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Charity Marketing or Cause Marketing: Pros and Cons

The holiday spending season is over, and while retailers are calculating the numbers, so are nonprofits. Businesses joining charities, as a marketing stunt, started in the 1970s and have grown exponentially since then … and for good reason.

One of the first joint agreements of its kind in 1979 was provided by the lawyers of the Famous Amos Cookie Company when the founder, Wally Amos, became the national spokesperson for Literacy Volunteers of America. It was a perfect match for both the company and the organization. American Express coined the phrase “cause-related marketing” in 1983 when they linked their business to the Statue of Liberty Restoration Project.

More and more companies have joined charities because of the many benefits available:

1. Exposure. Both the nonprofit organization and the business gain positive exposure in markets they may not have reached before.

2. Income. For the organization: The agreement between the organization and the company generally involves a certain amount of money going to the organization (for example: percentage of gross sales or net profit) as long as the organization accepts the company’s use of the name and / or organization logo. For the company: According to the American Institute of Philanthropy in a 2006 consumer study, when faced with multiple products with similar characteristics, value and price, the product that also supports a cause will be chosen, even surpassing the loyalty to another brand of product.

3. Budgeting Considerations: The organization receives funds that it did not have to actively request. The company saves money on its advertising and marketing budget simply by adding the organization’s logo and name to current campaigns.

4. Consumers and Public Relations: Consumers can feel good about their purchase knowing that they have donated to a cause and generally feel good about the company’s involvement in the community.

5. Employees and Public Service: Employees often appreciate working for a company that is involved in the community.

There may be some disadvantages To generate related marketing that must be taken into account:

1. The choice of charity is important. Since this is not a completely altruistic company, it is a good idea to choose a charity with which the company management has a certain affinity. Wally Amos chose the Literacy Volunteers of America because he himself dropped out of high school and earned his equivalent degree while in the U.S. Air Force.It would be quite embarrassing if the company supports the American Society for the Prevention of Cruelty to Animals when the press discovers that the CEO’s mother has 40 cats locked up in her basement and is commonly referred to by her neighbors as “The Cat Lady.”

2. Legal: This is a legal agreement that requires well thought out parameters for both the company and the organization. Avoid embarrassment and bad feelings in the future by having both sides represented by attorneys regarding clarifying monetary expectations and using an organization’s good name.

3. Accounting – Cause marketing is not simply donating to a charity. The company receives some benefit in exchange for the money. Check with the company’s accountant before making a final decision.

In general, cause-related marketing, or charity marketing, creates a win / win / win situation for the business, organization, and consumer and continues to expand as a result, especially in our recessionary economy.

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