By Craig Mellow
Pittsburgh, PA (September 1, 2007)- Until three years ago, Pittsburgh-based PNC Bank doled out corporate philanthropy the old-fashioned way. Regional committees across its eight-state footprint scattered contributions among a panoply of pet causes, from Prevent Blindness Ohio to the Philadelphia Flower Show. Then chief executive officer James Rohr came to the board with what he thought was a better idea.
Recalls Stephen Thieke, a director of PNC Financial Services Group: “We wanted to put the power of the company behind one cause where we could really try to make an impact”- not to mention generate more positive publicity than traditional scattershot giving yielded.
One model was Avon Products Inc., which since the early 1990s has wrapped its name around women’s health issues with annual weekend breast-cancer walks and other highly noticeable good deeds. But the bank’s board determined that “breast cancer was too narrow a cause for a company like ours,” says Thieke, 60, who used to be chairman of the risk-management committee at JP Morgan & Co.
A poll of what a PNC spokesperson calls “a representative sample” of the bank’s 27,000 employees identified education as a near-universal social concern. And PNC Grow Up Great was born-a commitment by the PNC Foundation to deliver $100 million over 10 years for the development of children under 5, including grants to Head Start and other preschool programs.
Grow Up Great hits a strategic home run for PNC, says Thieke. College grads are more tempted to work for a company they see doing the right thing-and by the 40 hours a year of paid time that PNC grants employees for engaging in volunteer work for early-education programs. Bank employees bond by taking on such tasks as reading to children and sprucing up crumbling classrooms on evenings and weekends. And the PNC brand is slowly boring into consumers’ collective unconscious as not just another bank that offers free checking. “I can’t tell you how many customers Grow Up Great brings in the door,” the director says. “I can tell you I have 11 grandchildren, and they all know PNC supports early-childhood education.”
PNC is a prominent recruit to the budding enterprise known as cause marketing, also called CM. Most businesspeople are likely to have seen CM around them without knowing just what it is: in the breast-cancer pink paraphernalia-ribbons, pins, pens, car magnets-on display each October from Yoplait lids to BMW showrooms, or the cryptic (RED) trademark that has sprung up to fight AIDS in Africa via purchases of a wide variety of products, including Gap T-shirts and Apple iPods. Carol Cone, 56, whose Boston corporate-citizenship consulting firm Cone Inc. helped PNC on Grow Up Great, defines the genre this way: “The cause becomes part of brand DNA to yield a sustainable competitive advantage.” She and other cause-marketing practitioners prefer to call it cause branding.
A proposal to use corporate goodness as a sales booster may well come soon to a boardroom near you. Cause-sponsorship expenditures by U.S. corporations have grown 46% in the past three years, to a projected $1.44 billion for 2007, according to the IEG Sponsorship Report, a standard reference for the advertising industry. Beyond the intangible benefits of goodwill, measurable payoffs for companies have included Coca-Cola’s fivefold sales increase during a six-week 1997 program that pledged a 15-cent contribution per case of beverages to Mothers Against Drunk Driving, and a 140% bump in Whirlpool Corp. product sales during a six-day drive in 2005 to benefit Habitat for Humanity.
Home Depot is in the midst of a three-year, $25 million program to build or refurbish 1,000 playgrounds in needy neighborhoods. Its largesse captured the 2006 Golden Halo award handed out by Cause Marketing Forum of Rye, New York, which keeps tabs on these matters. Rival Lowe’s Cos. struck back by joining the Whirlpool effort, putting new appliances in every home built by Habitat.
“What’s happening with cause marketing is analogous to companies’ competing to own word associations on Google,” says Stephen Jordan, executive director of the Business Civic Leadership Center, an affiliate of the U.S. Chamber of Commerce. “People are trying to own Honesty and Truth.”
It all sounds, as any CM promoter will tell you within a minute or two, like a classic win-win. Worthy causes shake contributions out of companies and their customers. The companies accumulate positive karma, often for a fraction of the cost of paid advertising-especially if a well-meaning celebrity can be brought into the mix, like Bono, the singer-activist who is a co-creator of (RED). “I saw Bono on Oprah recently, and the two of them spent an hour pushing products from Apple, Gap, and Motorola [another (RED) sponsor],” complains Inger Stole, an assistant professor of communications at the University of Illinois and a prominent voice in the nascent cottage industry of cause-marketing critics. “How much is publicity like that worth?” __Stole and other gadflies see CM as a get-out-of-jail-(almost)-free card for corporate sins ranging from tax evasion to pollution. The San Francisco-based organization Breast Cancer Action operates a “Think before you pink” campaign that criticizes Avon, among others, for too much marketing and too little delivery to the cause. The organization’s president, Barbara Brenner, says that a “forensic audit” of Avon’s breast-cancer walks in 2002 revealed that more than a third of the money raised was eaten up by administrative and marketing expenses. Avon contests the 2002 figure. And last year, says Susan Heaney, the company’s director of corporate responsibility, the Avon Foundation passed on to the cause 80% of all contributions, plus $15 million to $20 million in corporate funds.
