Every business needs and will benefit from forming a close relationship with a charitable organization.  The relationship should go beyond that of acting as a patron or sponsor.  The relationship would be more of a partnership where each organization works for the benefit of the other.  To the general public, the identity of the business and the charity are synonymous.

The term for this type of business activity is ‘cause’ or ‘social’ marketing.  The following excerpt is taken from When the cause is just, by Harvey Meyer (Journal of Business Strategy, Nov/Dec 1999).

Mulling over clothing accessories in downtown Minneapolis, Ellen Dahn figures two retailers offer similar styles at comparable prices.  Same for quality and customer service. Then Dahn recalls the uplifting advertisements one store does touting its ties to the Special Olympics; she gets no such emotional tugs from the other retailer. Guess which store Dahn will likely buy from? "With everything else being equal," says Dahn, "I'd much rather buy from a company I know is doing something for the community."

Studies of cause marketing have shown the following benefits for businesses:

·         Businesses experience stronger brand awareness

·         Employees feel a stronger sense of loyalty

·         Greater customer acceptance of price increases

·         Better relations with pubic officials

According to IEG Sponsorship Report, a Chicago-based newsletter that tracks cause related marketing:

"As companies find it harder to `out-innovate' or `out-advertise' their competitors, deep, substantive, and strategic cause programs that build corporate reputation and brand image will become an extremely valuable leadership strategy in the 21st century."

Working with Charities

The classical way to work with a charity is to simply make a cash contribution.  The charity uses the money to carry out its mission.  The business receives a tax deduction.

However, such an approach has its limitations and it fails to take advantage of the opportunities that can arise from working collaboratively.  More expansive interaction will gain greater benefits for the business and for the charity.

Other ways of working with a charity may include:

·         Support of charity fund raisers

·         Support of charity activities

·         Sell products or services through charity

·         Cross marketing

·         Development of a support group

Support of Charity Fund Raisers

Through support of a fund raiser, your business may obtain publicity and leverage the amount of money contributed to the charity. 

The amount of publicity received by the business will vary, depending upon how the event is promoted.  Publicity may be limited to designation as a sponsor on event materials: mailers, signs at the event, newspaper ads, and public service announcements.  When integrated with the marketing of your business, publicity may be extended to point of sale displays, inserts with invoices, banner ad on your web site and inclusion within your advertising campaign.

The contribution of your business may be used to attract contributions by individuals and other businesses, resulting in the charity raising a greater amount of money.  A well conducted fundraiser may result in raising over 10 times the amount of money that your business contributes.

When supporting a fund raiser, you should assess the limitations of the charity.  Many charities are dependent upon volunteers and their full time staff may not be experts in conducting a fund raising event.  In order to gain the most from a fund raising event, your business may need to provide back office support to help with promotion, registration and operation of the event.

Support of Charity Activities

Through growing and expanding activities of a charity, your business may obtain publicity.

The support of your company may take many forms and will need to be tailored to augment the mission of the charity.  Common forms of support include:

·         Employees volunteering time

·         Hosting communications, website or computer records

·         Printing, copying, or other use of your office equipment

·         Loan of vehicle or other use of production and distribution equipment

Sell Products or Services Through Charity

By establishing the charity as a retailer of your products or services, you may expand your distribution and put more money in the hands of the charity.

By selling through the charity, you gain access to all of the supporters of charity.  This represents a niche market that has in common its interest in the charity.  Such a market group might be difficult to reach in any other manner.

The charity’s resale of your products or services puts them in a position to earn the difference between the wholesale and retain price: a markup that may be equal to 50% of the retail price.  Typically a philanthropic position would be for your business to donate a percentage of revenue or profits – up to 5% or revenue.  However, earnings from resale of your products may be 1 to 50 times the amount of your contribution.

Most charities have little or no ability to act as a reseller.  Therefore, it is usually necessary to set up a sales fulfillment system operated for your company for the benefit of the charity.  When someone places an order through the charity, it will be necessary for your business to take it out of inventory, pack it, ship it and collect the money.

Cross Marketing

By marketing your products or services directly to the supporters of the charity and by marketing support of the charity directly to your customers, both your business and the charity will benefit from this referral or introduction to each others customers/supporters.

Care must be given to maintaining the integrity of each other’s contact lists.  Initial contact will be most effective if the business introduces the charity to its customers and the charity introduces its supporters to the business.

Development of Support Group

Support of the charity may be amplified by creating a support group or ‘booster club’ of similarly interested businesses.  All of the above described activities may be multiplied by the number of other businesses that may be solicited into the group.  This group may be informal or it may be organized with more structure: rules of membership, a leadership hierarchy and regular meetings.

Formation of another support group for a charity will give you another dimension for cross marketing.  In addition to promoting your business to the supporters of the charity, you may be able to arrange a promotion of your business to the customers of each of the other businesses within the group.

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