When schoolchildren last fall began buying brand-new three-ring notebooks and fresh pens for the start of school, Office Depot Inc. published ads proclaiming themselves "proud sponsors" of the National Parents and Teachers Association. The back-to-school partnership seemed as pristine as new yellow pencils; sales were up at Office Depot stores, and the PTA reported an increase in membership.
But some representatives of local PTAs were shocked at the deal the national board had made with the giant chain. To some it looked a lot like selling out: Office Depot got the right to use the official PTA logo in return for "an undisclosed sum." The partnership appeared to endorse one supplier over another, and to violate the 102-year-old group's ban on commercialism.
There's a lot of pressure out there for groups like the PTA to link up with corporations. As Willie Sutton remarked memorably, it's where the money is. While profits soared and most corporations found themselves richer in the '90s, most charities found themselves poorer. Government funding for social services and the arts was cut, foundation grants to non-profits leveled off, and individual giving remained flat, making non-profit groups feel that they had to aggressively search for new sources of money.
Bill Shore, executive director of Share Our Strength, a hunger-fighting charity that benefited from a share of American Express charge card transactions, said that though the non-profit sector is "rich in idealism," it's "entrepreneurially bankrupt, stuck in the posture of settling for that tiny margin of the financial universe that consists of leftover wealth."
Such sponsorships are the corporate philanthropy of 10 years ago, in which a little office staffed by one or two people gave out a few checks (a little of that leftover wealth) to respectable charities as evidence of good citizenship. Now the corporations want something back, and the deals are cut in the no-nonsense marketing department. Business executives are increasingly beguiled by the idea of "strategic giving," "focused philanthropy" and _ the big buzz phrase _ "cause-related marketing."
The PTA-Office Depot deal was actually one of the smaller, shorter partnerships; it ran for only a few months. Practically every major charity from the American Cancer Society to Habitat for Humanity already has some kind of sponsorship deal with a business. It hasn't quite gotten to Campbell's soup as the proud sponsor of the local soup kitchen, but the soup kitchen is probably thinking seriously about the possibility.
Sometimes the relationships are funny. Ansell Personal Products, for example, has bought the right to have its Lifestyles condoms be the official condom of the 2000 Olympics. And the insect display at the Smithsonian Institution was restored with sponsorship money from Orkin Pest Controls Inc.
Most are kind of neutral. When you use a particular Visa credit card, a percentage of the transaction goes to Reading Is Fundamental, Barbara Bush's charity of choice. So far, the partnership has been worth $1-million a year to the philanthropy.
Some examples serve as cautionary tales. When non-profit leaders gather these days, they point to the PTA-Office Depot deal as a case where poor planning led to bad publicity, deserved or not. They point with horror to a deal by which the American Medical Association endorsed some Sunbeam home products like scales and thermometers. Under criticism for endorsing the Sunbeam goods without conducting tests on comparable products, the AMA backed out and had to pay a fine for breach of contract.
As an example of how to plan to make things go right, non-profit fund-raisers are studying the partnership between the Boys & Girls Clubs of America and the Coca-Cola Co.
Kurt Aschermann, senior vice president for marketing and communications for the Boys & Girls Clubs, negotiated that deal, the largest corporate-non-profit deal ever, a $60-million "strategic partnership" over at least 10 years. Coke will provide money for concerts and sports tournaments at the 2,065 clubs around the country. Up to now the largest corporate commitment to cause-related marketing was that of the cosmetic company, Avon Products Inc., which has given $25-million to groups educating women about early detection of breast cancer from the sale of its "pink ribbon" products.
Aschermann remembers corporate philanthropy began to change drastically about six years ago. Corporations, including Coke, wanted, as he put it, "to build some value for the company into the gift."
It wasn't just that the corporation wanted to increase its sales, Aschermann believes. "They wanted people to say this is a good company, it's doing good stuff," he said. "It's not just writing a check and going home."
The important thing, Aschermann said, is for charities to remain true to their mission. He said he rejects offers every day from companies that say, "If you can get your 2-million children to sell my widgets, I'll give you several million dollars."
Coca-Cola will set up a deal by which a percentage of supermarket sales will be donated directly to Boys & Girls Clubs. The PTA rejected a similar deal with Office Depot.
Club members won't be selling Coke, but local bottlers will be sponsoring sports tournaments, and the name Coke will be on every scoreboard. Though the deal is carefully not exclusive of other products, there won't be a lot of Pepsi machines in the clubs.
The clubs not only get money for their programs, they also get exposure through Coke's considerable ad budget.
The motive is similar for the American Cancer Society, which has in essence rented its name to SmithKline Beecham's NicoDerm anti-smoking patch and to the Florida Department of Citrus. The anti-cancer group, said Steve Dickinson, national vice president for communications, has always endorsed the principle of no smoking and plenty of orange juice. Specifying a particular product wasn't a big leap. The American Cancer Society isn't poor; it raises at least $5-million a year. But, Dickinson said, "that still doesn't give us access to a $20-million ad campaign to talk about smoking, as SmithKline Beecham does, or $25-million as the Florida citrus group does."
"The company would never have written the check if the product was not mentioned," Dickinson said. "We know we're walking a line here. It's a business relationship. It's where the money is, and it's where lots of consumer attention is focused. Getting a piece of that for a cause like fighting cancer sounds reasonable to us."
Mentioning the non-profit group in its ads in turn gives companies a way of setting themselves apart, and, in some sense, above competitors.
"It's a business," an executive at a big manufacturing company said recently at a Ford Foundation session on cause-related marketing. "It's a business to try and present ourselves as being more giving than others."
Corporations can't precisely measure the payoff in increased sales, but they do know there's a halo effect. A survey by Cone Communications of Boston found that 76 percent of consumers report they will switch brands or retailers to one associated with a good cause. The Cone survey also found that consumer cynicism about cause-related marketing was falling. "The 1993 benchmark study found that 58 percent of consumers held a degree of skepticism. Today only 21 percent of consumers say they wonder if the company's motives are good," a Cone company newsletter said.
On a practical level, the marketing departments see they can reach a targeted audience whose interests are known. The conservation group Ducks Unlimited, for example, has lent its name to companies that sell camouflage clothing, dog food and beer.
Obviously, a group doesn't want to be linked with a product that reflects badly on the cause _ unlike Ducks Unlimited, most non-profits would reject the sponsorship of an alcohol company; same for cigarettes.
Fisher Howe, author of The Board Member's Guide to Fund Raising, said charities should reject all but the direct, no-strings-attached, philanthropic dollar from a corporation. Cause-related marketing has been dangerous, he said, since the grandmother of all such campaigns _ the 1983 American Express campaign by which part of every credit card transaction went to help restore the Statue of Liberty.
"The companies are looking at the potential for market exploitation, not at the social values. They are giving away nothing," Howe said. "This sort of marketing device as a substitute for straight philanthropy is a terrible sign for the non-profit organizations."
Some charities have particularly sensitive issues. Catholic Charities USA has so far opted out. "We'd have to be very careful," said the Rev. Fred Kammer, executive director, "to watch out for the bad actors _ cigarettes, alcohol, defense spending."
How about communion wine? "We wouldn't endorse one wine over another," Kammer said.
Newhouse News Service
Constance Casey writes for Newhouse News Service