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.
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.