Nonprofit Organizations Compete in Online Funding Campaigns

College Park, MD (January 18, 2011)- Over the past year, online giving competitions have raised visibility and funds- both for nonprofits and for the competitions’ corporate sponsors. These projects- often funded and promoted by major Fortune 500 companies like Pepsi, Lowe’s, and JP Morgan Chase- utilize social media principles to engage consumers to vote online for donation recipients. Alliance for Community Trees member and partner organizations have competed for significant funding in these programs.

In the Pepsi Refresh Project, ACT member organizations like New Jersey Tree Foundation and Indiana Urban Forest Council are competing in different categories, all for funding to plant trees. So are groups like Matt’s Trees in New Orleans and Buffalo Olmsted Parks Conservancy.
Lowe’s is giving away $1 million through its Community Giving Campaign, in which ACT partners American Forests and Keep America Beautiful are participating.
In a February 2010 article titled “Give and Take”, The Economist surveyed this emerging trend, focusing on the most visible of these corporate giving campaigns, Pepsi Refresh:
Instead of spending $20 million on a handful of 30-second spots for the 2010 Super Bowl, Pepsi decided to give that amount away. Under the slogan “Refresh Everything”, the Pepsi Refresh campaign asks the public to vote online for charities and community groups to receive grants ranging from $5,000 to $250,000. A few days before the game its arch-rival, Coca-Cola, was also bitten by a charitable bug. It promised to give $1 to the Boys & Girls Clubs of America every time someone watched its Super Bowl ads on its Facebook page, up to a maximum of $250,000.
Pepsi Refresh is probably the most prominent example so far of “cause marketing”-trying to win customers by ostentatiously doing good. Other recent examples include Chase Community Giving, in which small charities competed to win $5 million in donations from JPMorgan Chase, and American Express and NBC Universal’s “Shine A Light” program, which awarded a grant of $100,000 to a small business chosen through its website.
Marketing people say consumers are increasingly trying to do good as they spend. Research in 2008 by Cone, a brand consultancy, found that 79% of consumers would switch to a brand associated with a good cause, up from 66% in 1993, and that 38% have bought a product associated with a cause, compared with 20% in 1993. Rather than try to make products that can be marketed as ethical in their own right, such as “fair trade” goods, firms are increasingly trying to take an ordinary product and boost its moral credentials with what one marketing guru calls “embedded generosity”. The fad for online competitions to award the handouts also appeals to another trend, so-called “slacktivism”, whereby people are turning to the internet to give their consciences a boost without doing anything more onerous than clicking a mouse a few times.
The strategy seems to be working, judging by the proliferation of articles (such as this one) noting Pepsi’s campaign. JPMorgan Chase claims its campaign was not marketing, but simply an attempt to manage its existing corporate philanthropy more imaginatively. If so, its marketing staff are missing a trick, given that around 2 million people signed up to vote on Facebook, many of whom were not existing Chase customers. Moreover, the favorable headlines generated by Chase’s $5 million outlay contrasted strikingly with the grudging reaction to Goldman Sachs’s launch around the same time of a $500 million campaign to support small businesses.
Although the public likes online popularity contests, they can have unintended consequences. Chase, for example, caused a fuss by excluding a pro-life group and an outfit that wants to legalize cannabis from its competition. Moreover, many firms see virtue in tying themselves to a particular cause. Ten firms, including Gap, Apple and most recently Nike, have deals with (RED), a scheme fronted by Bono, a rock star, to raise money to fight AIDS. It has raised $140 million so far, despite fears that, as Susan Smith Ellis, its boss, puts it, “it would be just a big launch on Oprah then never heard of again.” Equally, Pepsi’s efforts to promote healthy lifestyles while selling healthier products and Coca-Cola’s various initiatives to protect water supplies in developing countries are critical to the pair’s future. Refreshing everything, in contrast, is a more nebulous goal.

Related Resource:

The Economist- Charity as advertising: Give and Take