pursuits. It is as if business pursuits and philanthropy cannot comfortably coexist because the metrics are not sophisticated enough to soothe those who are suspect of the business’s intentions. Yet, by necessity they must coexist for the world is moving in this direction.

    What is missing to support the argument in favor of RED is the metrics of the long term effect of the exposure of people to causes to which they may not have otherwise been exposed. IE, if my teenage children have Red mobile phones, it is probably because some money that could have gone directly to a cause went into the advertising and promotion of Red mobile phones. However, that exposure may result in one or two of my children taking a “gap year” in 3 years and going to Africa to volunteer and teach orphaned children. It may result in one of my children starting to attend fund raisers 10 years sooner than he or she would otherwise. It may result in one of my children teaching English to non English speaking workers at his high school. Because the results of early exposure to philanthropic needs cannot be foreseen or measured is not enough reason to claim that the process is unfair, selfish, less than good.

    I firmly believe the the days of black tie largess are waning. I believe that philanthropic efforts like Red will become more common. I believe (hope) philanthropy will become more of a daily activity in the next generation…through everyday shopping and service and in ways we haven’t even thought of.

    To enforce a policy of ” wealthy individuals and corporations who wanted to be truly philanthropic would begin by committing themselves to paying more taxes, while making sure those taxes are used wisely to address the real structural causes of social problems by helping all citizens to become involved in advocating and implementing more just social and economic policies and laws.” (Policybusters above statement) to me seems wrong. In fact, in his book “Who Really Cares”, Arthur Brooks shows that an increase in forced giving (taxation) actually results in LESS being given, not more.

    People want to give freely. The younger generation is very interested in philanthropy, but in ways very different than I grew up with. The spending of $1 in the advertising of a cause may come back 10 fold in 5 years.  I don’t think the “...ostensible ‘corporate generosity’” (Roseman) is “self serving”, nor do I think it diminishes “true altruism”. I think shopping may indeed be A solution…not THE solution, but A solution. I agree that “doing good sometimes requires sacrifice” but I do not agree that doing good ALWAYS requires sacrifice. If we ask for the “direct and secondary benefits” accrued to the corporation, shouldn’t we also measure the direct and secondary benefits accrued to the philanthropy?

    I think this amalgamation of commercialism and philanthropy deserves a long incubation period, perhaps as long as a generation, before we question its viability or its “goodness”.

  • Jessye's avatar

    BY Jessye

    ON May 13, 2010 10:06 PM

    “All professions of CSR and campaigns like Product (RED) are little more than apologetics for preserving an exploitative economic system that keeps reproducing extreme inequities in wealth UNLESS such professions and marketing campaigns ALSO encourage and empower citizens to engage in more direct forms of social and political activism to CHANGE THE STRUCTURE OF THE SYSTEM that continues to reproduce these gross inequities.”

    If Product (RED) truly wanted to be socially conscious, every RED Gap t-shirt would be made from organic, fair trade cotton and sewed by someone receiving a fair wage. Every RED cellphone would contain conflict-free coltan. Every single RED product would use minimal packaging from recycled materials. Changes to the structure of the world economy, rather than mindless donations, are essential to stopping the reasons that poverty, exploitation and environmental degradation exist in the first place. You need to stop the knife from cutting before you bandage the wound. Initiatives like RED can be effective, but the root causes must be addressed first.

  • BY Colin McElwee

    ON July 26, 2010 03:08 AM

    If you want to get a message across, as any business knows you need a multi faceted communications campaign. Awareness of philanthropy, what it is and why it is important can be generated in many ways: Suggested means are:

    Black tie largesse
    Direct donation in a box in the street
    Donation via Government
    Donation via multi-lateral organization
    Donation via % of corporate profit (RED)
    Direct action in the field
    CSR corporate campaign

    All of the above and more raise awareness. You don´t even have to partake to be aware. So criticising one means of giving albeit a cynical self interested means, against another seems pointless, they are not mutually exclusive. Rather they all add up to something, not enough, but something that did not exist before. Every new means of communication and action incrementally improves the whole.

    Fundamentally awareness among the young and changes in their behaviours over time will lead to change in the structure of the developed world, both corporately and politically. This is not a rapid process (I agree a generation is needed) but change will come.

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