The uncertain economy may have led both consumers and companies to scale back their charitable donations this year. But rather than not give at all, many are doing their philanthropic work at the checkout line.
Cause-related retail, in which a portion of what a consumer pays for a product goes to a charitable cause, is likely to flourish this year, say experts.
"As the economy tightens, Americans have fewer dollars to give to charities," says Alison DaSilva, vice president of Cone, a Boston-based marketing firm that helps corporations develop charitable-giving programs. "Marketing promotions provide a very convenient way for Americans to give back."
Among the 91 percent of Americans who will give to charity this holiday season, 58 percent plan to do so through cause-related purchases. It represents the second most-popular method behind donations of personal belongings, according to a recent Cone survey.
The types of retailers offering cause-related promotions varies. "It could be a charity tie-in with a breakfast cereal or even men's ties," says Bennett Weiner, chief operating officer of BBB Wise Giving Alliance, a national charity watchdog in Arlington, Va., under the auspices of the Better Business Bureau.
Examples of promotions: Target donates 1 percent of purchases made with the company's credit card to arts and education programs. Hormel donates cured hams to charities based on consumers' purchases of the company's meat products between October and January.
In addition, several national banks offer credit cards with affinity programs that let consumers direct a small percentage of their purchases toward specific charities. And some websites, like www.greatergood.com, donate a percentage of revenue from product sales.
Both online and on store shelves, consumers will likely notice an uptick in cause-related promotions this holiday season. The programs have become an increasingly useful tool in helping companies set themselves apart.
"It's a way of helping charities, but it also helps promote their product and give a lot of attention to their corporation's goodwill," says Mr. Weiner.
Unfortunately, some companies withhold information, such as the percentage of a purchase they give to a charity, in order to make their program appear more generous than it is.
"If the disclosure is silent, or uses vague language like 'a portion of the proceeds,' the consumer is likely going to believe much more is going to the charity than is actually the case," says Weiner.
Further, some experts warn that cause-related shopping often benefits the retailer far more than the charity. All but the largest national charities generally receive a fair take from each purchase, they say, while companies often benefit a great deal from aligning themselves with nonprofits that directly address one of their liabilities.
"Typically the companies hungriest for an association are the ones a nonprofit least wants to be publicly associated with," says Mark Rovner, vice president of Craver, Matthews, Smith & Co., an Arlington, Va., firm that consults for nonprofits.
When Mr. Rovner worked for an environmental group a few years ago, for example, it was asked to participate in a cause-related promotion with a cruise line against which the Environmental Protection Agency had just levied a large fine.
"If you want to make a real benefit to a charity, make a direct donation," says Rovner.