For Holidays Starbucks, Critics See (RED) & Green

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I love Starbucks. I love Product (RED). I love cause marketing. If you have a problem with any of these you should probably leave now.

Through December 1st when customers spend $15 on any purchase Starbucks will automatically make a $1 donation to The Global Fund on their behalf. Customers also get a copy of the exclusive All You Need Is Love Holiday CD for free.

But that's not all.

On December 1st, Starbucks will commemorate World AIDS Day by donating 5 cents from every beverage sold that day as well as $1 from every Starbucks (RED) product purchased in stores.

To date Starbucks has generated contributions equaling more than 5 million daily doses of antiretroviral medicine through the purchase of Starbucks/(RED) products.

But no good deed goes unpunished.

A recent Nonprofit Times article titled Product (RED)'s Impact is Shrouded in Vague Answers frowns on (RED) partners like Gap and Starbucks that don't report sales related to (RED).

But the Times also reports the points I often make on (RED). The cause marketing business model it's created with companies like Starbucks is....

  • ...the best way to raise money with businesses, especially retailers, because it engages the most powerful and lucrative force they have: its customers.  In short, despite what most people think, the real money in corporate philanthropy is not in the company checkbook. It's in the customer's pocketbook.
  • ...an incredibly successful way to build a philanthropic brand. Think about it. Critics complain that (RED) partners have spent tens of millions of dollar on marketing (RED)--like they wouldn't have spent it on something besides philanthropy anyway. But what they don't concede is that in just a few short years (RED)'s philanthropic brand has risen to a level that it's taken others--St. Jude, Unicef, MDA, Komen--decades to achieve. And (RED) owes that to star-power and an impressive ability to harness the corporate marketing machine.

A lot of nonprofits ask me what area they can work on to be more successful in cause marketing. Three things, I tell them: brand, brand, brand.

It's a lesson Product (RED) drilled on right from the beginning, and to-date has $135 million as proof that in the school of corporate philanthropy they are a top student.

Not Seeing Red Over Starbucks/(RED)

I love when Product (RED) launches a big partnership like it did recently with Starbucks.  It really thrusts cause marketing into the spotlight and gets nonprofits and for-profits talking about how they can work together to market each other and support their communities. The Starbucks/(RED) pact has also brought up lots of good comments and questions about what cause marketing is, how it works and how it differs from other types of giving.  Here are some of the things that cause marketing IS and ISN'T as it relates to the Starbucks/(RED) program.

Starbucks/(RED) IS a partnership for profit.  Cause marketing is a partnership between a nonprofit and a for profit for mutual profit.  For the nonprofit, it raises money and visibility.  For the for-profit it enhances favorability with consumers, which drives sales.  In short, it gives consumers a better reason to buy than just for product or price.  Both (RED) and Starbucks have business goals beyond their real and noble intentions to fight AIDS in Africa.  (RED) wants to further build its philanthropic brand so it can land more high profile and lucractive partners like Starbucks.  Starbucks wants to boost flagging sales with a new promotion that will increase customer thirst for $4 lattes.

Starbucks ISN'T a cheapskate for donating five cents from every holiday drink.  I've actually heard this standing in line waiting to order my own drink.  "That's it?  Five cents on a drink I just paid $4.50 for?"  But look at the math of Starbucks' generosity.  How many stores: A LOT.  How many customers: A LOT.  How many drinks served each day: A REAL LOT.  Starbucks will raise millions for (RED) and consumers can easily support the campaign by buying their hot drinks at the same price they've always bought them.  (RED) will raise more money tying their success to coffee consumption than they could have ever squeezed from the corporate checkbook or from those well meaning folks in community relations.  You decide: would you rather have five cents from every drink and a eight-figure check or a nice five-figure community grant?  Starbucks and (RED) chose the right course.

What Starbucks spends on marketing (RED) IS good business, for everyone.  When Gap launched their partnership with (RED) and people saw all the ads, hoopla and in-store displays, there was an outcry: "Stop spending money on advertising.  Just give it to (RED)!"  People are saying the same thing to Starbucks.  And they are right on one count: among others things, those sharp-looking (RED) aprons behind the counter aren't free.  But to suggest we just take the money spent on promotion and give it to (RED) misses the mark on the power of cause marketing, how it works and how it differs from other types of giving.  The fact that Starbucks could partner with (RED) to grow its business and to help a good cause was the impetus for the partnership!  Another truth: those Starbucks promotional dollars would not have been re-purposed for charitable giving.  But rest assured they're not wasted because they promote (RED)'s work and mission.  Thanks to similar investments by companies like the Gap, Motorola and Apple, (RED) has become a top philanthropic brand IN THE WORLD in just a few years.  This accomplishment cannot be understated and the corporate marketing machines of (RED)'s corporate partners deserve a good deal of the credit.   

Cause marketing ISN'T an end, it's a means.  Taken by itself cause marketing seems short-sighted, wasteful and stupid.  So do glitzy charity fundraisers.  So do those silly charity address labels and greeting cards I get in the mail every week.  At the hospital I work at in Boston we have a cause marketing program because it raises some money and gives a lot of exposure in the community.  But, more importantly, it feeds our major gifts and foundations teams with prospects and opportunities.  As we build cause marketing partnerships with individuals and companies we tap other sources of philanthropic wealth that are more lucrative and transformative than cause marketing.  We get asked to submit proposals to corporate foundations and senior executives visit the hospital and get to know us.

(RED) is different from most nonprofits in that cause marketing is more of a platform than a springboard into new fundraising opportunities.  I have no doubt that after the holidays when the first phase of (RED) ends in Starbucks stores the folks from (RED) will have quietly gathered a sizeable bit of intelligence about the senior team at Starbucks and who might be good prospects for cultivation. 

Let's not forget that while Starbucks will raise a lot of money in the coming weeks, the cash and stock individuals (like Schultz) could give and bequest to (RED) to fight AIDS in Africa could make the companies efforts look like a hill of beans.