Watch "Breast Cancer Products Bring In Big Money — But to Whom" for CharityWatch Executive Director, Laurie Styron's contribution to this topic.
October is breast cancer awareness month, and the pink ribbon is the most recognizable and ubiquitous symbol for promoting the cause. A lot of companies incorporate the pink ribbon and get in on cause-related marketing in other ways in order to sell products. Often they use phrases like "10% of your purchase will go to fighting breast cancer," or "5% of our profits are donated to charity."
"A commercial coventurer is a type of professional fundraiser. It is a person or organization, who, for profit, is primarily engaged in a business other than in connection with raising funds for charitable purposes. A commercial coventurer raises money for charities by giving the charity a certain percentage from the sale of goods or services. A commercial coventurer represents to the public that the purchase or use of its goods or services will benefit a charitable organization..." (Office of the Attorney General of the State of California).
There are a few problems with this type of indirect giving to charity that donors need to be aware of:
(1) The language is too ambiguous to allow you to quantify the amount of money from your purchase that will go to charity. The word "profit" is defined as a company's revenue minus its expenses. So, for example, say a company claims that "10% of profits are donated to breast cancer charities." If you pay $50 for an item, you might assume that $5 will be donated to charity. This is not the case, however, since the price you pay for the product doesn't equal the profit. It may cost the company $15 for materials to make the product, $20 in labor costs to assemble it, and another $8 per item in overhead to cover indirect costs like insurance, rent on the factory used to make the product, and electricity costs. These $43 in costs result in only $7 of profit on the $50-priced item, and 10% of the $7 profit is only 70 cents, not $5. Even worse, in some cases a company may assign so many costs to a product that they can claim that their profit margin is $0! In that case, none of what you paid for the product will go to charity.
(2) There is no way to verify a company's charitable donations. For-profit companies are not required to open their books to outside scrutiny in a detailed way. It can be difficult, if not impossible, to obtain the information you would need in order to verify that a company made donations to a charity in the amounts that it promised. Some states, such as Colorado, may post records of the results of charity solicitation campaigns, including the total revenue generated from a cause-related marketing campaign and the dollar amount that was donated to a specific charity. But in most cases, these reports are filed after a cause-related marketing campaign has ended. Meaning, if the company donated little to nothing to charity as a result of your purchase, you can get angry about it afterwards, but you can't access this information before-the-fact in a way that would inform your purchasing decision.
(3) It's an inefficient way to give. Charities that enter into cause-related marketing agreements must spend time negotiating contracts and licensing agreements, as well as keeping detailed accounting records in order to comply with state-level reporting obligations that can become time consuming, burdensome, and expensive. The amount of money they receive from a company's product sales is often a tiny fraction of the purchase price a consumer paid for the product. Someone who is motivated to support a charitable cause like breast cancer is usually better off keeping their purchasing and donating decisions separate. Make a donation directly to the charity of your choice. Then, look past the pink ribbons and other cause-related marketing hype, and simply buy the best product to suit your needs.
See CharityWatch's Hot Topic on donating to breast cancer charities for a list of Top Rated organizations working in this cause.