Built-in charitable donation is raising concern

first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREWhicker: Clemson demonstrates that it’s tough to knock out the champIn many cases, charities and their corporate partners are unwilling to discuss the specifics of their embedded-giving programs, declining to answer questions about how much is raised and even where exactly the money is going. Sometimes charities do not even know they are supposed to be receiving donations. For instance, some beneficiaries of an embedded-giving program in a holiday catalog from Barneys New York found out they were listed only after they were contacted by The New York Times. The World Wildlife Fund, a major charity that works to preserve and protect animals and the environment, was among them. John Donoghue, its senior vice president, was disconcerted to learn that his organization was among a number of charities named as beneficiaries of items purchased from Barneys’ “Have a Green Holiday” catalog. “Unfortunately, just like Barneys shoppers, we’re in the dark as to how or if Barneys and the manufacturers will fulfill their commitment to donate a portion of the proceeds from these products to WWF,” Donoghue said. Experts say such loose arrangements mean that donors cannot be sure where their money is going. Shopping has become virtuous, especially at this time of year. Buy a “Better World” scarf at American Eagle Outfitters, and the retailer says $10 of the $19.95 price will go to one of three charities. Buy or lease a BMW this month, and participating dealers say they will give $25 to the Make-A-Wish Foundation. Consumers these days can benefit a wide variety of charities with their purchases. Or can they? Increasingly, nonprofit experts are beginning to question one of the fastest-growing sectors of giving, the practice of building a donation into the purchase of everything from fine jewelry to Always feminine products. They point out that such giving is unregulated and, in most cases, unaccountable – and no one knows who, if anyone, is claiming a tax deduction for it. “It’s virtuousness as a marketing gimmick run amok,” said Lucy Bernholz, founder and president of Blueprint Research & Design, a consulting firm for nonprofit organizations, who has coined the term “embedded giving” to describe the phenomenon. “The potential for it to be a scam is huge.” “In most cases of embedded giving, the donors will have even less idea of where their money goes than they do when they give to many large charities,” said Timothy N. Ogden, chief knowledge officer at Geneva Global, a philanthropic-consulting firm. The start of embedded giving can be traced to the early 1980s, a time when American Express developed an effort to raise money for the restoration of the Statue of Liberty and Ellis Island by donating one penny for every purchase charged to its credit cards, generating $1.7million. But some worry that embedded giving could end up eating away at larger, more direct charitable contributions. Donors, they say, will feel they are making donations all the time and be less likely to write out big checks at the end of the year. Probably the most successful program of this kind is (Product)RED, which was created with the backing of Bono, lead singer of U2. The organization raises money for the Global Fund to Fight AIDS, Tuberculosis and Malaria through the sale of items designed specifically for that purpose by such companies as Apple, Gap and Motorola. It has pulled in some $51.7million since it began in 2006. Unlike many other programs, however, a detailed contract exists between the seven companies that have signed contracts to use the (Product)RED brand. Typically up to 50percent of profits go directly to the Global Fund, and buyers can see how much the effort is raising on the Web. But in most cases, embedded giving raises more modest amounts. The World Wildlife Fund garners $2million to $3million a year from such programs done in partnership with 22 companies. Its seven-year relationship with Build-A-Bear Workshop, for instance, has raised $1.5million, according to the fund. Donoghue said the benefits of embedded giving can reach beyond money. For instance, he said the fund can influence the use of more environmentally sound commodities and products through its choice of partners. And the deals can vastly expand the group’s reach. “For us to have 100,000 cool girls walking around wearing panda-branded T-shirts that have appeared in a circular that goes to 50million people and is paid for by a corporate partner has a communications benefit we could never afford on our own,” he said. The BBB Wise Giving Alliance recommends that charities participating in embedded-giving programs ask that retailers spell out how much of the money in a purchase will go to them.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!last_img read more