Some prominent nonprofits remain wary of offering companies their imprimatur. “We’re careful about what we say about the companies we cooperate with,” says Gwen Ruta, director of corporate partnerships at the Environmental Defense Fund, which has worked with major entities like McDonald’s and Federal Express “to create environmental innovations that also bring business benefits,” as she puts it. “We know we support FedEx’s move to delivery vans that reduce _emissions by 90%, but we don’t know about everything else FedEx does.”
Skeptics or not, if greed was good in the 1980s, giving back has gone grand in the 2000s. Bill Gates and Warren Buffett were just two of the record 21 Americans who contributed more than $100 million each of their own money to various causes last year, according to the trade journal Chronicle of Philanthropy. Donations to the top 400 U.S. nonprofits jumped 13%, to $63 billion, in 2005 and were on course for another double-digit rise in 2006. Companies are fiercely proclaiming their corporate social responsibility and the faith that nice guys finish first.
This translates across corporate America into pressure to seem caring, at the same time as the ante for cultivating that impression is rising. “If you want someone to pay attention when you give $1 million, you have to be smart,” says Tim McClimon, president of the American Express Foundation, which distributes $30 million to charities annually for the card and travel giant. Cause marketing can get a company more bang for the same bucks than direct charitable contributions.
AmEx is credited with giving birth to CM in 1983 by promising to donate money for the restoration of the then-scaffolded Statue of Liberty each time a customer used an American Express card, traveler’s check, or other service. The repair effort got $1.7 million, and AmEx got a 28% increase in card usage and a 17% rise in users during the promotion period.
The lessons of this success were taken most deeply to heart not by rival corporations during the testosterone-fueled ’80s, but by entrepreneurial nonprofits. Susan G. Komen for the Cure, founded in Dallas in 1982 by Nancy Brinker and named after the sister she had just lost to breast cancer, became the dynamo of corporate-charitable synergy. In 2006 Komen raised $36 million for breast cancer research and awareness, working with more than 100 corporate partners from Campbell’s to Facebook, says its cause-marketing director, Katrina Drake. Older-line charities have followed the Komen strategy by renting their aura to household consumer names. The American Heart Association, for example, has received $10 million from Subway Restaurants, in turn allowing the sandwich empire to invoke its name in advertising. No hard figures are available to show whether cause marketing is displacing direct charitable giving by corporations. But nonprofits are feeling the heat to deliver something in return for contributions.
The logic of CM is compelling. If a company draws cause-marketing funds from its philanthropy pool, as is usually the case, that’s money it would have spent anyway, to less business effect. Even if the dollars come from the marketing budget, the sum involved can be relatively puny. An allocation of $8.3 million for playgrounds represents 0.009% of Home Depot’s 2006 revenues, and other corporations burnish their reputations more economically still. A mere $200,000 will be enough to sign on as a sponsor of Partnership for a Drug-Free America’s new parent-targeted “Time to talk” campaign, says Debbie Kellogg, director of corporate relations and alliances at the nonprofit. “That’s the cost of just two full-page ads in a popular magazine like Prevention,” she adds.
As cause marketing has grown, corporate donors have become more ambitious and controlling. “There are very few companies anymore that are willing to write you a check and let you tell them how it’s going when you get a chance,” says Doug Staples, senior vice president of strategic marketing and communications at the March of Dimes. Cause branders design or cherry-pick charities to fit their own vision. They want their cause to become an element of corporate identity, and they involve the CEO and the board of directors to make sure the objects of their generosity harmonize with broader development goals.
“Strategic philanthropy is the way philanthropy is going in business,” says Kevin Martinez, vice president for community affairs at Home Depot. His company’s playground campaign, for example, is tied to its larger strategic objective of appealing to female customers, he explains. (Note the preponderance of women in recent Home Depot ads.) The campaign also serves as a rallying point for employees, who are organized into construction brigades to help build playgrounds on their own time. “Every associate can recite our mission: to build a playground within walking distance of every child in America,” Martinez says. The work is done under the guidance of KaBOOM!, a 10-year-old Washington, D.C.-based nonprofit, which receives the huge retailer’s contributions. And the spectacle of volunteers in Home Depot regalia bolting in a new seesaw seldom fails to attract local news coverage.
