"Cause-related marketing" ventures appear to be proliferating across the United States, prompting serious examination by those who study the nonprofit sector.
The term "cause-related marketing" is applied to joint ventures between for-profit businesses and nonprofit organizations. The term was coined by American Express in 1980 when it gave a boost to restoration efforts for the Statue of Liberty by donating a small amount of money for each credit card transaction during a defined period of time. For that effort, as with other cause-related marketing ventures it has done in the intervening years, millions have been raised for nonprofit causes ranging from support of Olympic athletes to organizations that battle hunger and homelessness.
When cause-related marketing programs work, they appear to be good for both sides. Nonprofits develop new sources of funding, enlarge their support base and improve public awareness of their work. Businesses gain by differentiating themselves from competitors, increasing public exposure at lower cost, broadening their customer base, improving customer recognition and attitude toward the company, improving relations with its work force and vendors, and, most importantly, bringing in additional revenue.
When the media that specialize in the nonprofit sector devote attention to cause-related marketing, they tend to focus on large corporations working with large charities. But what about the many midsized corporations and small to medium nonprofits that have successfully implemented programs of mutual benefit?
The latest issue of Jossey-Bass' scholarly publication Nonprofit Management & Leadership -- Volume 5, Number 3, Spring, 1995 -- contains a gem of a scholarly article which carefully examines cause-related marketing ventures among midsized firms, largely family-owned, that support arts organizations.
While the study by Karen Maru File and Russ Alan Prince was limited to the greater New York City metropolitan area, the study confirms trends that I've recently written about in our region.
The authors acknowledge that more midsized companies now believe their charitable work should be linked to their marketing and should advance corporate self-interests. In itself, this position is not a bad thing for nonprofits. However, as I've stated many times before in this column, nonprofits and their for-profit corporate partners must understand at the outset what each other's interests are in order to minimize major public relations disasters down the road.
In File and Prince's study, almost 80 percent of businesses involved in philanthropy with arts organizations were philanthropically motivated. Only 20 percent specifically sought business benefits linked to their charitable involvement. However, the study found a growing interest in cause-related marketing even among those whose giving was philanthropically motivated.
While the authors fill their study with interesting data, one finding is particularly telling. More than two-thirds of those businesses that had developed a cause-related marketing program with a nonprofit were dissatisfied with their relationship.
Given the fact that cause-related marketing has already built a history of success over the past 15 years, and given its increasing popularity, why is it still leaving midsized business owners dissatisfied?
I have found that the primary reason for unhappiness between nonprofit and for-profit partners is miscommunication about program goals and objectives. This often leads to thorny and complex problems down the road. In most cases, this miscommunication is due to business naivete on the part of the nonprofit, and a lack of understanding of the operations and motivations of the nonprofit sector on the part of the business leaders.
This is further complicated by the tendency of many nonprofit managers and some board members to believe that partnerships with for-profits are, at the very least, suspect. This creates an inherent dissonance within the management and governance structures within the nonprofit that undermines potentially rewarding programs.
Successful cause-related marketing partnerships have clear goals and concise objectives, good lines of communications, leadership support, an evaluation plan, and lots of detail on exactly what resources will be brought to the table.
Nonprofit Management & Leadership can be ordered from Jossey-Bass at (415) 433-1767.
Lester A. Picker is a philanthropy consultant. Write to him at The Brokerage, 34 Market Place, Suite 331, Baltimore 21202; (410) 783-5100