When is a Donation Not a Donation?

A donation that's not a donation? What's that? When it's a situation where the supporter believes they've a donation, but the nonprofit does not see it that way.

Such as, a small nonprofit puts a link to Amazon on their website, because they get a few pennies back from each book sale as part of the "associates" program. The nonprofit thinks, "We're providing a service, and getting a little extra cash." The organization's supporter thinks, "What a fun way to make my donation!" On a larger scale, it could be the logo of a national organization placed on items or the marketing of a national chain store.

Either way, the supporter is often likely to confuse the $25 spent on goods with having made a $25 donation direct to the nonprofit. I've been skeptical of these arrangements for years, and (when I was consulting) often warned my clients not to put too much effort into such arrangements. But it was just my feeling that this was happening. Now, I have a little bit of evidence.

In today's Nonprofit Quarterly online, there's an article saying that Cause Marketing Drives Down Donations. The evidence comes from a University of Michigan study:

More precisely, the study found that giving decreased if a donor had previously purchased a cause-related product, even if the donor was going to make the purchase independent of any charitable considerations. As a result of her findings, Professor Aradhna Krishna, the study's lead researcher, suggests that maybe not all giving is good giving.

There are already some criticisms of the study - small sample size, range, methodology - but I believe that further study will only bolster these results. So, does this mean you should avoid all such arrangements?

I think you can still use marketing arrangements, and sell goods, but you must do it with caution, and with eyes wide open. Make sure that the potential donation is enough to make it worth your time. Use these co-marketing deals to reach new supporters - those who haven't heard of you before and were not going to give a donation otherwise - rather than presenting these opportunities to your current donors.

Ask yourself this; is the business you're considering partnering with going to be promoting your mission to their customers, or are they expecting you to promote their products to your donors? Who does more work in the contract, and who gets more of the profits? If the balance is off, it's okay to just say "No."

I've said it before, and I'll say it again, "If you only ask for small donations, you'll only get small donations."

Reading the Fine Print on Micro-Donations

October is Breast Cancer Awareness Month, and we're seeing pink everywhere to remind us of that fact. Many charitable organizations are involved in this effort, and many have entered into cause marketing agreements with various corporations to receive donations on products sold with the pink ribbon logo. Donations are mostly small, such as $0.10 for purchasing specially marked packages of Dannon Yogurt, to several dollars on a new pink Kitchenaid blender.

Cause marketing is not new, but it's certainly been receiving more and more attention. One recent survey found that "Mothers and Young People Are Most Likely to Buy Products Tied to a Cause." Certainly, they make the purchaser of the product feel good about their choice, and certainly it makes the producer of the product look like a good corporate citizen. But how effective are these arrangements for most nonprofit organizations as fundraising vehicles?

There's no question that such co-marketing agreements work well for certain large, national organizations, such as Susan G. Komen for the Cure. They are "The" breast cancer charity to many people as a result of their leadership in cause marketing. But how about your local food pantry?

As a result of writing this blog, barely a week goes by when I do not hear from a marketing organization that would like access to my readers to promote "a fantastic new way to raise money for your cause." Typically, it involves the nonprofit selling some product or service, unrelated to their mission, and keeping a small percentage of the sale. "This product sells itself," I'm always assured in these emails.

You'll notice, I haven't been passing those along to you. It's always been my opinion that these small-scale cause marketing agreements are a distraction. Grassroots organizations need to maximize their interactions with their supporters, and squandering those contacts with a sale they only keep a small portion of comes at their loss, no matter how good the product might be.

I also believe it's misleading the donor as well. If I were planning on giving you a $25 donation, and you sell me a $25 item, in my mind we're done. I've given you the budget I had for you. That you are only keeping $3.75 of that $25 doesn't occur to most donors. Selling instead of raising not only distracts, it decreases your potential donations.

Here's my rule of thumb:
"When you ask for small donations, you'll only get small donations."
You can quote me on that.

But this subject comes up for me today as a result of Twitter. This morning, my twitter feed was full of warnings to "read the fine print." It turns out that it's not so easy being pink, and consumers are starting to catch on that "cause marketing" may be more marketing and less cause.

Many of the tweets were forwarding on that "Just because you bought the pink blender doesn't mean you made a donation." The fine print indicates that you must first register your product on a certain website before Kitchenaid passes along any of their profit to Komen.

And Dannon Yogurt? You also need to enter a code from each package lid on the website for your ten cents to pass through to the National Breast Cancer Foundation. And, they'll only pass on the dimes up to a maximum donation of $1.5 million.

Of course, $1.5 million is nothing to sneeze at, and going Pink for October is wonderful for raising awareness of Breast Cancer. But as a cautionary tale for small, locally-based nonprofits, it's instructive. Before entering into any marketing agreements, read the fine print. Both from your organization's perspective, and from the point-of-view of your donor.

How much money are you really likely to raise? How much staff time is it going to take? Would you raise more from your list with a simple ask instead of a sale? Is the product something you really want to be associated with? Are there maximums on donations? Any loopholes or gotchas that might prevent you from collecting all that your donors think they've given you? In the end, who will benefit more, your organization or the company you were promoting?