Nevertheless, a problem with cause marketing, admits Carol Cone, is that “it takes a long, long time for the public to perceive what a company is doing.” While product promotions linked to charity have continued to prove effective as short-term sales boosters, as evidenced by the Coca-Cola surge in 1997, it is difficult to measure longer-range impact. Whirlpool has been donating as much as $10 million worth of appliances annually to Habitat for Humanity since 1999, and in 2004 it sponsored a concert tour by the charity’s celebrity face, country singer Reba McEntire. Follow-up surveys showed that 52% of consumers who were aware of Whirlpool’s support for Habitat felt either “favorable” or “passionate” about the brand, compared with 35% of the unaware population. “In a market where you battle for 1% market share, that’s significant,” says Jeff Terry, who ran Whirlpool’s Habitat program for several years and is now a vice president at Cone Inc. But considering that only 11% of the survey population had even heard about the Whirlpool-Habitat tie, the result is no knockout punch.
The (RED) campaign has tried to strengthen cause-brand linkage by combining stars from the worlds of entertainment and consumer pitchmanship. Bono and collaborator Bobby Shriver, a Kennedy scion who succeeded his mother, Eunice Shriver, as the force behind the Special Olympics, spearheaded the effort. “They went to the world’s best marketers and said, ‘I don’t want to talk to your foundation officer, I want to talk to your chief marketing officer,'” says (RED)’s California-based president, Tamsin Smith. And the marketing chiefs took the call. Armani and Nike, among others, joined Apple, Gap, and Motorola in offering (RED)-linked products and returning as much as 40% of the proceeds to the Global Fund to Fight AIDS, Tuberculosis, and Malaria, which works closely with the United Nations. The result was $25 million raised during (RED)’s first six months in the U.S., plus Oprah-wattage goodwill exposure for the sponsors.
But exposure has bred the last thing any board wants while trying to patent Truth and Honesty: controversy. An article in the trade magazine Advertising Age alleged that from October to March, (RED) raised $18 million rather than $25 million for the Global Fund while its partner companies spent $100 million advertising their own virtue. Shriver countered on the (RED) blog that $25 million was the correct amount of money raised, and derided the $100 million advertising figure as “completely wrong-by more than 50%” and partly based on “guesstimates.” In a letter to the editor of Advertising Age, he said that the sponsors would have spent the marketing money “anyway. It never would have been given to the Global Fund.” The sponsors all refused to comment for this article.
Skepticism about cause marketers’ good intentions can only spread as CM does, prodded by campaigns whose self-serving subtexts seem tailor-made for ridicule by Jay Leno or Jon Stewart. Megacalorie suppliers Coca-Cola and Kraft, for instance, have teamed up to finance Boys & Girls Clubs of America’s new offensive against obesity among 6- to 18-year-olds. Delta Air Lines has trumpeted itself as “the first U.S. airline to implement a voluntary carbon-offset program,” planting trees to absorb the greenhouse gas spewing from its jets. On a closer reading, Delta is only offering ticket buyers the opportunity to add their own cash for planetary reforestation, though the company promises to make its own donation for every customer flying on Earth Day.
An effective campaign “has to pass the three-second test,” says David Hessekiel, president of the Cause Marketing Forum. “You have to make sure it’s not going to look like you’re putting something over.”
Nevertheless, boards at consumer-oriented companies would do well to take a fresh look at embedded “dartboard philanthropy” and think about how to stand out from the burgeoning cause-branding crowd. One school of thought says you should follow the trend toward espousing edgier causes on which your company can put an emotional trademark. “Three years ago nobody would touch poverty with a 10-foot pole. Now it’s all the rage,” says Dana DiPrima, who heads the cause-related practice at Leverage Group, a marketing-services firm in New York City and Los Angeles. “I would love to see somebody pick up childhood abuse and neglect.”
Manpower Inc., a global employment service, has pinned its name to the fight against modern-day slavery by championing an international business charter that promises “zero tolerance” for human trafficking. “When I started talking about human trafficking with our board two or three years ago, they asked whether this is really where we should be living as a company,” Manpower chairman and CEO Jeff Joerres recalls. “But when people in important new markets for us, like Asia and the Middle East, started asking whether trafficking isn’t just the same as temporary employment, we saw that this was an identity issue for us.”
As Home Depot’s Kevin Martinez says, “You can’t be all things to all people. People do not understand the complexity of giving money away.” Strategic philanthropy will work better if the board gets involved and helps focus it from the start.
For the full article, visit Board Member Magazine.