Using Cause Marketing Money to Fund Your Charity’s Endowment

One criticism of cause marketing I often hear is that money raised that way is almost certain to be a pittance for most charities. But such criticisms overlook a crucial point about cause marketing funds.

Nationally syndicated author Cecil Adams, for instance, when addressing his “answer-man” column to the issue of pink ribbon cause marketing wondered why conscientious Yoplait eaters wouldn’t just send a $12 check to Susan G. Komen for the Cure rather than futz around with yogurt carton lids. More to the point, if your charity is not Komen or Children’s Miracle Network Hospitals, or St. Jude Children’s Research Hospital… each of which annually raise more than $75 million via cause marketing…what’s in it for your charity?

There’s two main answers; the second is that your sponsor-partner has a strong incentive to promote your cause as they promote their sponsorship. Charities shouldn’t settle for just brand-building or awareness-raising when they sign cause marketing deals, but it’s not an insignificant contribution.

The first main benefit of cause marketing for charities is the money. But it’s not just any money, it’s unrestricted money.

The very fact that donations come in pennies at a time from millions of supporters is part of the genius of cause marketing. If a generous donor gives your nonprofit hospital $2 million, you can be darn sure that you’re going to jump through some high hoops for that money. And naming rights are the least of it. The donation tail often wags the dog.

Remember when Joan Kroc left $1.5 billion to the Salvation Army? The gift was made contingent on the Salvation Army building some number of community centers. Before the gift the Sally Ann was explicitly NOT in the community center business.

But if self-same hospital raises $2 million through cause marketing efforts, often in $0.10 increments, the democratization of the donation leaves the charity free to utilize the money however it sees fit.

When I read the news item in Outdoor USA Magazine, a trade publication, above it occurred to me that one of the ways a charity could use cause marketing funds is to build an endowment. In the charity world an endowment is a self-perpetuating fund that pays a charity’s expenses in full or in part.

Now to be clear, cause marketing funds weren't used to fulfill The North Face's pledge of support to the Conservation Alliance’s endowment fund.

But they could have been.

Labels: , , , , , , ,