Wise as Serpents, Harmless as Doves

Circuit City-Mary J. Blige Duet Album for Boys and Girls Clubs of America

Throughout November 2006, Circuit City diligently promoted its exclusive deal with Hip Hop Soul artist Mary J. Blige called Mary J. Blige & Friends that benefits the Boys and Girls Clubs of America in commemoration of their centennial year. The recording features the appealing Blige in duets with an impressive array of artists include Sting, LL Cool J, Jamie Foxx, Elton John, Santana, and others.

Given the season, you’d expect this to be a charity Christmas album. But it’s not. Evidence, I think, of the creativity of the dealmakers at Boys and Girls Clubs of America.

The offer is straightforward. The album is ‘specially-priced’ at $16.99 for a two-disk set, and “all proceeds benefit Boys and Girls Clubs of America.” I’m almost always critical of the ‘proceeds’ language as being too vague to be helpful. The last research I saw on this said that consumers prefer more concrete language.

But I’m not here to criticize so much as praise and warn.

Led by Kurt Aschermann, who is still there so far as I know, the cause-related marketing efforts of the Boys and Girls Clubs have long been impressive, especially given the organizational constraints of Boys and Girls Clubs of America.

The Boys and Girls Clubs of America is itself a kind of a club. Organizations can apply for membership and may be admitted based on whether they meet the national organization’s criteria. Local clubs must recertify periodically. The national organization has programs that are available to the local clubs, but they’re generally not required to use them.

This loose affiliation means that cause-related staff can do deals, but the local affiliates are under little or no obligation to administer the campaigns in their local clubs or markets. For instance, the national headquarters did a deal with Coke 10 or more years ago that involved placing Coke vending machines in the clubs. Some local clubs accepted the deal, but others did not because they had existing relationships with local bottlers that were more lucrative.

So bully for the Boys and Girls Club cause-related marketing dealmakers for this deal as well as a long string of cause-related marketing successes that preceded it.

It’s easy when you’re putting together a deal like this to get caught up working on creative side: securing the artists, the music, the arrangements and the musicians; cover art; promotions; setting up the recording times and places. A producer probably did most of the heavy-lifting on these details, but the charity was certainly very involved.

But two of the most important determinants of the success of one of these charity albums isn’t creativity, it’s accounting. If the charity has to cover returns, which always come, they lose. If they accept trade credit terms 2-10 Net 30, which are standard in retailing, then the charity loses 2% of the proceeds, because retailers typically have terrific cashflow and will pay quickly in order to get a discount. 2-10 Net 30 credit terms…which means the payer gets a 2 percent discount if they pay within 10 days of delivery… are one of the finance tricks large discount retailers use to ensure profitibility.

So while nonprofit charities are thought of as harmless doves in business, they need to be wise as serpents when negotiating these deals.

Labels: , ,