Consulting > Cause Marketing

A crowded and constantly changing consumer marketplace, new competition from quality store brands and media fragmentation make it extremely tough for marketers to command premium pricing for their branded products.

In addition, research shows that many of today’s consumers demand more than just a quality product or an amusing commercial – they want to buy brands that resonate with their values.

More and more, marketers are investing in cause marketing to leverage the emotional bonds consumers have with causes in a manner that translates into increased purchases and brand loyalty.

Business benefits of cause marketing:

• Brand differentiation
• Enhanced employee recruitment and retention
• Building new and deeper community networks
• Fostering talent and teaching new skills to employees
• Improved relations with regional and federal governments
• Enhanced credibility and education information
• Access to knowledge and experience to aid in research and development

Measuring the total value of corporate-nonprofit partnerships is difficult since partnerships are funded through a variety of different corporate budgets, including corporate foundations or corporate contributions, marketing, human resources, government relations, and community affairs.  In addition, some partnerships do not involve financial exchanges at all.  The following facts and figures from a variety of sources help to put the growing trend of cause-related marketing, sponsorships, and other forms of partnerships in perspective.

• An all-time high of 84% of Americans say they are likely to switch brands, when price and quality are equal, to help support a cause.
  Source:  2002 Cone Corporate Citizenship Study, The Role of Cause Branding (2002).

• More than 7 out of 10 Americans (75%) say a company's commitment to causes is important when they decide which products and services to recommend to others.
  Source:  2002 Cone Corporate Citizenship Study, The Role of Cause Branding (2002).
  
  

• Among shareholders who rated a company's philanthropy favorably, 78% say they will continue to invest in the company.
  Source:  National Philanthropy Benchmark Study, Council on Foundations & Walker Information (2002).

• Employees whose companies support social issues are 40% more likely to say they are proud of their company's values and nearly 25% more likely to be loyal to their employers than those whose companies do not have such programs.
  Source:  2002 Cone Corporate Citizenship Study, The Role of Cause Branding (2002).

• In 2001, corporate charitable contributions equaled $9.05 billion, which represents 1.3% of corporate pre-tax profits, one of the highest shares of profits in recent years.  (These figures do not include corporate sponsorships, volunteer time, donations of facilities or services--which do not quality as gifts under the tax code.)
  Source:  Giving USA Annual Report for 2001, AAFRC Trust for Philanthropy (2002).

• 92% of Americans today have a more positive image of companies and products that support causes, significantly higher than figures preceding September 2001 (81% in March 2001, 83% in 1999, 85% in 1993).
  Source: 2002 Cone Corporate Citizenship Study, The Role of Cause Branding (2002).

Nonprofits and companies collaborate for many different reasons. While there may be many different specific objectives, generally an underlying premise of most corporate-nonprofit partnerships is the goal of strengthening the organization's and company's brand identity. While it is different for every partnership, specific motivations may include:

Benefits for the Nonprofit Organization

• Impact on mission
• Increased revenue
• Enhanced visibility of the cause or the nonprofit's message
• Access to new audiences
• Connections to the corporation's network of employees, suppliers, distributors, 
  and other contacts
• Expertise in marketing, strategy development, and other corporate experience

Benefits for the Company

• Brand differentiation
• Enhanced employee recruitment and retention
• Building new and deeper community networks
• Fostering talent and teaching new skills to employees
• Improved relations with regional and federal governments
• Enhanced credibility and education information
• Access to knowledge and experience to aid in research and development

Cause-related marketing (CRM) is defined as the public association of a for-profit company with a nonprofit organization, intended to promote the company's product or service and to raise money for the nonprofit. CRM is generally considered to be distinct from corporate philanthropy because the corporate dollars involved in CRM are not outright gifts to a nonprofit organization, hence not tax-deductible.
The phrase "cause-related marketing" was first used by American Express in 1983 to describe its campaign to raise money for the restoration of the Statue of Liberty. American Express made a one-cent donation to the Statue of Liberty every time someone used its charge card; the number of new card holders soon grew by 45%, and card usage increased by 28%.

In their efforts to diversify and enhance their funding base nonprofits have embraced CRM. The practice has evolved to include a wide range of activities from simple agreements to donate a percentage of the purchase price for a particular item or items to a charity for a specific project, to longer, more complex arrangements. Corporations too have been drawn to CRM due to the competition of the expanding global marketplace and the need to develop brand loyalty. A number of recent studies have documented that consumers carefully consider a company's reputation when making purchasing decisions and that a company's community involvement boosts employee morale and loyalty.

CRM has become a controversial topic among grantseekers, as nonprofits entering into CRM activities debate the ethics of lending their name and reputation to corporations. Some of the common criticisms of CRM are that it undermines traditional philanthropy, that nonprofits are changing their programs in order to attract CRM dollars, and that only well-established, noncontroversial causes can attract CRM dollars.

To find and develop CRM opportunities, nonprofit organizations should expand their research efforts beyond the traditional corporate giving directories and refer to the resources in the business departments of public and/or academic libraries.

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