A Very Corporate Christmas: Philanthropy & Business During the Holidays

At the close of the fourth quarter, corporate America is wrapping up its philanthropy for the year. Increasingly, philanthropic activities are extending beyond the company’s foundation or corporate contributions program to its employees and consumers. The holiday season presents the perfect opportunity for businesses to engage the generosity of their patrons and employees, and it may not be all that bad for their own images. 

This reality is particularly true for retailers, who make anywhere from 20 – 40% of their annual revenue during the November and December holiday season.  And consumers are progressively more aware of, and interested in, the corporate image of the stores they patronize.  According to a holiday season survey conducted by Cone, Inc. in 2005, more than half of consumer respondents indicated that they planned to purchase a product affiliated with a cause or charity, or buy from a retailer that supports a cause.

Not surprisingly, businesses that directly target consumers are taking notice of this trend.  In recent years there has been a significant increase in the number of companies aligning themselves with a cause or initiative during the holidays.  This is true for both affordable and luxury markets.  From a portion of proceeds from conventional products, including select toys sold at IKEA going to support UNICEF and Save the Children, to lavish auction items whose entire value will be donated to a selected charity, retailers are engaging their customers through cause marketing efforts this season.  Bloomingdale’s, for example, is teaming up with Swiss International Airlines, Leading Hotels of the World, and multiple designers to auction off unique vacation experiences to the highest bidder.  Minimum bids for every package start at or above $25,000, with all proceeds going to benefit AmeriCares. When the auction closed in early December, the seven items up for bid garnered a total of more than $200,000.

The holiday season presents the opportunity for new partnerships between the public and private sectors, and also allows for the promotion of longstanding partnerships.  Businesses may adopt a charity for the season, the way that Bloomingdale’s is raising funds for AmeriCares.  Or, as Julie mentioned in her post, Gucci selected UNICEF.  And increasingly, as corporations establish long term partnerships with one or more non-profits, the holidays provide an opportunity to promote, or perhaps more actively engage, that partnership.  For example, the Target Corporation has partnered with the Salvation Army in the past, and this holiday season the duo launched a multi-faceted Christmas partnership, through which Target will promote an online version of the Salvation Army’s Angel Tree program on its website.  Target is donating $1 million up front to get the project started, and is also selling a limited edition ornament whose proceeds will be contributed to the Salvation Army. 

It is interesting to note that direct competitors, such as Target and Wal-Mart, are both actively promoting their partnerships with the same organization.  Target is touting its expanding partnership with the Salvation Army; Wal-Mart, is simultaneously promoting its partnership with the Salvation Army, stating its intention to help the organization raise more than $20 million through its red kettle campaign.  Both companies have multi-year partnerships with the organization, and have been significant contributors in various capacities. 

Advertising such partnerships is also becoming increasingly important for business.  As mentioned above, consumers are ever-more attuned to corporate image, and factor a company’s image into their decision about where to shop.  In fact, a 2002 survey conducted by Environics International found that almost 30% of consumers had avoided doing business with a company because of its business practices.

Partnering with a cause however is not a guaranteed recipe for success.  The Gap, which has been promoting its participation in the (PRODUCT)RED initiative, suffered a sales loss of 8% in November, worse than its sales decline forecast. And critics don’t see the corporate benevolence that companies claim is manifested in their various initiatives.  Some say these businesses are jacking up prices on products affiliated with a cause, pocketing the same amount of money and ripping off the consumer. Others express concern that the private sector is capitalizing on various causes to make more money.

Nonetheless, there is no question that businesses are increasingly aware that aligning themselves with a cause or initiative can have a positive impact on their corporate image.  And non-profit organizations are eager to partner with the private sector, acknowledging corporate partnerships and encouraging their donors to take advantage of the opportunity to support their mission doing business with their commercial partner(s).  The holiday season offers a win-win opportunity for consumers who feel they are doing good, the corporations who benefit from the positive social image such partnerships create, and the non-profits who generate brand awareness and some extra cash in the door before the end of the year.