July 24, 2003 | Read Time: 2 minutes
In the post-boom economy, some businesses have combined their marketing and charitable-giving strategies, notes an article in the Harvard Business Review (July). The companies are increasingly seeking to support charities in ways that will enhance their reputations, help them sell more products or services, and deepen employee loyalty.
Many companies are engaging in so-called cause branding, a way of engaging both the business and the nonprofit group more deeply in a marketing relationship, the article says. The approach typically incorporates several strategies, such as sponsorship of a nonprofit group’s special event, product promotions that return a portion of sales to the charity, advertising, and volunteer efforts on behalf of the charity by company employees. The article was written by Carol L. Cone, Alison T. DaSilva, and Mark A. Feldman. Ms. Cone is chief executive of Cone, a Boston company that specializes in developing such marketing deals, and Ms. DaSilva and Mr. Feldman are two top officials at the company.
An example of a company engaged in cause branding, the authors say, is the cosmetics company Avon Products, whose salespeople routinely distribute educational materials on breast-cancer prevention to clients and potential clients, while the company donates millions to the cause. ConAgra Foods, which runs about 100 after-school cafes for needy children, donates goods and trucks to food banks and sponsors a public-service campaign to raise awareness of child hunger.
The authors warn of limitations and pitfalls in cause branding, however. For one thing, they say, aligning with a cause won’t save a company’s damaged reputation. What’s more, companies need to select a cause aligned with their corporate goals. The authors recommend that companies first choose a cause, then select one of the charities devoted to that cause based on the charity’s mission, priorities, management style, and other factors that the company decides are important.
To publicize its support for a cause, a company can increase news-media attention by emphasizing the innovative nature of its efforts, the authors say. But, they warn, too much publicity can backfire. The tobacco giant Philip Morris USA received negative publicity when it spent $100-million in 1999 to advertise its support of causes to which it had given just $95-million, according to the article.
And, it says, nonprofit groups can be hurt when their endorsement of a company seems purely mercenary. In 1994 the Arthritis Foundation allowed MacNeil consumer products to use its name and logo on some pain relievers. Attorneys general in 19 states subsequently alleged that the campaign’s claims that a portion of sales would go to the foundation were false, according to the article.
The article can be purchased online for $6 at http://www.hbr.org.
