Who Should Pay for Cause Marketing Expenses?

This story in the New York Times, Checking Out, and Donating Too, got me thinking on who should and does pay cause marketing expenses for register programs--like those at Safeway supermarkets described in the article. Lucy Bernholz from Philanthropy 2173 asserted "that embedded giving [Lucy's name for cause marketing] was largely unregulated, and that some retailers kept a percentage of donations as a 'finder’s fee.'"

I was surprised by this and tweeted Lucy for details. She replied publicly:

quote was misattributed. However, co's that use $ raised to cover costs of running these campaigns are basically doing this

Companies shouldn't be keeping a portion of the monies raised to pay expenses. But the fact that expenses are paid out of the revenues raised and not from some treasure chest unearthed for just this purpose shouldn't be surprising to anyone.

None of the retailers I work with pay for the printing of their pinups  (and maybe register signs and few other minor supplies). This usually consumes 5% to 8% of the revenues raised. At the end of the program, the company forwards me a check for all monies raised and I pay the bills. I've never heard of a company withholding cause marketing dollars or charging a "finder's fee" to pay expenses. If the company has purchased something that my nonprofit agreed to pay for, we reimburse them.

I don't require companies to pay expenses for two reasons.

First, I never would have recruited so many partners if I had insisted they pick up the expenses for a cause marketing program. This is especially true for the local and regional companies I work with that don't have deep marketing or charity budgets. They are happy to help, but when you add a price tag to helping they'll balk. But as you'll see, just because they are doing something for free doesn't mean it isn't valuable or doesn't come at a cost.

Second, I subscribe to this basic truth of cause marketing: the most valuable thing a retailer can do to help a cause is ask its customers to support it.

It's very generous when a company pays the expenses of a cause marketing campaign. But requiring them to won't win you any partners, and the upside of a register program is just too lucrative to insist on it.

When can you ask companies to pay expenses? When they offer and when your cause is big enough to turn away businesses that won't.

I haven't been able to confirm it, but I've heard that causes like St. Jude's Children's Research Hospital requires some partners to pay upfront "administrative fees" to cover expenses that ensure 100% of the money raised goes to the kids.

But what does the shopper at the register think about cause marketing expenses?

I'll hazard to say that they know fundraisers of all kinds have expenses. Do they really think the expenses from that charity gala they attended last night were paid by one generous donor, or supplied by leprechauns laden with gold at the end of the rainbow?

You might be thinking that while the consumer makes the donation in a cause marketing program, the retailer reaps marketing benefits without paying anything. Shouldn't they pay something? True, they don't help with expenses, but they do absorb a cost. The company donates its employees to the effort and their time at the register asking shoppers to support the cause.

[Remember, the retailer doesn't reap any tax benefits from a register program. They are merely handling the consumer's donation and can not claim it as a deduction.]

Shoppers only have so much patience and time at the register to answer questions from an already harried cashier. They want to pay for their stuff and leave. And if a cashier is asking the shopper to support a cause what's the business losing by not asking:

"Would you like to sign-up for our credit card today?"

"Do you need batteries with that?"

"There's 15% coupon at the bottom of your receipt for your next visit. Will we see you again soon?"

So, we're back to where we started. Who pays for cause marketing expenses? The answer for me is the company if they want to, but they provide enough value to be excused. Besides, you'll recruit more partners and raise more money if you don't look the other way and whistle when the cause marketing bill arrives. Would you rather raise more money or get your expenses paid? Do the math.

That leaves the generous consumers at the register to pick up the tab. They know that fundraising has expenses. And according to the The 2010 Cone Cause Evolution Study, 81% of Americans prefer point-of-sale programs (i.e. register programs, pinups). What they probably don't know is just how lucrative and cost-efficient register programs are for causes.

Cause marketing is an easy and cost-efficient way for consumers to donate to their favorite causes while they shop. The cost to companies is a modest investment as they earn a halo that has its own rewards. And the gain to causes is hundreds of millions of dollars each year.

Regardless of who's paying the expenses on cause marketing, its return-on-investment is something we can all take credit for.