Can E-Commerce and Charity Co-Exist?

Here in the season of insane buying, it may be useful to point out that Americans are essentially a giving people. This generosity toward those less fortunate is a consistent national characteristic that the country should be proud of.

The vast majority of Americans, about 70 percent, give to at least one charity per year, according to IndependentSector. The average contribution of US$1,075 is 2.1 percent of the typical household income — a significant sacrifice involving a significant amount of money.

Of course, where there are significant amounts of money, business usually follows. Nothing wrong with that, except for those areas where commerce and morals come into conflict, such as when marketing meets charity.

I’m sure I’ll be accused of being an anti-business cynic, but to me there is something inherently sleazy about e-tailers linking their online businesses to charity groups for the principal purpose not of helping the charity, but of currying customer favor.

Raising the Possibilities

The Internet can be a powerful tool for charity and nonprofit organizations, which themselves represent a healthy slice of the U.S. economy — around 8 percent, according to some estimates.

More and more nonprofit organizations are looking to the Net to raise money and consciousness for their causes. A recent “Expanding Philanthropy through the Internet” symposium in San Jose, California revealed the planning of two new online marketplaces devoted to charity — AidMatrix and TechFoundation — that will simplify the process of giving.

As Timberland Company chief executive officer Jeffrey Swarz put it: “Doing well and doing good are not separate activities, but are in fact inextricably linked.”

Sellers As Givers

Most consumers literally buy into that philosophy. A 1999 study by Roper Starch showed that, all other factors being basically equal, 76 percent of Americans would like do business with brands associated with reputable, responsible charity causes.

A recent study by UCLA also found that firms with higher levels of philanthropic activity had significantly higher rates of return on assets and financial investments.

Clearly, there’s a link between a positive public face on charity and corporate health, and people are noticing. PricewaterhouseCoopers estimated recently that in 10 years, the valuation methods on Wall Street will include new metrics like social performance. Within five years, 70 percent of North American and European companies will assign board-level responsibility to areas of social accountability.

So what’s a company to do?

Value of Good Intentions

The Internet provides multiple opportunities for discreet philanthropy, such as CharityGift.com, where companies can donate money to charities instead of spending it on gifts for clients.

Without a doubt, though, many companies want consumers to know that they are giving. As a Nua Research Services analysis points out, businesses can link their online stores to “charity malls,” such as GreaterGood.com, where a percentage of every purchase goes to charity. Firms can also sponsor click-to-donate sites like The Hunger Site, which enjoys more than two million unique visitors a month, according to PC Data Online.

There’s even a name for trying to build profit margins through linking business to charity: “cause marketing.”

Value of Bad Intentions

However, the tawdry side of cause marketing is the Machiavellian lengths businesses will go to employ it. By linking their names to charity, firms are giving the impression, which may or may not be verified, that they are more than worthy of garnering business from donation-minded Americans.

The problem is, a company’s charitable function might be much more style than substance.

Giving back to the community is an admirable goal, but when it becomes a hard, corporate strategy geared toward increasing assets, yes, it’s easy to become cynical.

The Fine Line

True, the bottom line may be that charities could end up with more money and that, in turn, helps more people. But you also have nonprofits and for-profits potentially scratching each others’ backs, each with increasing executive salaries but decreasing percentages of charity dollars actually reaching the needy.

Plus, if you’ve ever been on the receiving end of charity strong-arm tactics, in a business environment that puts serious emphasis on charity-raising contests, you know how “charity” suddenly feels like “coercion.”

I don’t have a problem with companies giving back to the society that allows them to exist in the first place. Nor do I have a problem with the tax breaks they get as a result. The problem comes when they try to tell me what great guys they are and hey, while you’re admiring us, why not buy a toaster?