What Every Nonprofit Should Know About Cause Marketing

Pampers-UNICEF Cause Marketing Campaign
Cause marketing campaign featuring Pampers from Proctor & Gamble and UNICEF/Photo Courtesy of P&G

What is cause-related marketing?

Cause-related marketing has exploded in recent years even though it is a relatively young concept.

Cause marketing began, on a national scale, in the early 1980s when American Express partnered with the nonprofit group that was raising funds to restore the Statue of Liberty.

American Express gave a portion of every purchase through its credit card to the cause and an additional amount for every new application that resulted in a new credit card customer.

The company also launched a huge, for its time, advertising campaign.

The results are now legendary: the Restoration Fund raised over $1.7 million, and American Express card use rose 27 percent. New card applications increased 45 percent over the previous year. All this was accomplished with a three-month campaign.

Everyone involved was a winner. The nonprofit cause received needed funds, American Express increased sales of its product and achieved a reputation for social responsibility. American Express even trademarked the term "cause-related marketing."

Now, companies have fully embraced what is called "doing well while doing good." Cause-related marketing may eventually become the primary way that businesses express their social responsibility.

The growth of cause marketing has exploded, from a $120 million industry in 1990 to $2 billion in 2016. Plus consumers seem to like it. Research has suggested that more than 89 percent of consumers would switch brands to buy a cause-related product if price and quality were similar.

How does it work?

There are now many versions of cause-related marketing. It is an agreement between a business and a nonprofit to raise money for a particular cause. The company expects to profit from this arrangement by selling more products and by enjoying the "halo" effect of being associated with a respected nonprofit or cause.

A cause-related marketing program is not an anonymous or low-key donation to a nonprofit, but one that lets the public know that this corporation is socially responsible and interested in the same causes as its customers. The nonprofit benefits both financially and through a higher public profile as a result of its partner's marketing efforts.

Cause-related marketing campaigns have blossomed over the last few years and can appear in a variety of forms. Jocelyne Daw, in her book Cause Marketing for Nonprofits, lists some of the most popular:

  • Product sales. Think of the (Red) campaign which has brought together many companies to sell specially branded products (a red Gap T-shirt or a red iPod for instance)with a portion of the selling price going to the Global Fund for HIV/AIDS prevention.
  • Purchase Plus. Also called "point-of-purchase, this widespread campaign is waged at the checkout lines of grocery stores or other retail venues. Customers are encouraged to add a donation to their bill. The store processes the money and gives it to the nonprofit with which it has partnered. Promotion is usually pretty low-key, but that makes these programs easy to set up. Plus, they are quick so a business can respond to, say, a natural disaster in a timely way. One of the most successful cause-marketing programs, "checkout for charity"  campaigns raised more than $388 million in 2014 and $3.88 billion over the past three decades
  • Licensing of the nonprofit's logo, brand, and assets. Licensing runs the gamut from products that are extensions of the nonprofit's mission to using its logo on promotional items such as T-shirts, mugs, and credit cards to having the nonprofit provide a certification or commendation of particular products. An example of the latter is the American Heart Association, which provides recognition for products that meet their standards for heart health. 
  • Cobranded events and programs. Probably the best-known example of a cobranded event is the Susan G. Komen "Race for the Cure." A typical co-branded event was a London Children's Museum that teamed up with the 3M company to build and outfit a science gallery for children. The involvement of the corporation in this type of program is deeper than the usual sponsorship. In the case of the children's museum, scientists from the company helped with the exhibits while the company's employees served as volunteers.
  • Social or public service marketing programs. Social marketing involves the use of marketing principles and techniques to encourage behavior change in a particular audience. An example is the partnership of the American Cancer Society with the NFL and Chevrolet, for the Great American Smokeout.

How is cause-related marketing different from corporate philanthropy and corporate sponsorships?

Corporate philanthropy takes place through direct monetary gifts to a nonprofit. It is often made through the corporation's foundation. These donations are usually for a particular program that the nonprofit will run and can be of short or long duration.

Corporate sponsorship is a bit closer to cause marketing since the corporation gives the nonprofit money to hold an event, run an art exhibit, or other time-limited activity. The funds may come from the community relations budget of the corporation, or the marketing budget and the company expects a certain amount of publicity in the way of signage, PSAs, promotional materials, etc.

What are the advantages of cause-related marketing?

There are advantages for both nonprofit and business. For business, cause-related marketing proves that it is socially responsible and provides great public awareness of its values and willingness to support good causes.

For the nonprofit, the contributions from a cause-related marketing project can be significant, and those funds are usually unrestricted so even overhead costs can be supported by them. Besides actual monetary benefit is the intangible value of the publicity and advertising that usually accompanies a cause-related marketing program, which is often done by the corporation's public relations and marketing departments in tandem with the nonprofit's own marketing.

What are the disadvantages of cause-related marketing?

There is always the possibility that one of the entities involved (nonprofit or corporation) will do something that hurts its reputation. In that case, the other party may be perceived negatively as well. For that reason, corporations and nonprofits should choose their partners wisely.

In addition, there has been considerable concern about nonprofits lending their good names to for-profit activities. Does it weaken the trustworthiness of a nonprofit? Does it blur the lines between business and philanthropy? Could a nonprofit "sell out" by lending its support to products that are less than benign for the public? These questions continue to be debated by both fundraising and marketing professionals.

Mara Einstein,a marketing professor and author, raised these questions in an article in the Chronicle of Philanthropy:

  • Does buying products for a cause take the place of writing a check to a charity or going online and signing up for a monthly gift?
  • Do large, national nonprofits that have become marketing powerhouses take attention and money away from smaller but just as worthy charities?
  • Since cause-marketing is usually handled by the marketing department of participating corporations, do "product strategies" outweigh humanitarian ones?

Cause marketing is here to stay, however, and there is no doubt that it can be beneficial for many charities and causes. The challenge will be to understand it better and head off negative consequences.

Resources for this article include:

  • Cause Marketing for Nonprofits: Partner for Purpose, Passion, and Profits, Jocelyne Daw, Wiley, 2006. An extremely well-documented text about cause-related marketing.
  • The Art of Cause Marketing: How to Use Advertising to Change Personal Behavior and Public Policy, Richard Earle, McGraw-Hill, 2002. Earle cites his top ten list of the best cause-marketing campaigns and why they worked.
  • Cause Marketing Forum The best place to keep up with cause marketing.
  • Charities Shouldn’t Let Corporate Marketers Set the Agenda, Mara Einstein, Chronicle of Philanthropy (April 29, 2012). A must-read classic.

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