NEW YORK (Reuters) - At the peak of the shopping and giving season, consumers are increasingly combining both activities.
They are buying products that have charitable tie-ins, shopping through web portals that send savings to nonprofits and donating at the registers when they check out at physical stores. They’re buying product lines like Newman’s Own, which channels profits to a foundation, and TOMS Shoes, which gives a pair of shoes to a needy child for every pair the company sells.
These charity-linked purchases might give consumers a good feeling, but are they good for charities? And for shoppers?
Laura Brooks, 38, is a stay-at-home mom and lives in St. Louis with her husband, Steve. After one of her three children asked for a pair of TOMS shoes last year, it occurred to her that she could incorporate giving into her regular shopping. She now also buys most of her children’s books through the Kohl’s Cares programs, which donates 100 percent of proceeds to children’s causes.
“I bought all these things before -- shoes or salad dressing -- but now it feels like I am doing good, too,” Brooks said.
Maybe so, but only if those shopping decisions aren’t taking the place of her other charitable giving, say some experts.
Charitable shopping “undermines the philanthropy of a nonprofit through diminished charitable donations,” said Sondra Dellaripa, principal consultant for the nonprofit consultancy Harvest Development Group.
In fundraising development for charities, she said, it is important to build a relationship with a donor - something that doesn’t happen in these transactions.
So, how can you make your shopping turn into giving while keeping in mind how much you’re really giving to charity?
Direct donations at merchants are one of the biggest cash generators. For instance, St. Jude’s Children’s Research Hospital’s holiday season has a “Thanks and Giving” campaign that collects dollars at cash registers - and is now its single largest fundraiser.
More than 60 companies, mostly retailers, participate in the two-month drive that raised nearly $65 million for St. Jude’s last year - up from $8.4 million in 2004, when the program started.
Rick Shadyac, CEO of ALSAC/St. Jude, the fundraising organization of the hospital, said connecting with consumers when they’re shopping has been extremely successful, both in terms of dollars raised and awareness. The ease of making a contribution while a transaction is already under way is likely why it has worked, he said.
“It is a very easy thing to do when you’re going through that process anyway,” Shadyac said. Generous consumers should remember that they can take a charitable deduction for their at-register contributions if they remember to get a receipt that details the gift.
One step removed from this are consumer products that give a portion of profits to specific charities. This is soaring - from pink ribbons during Breast Cancer Awareness Month to campaigns that donate loyalty rewards from companies like Amazon.com Inc and airlines.
The broad array of products makes it difficult to tally the overall retail impact, but companies will spend about $1.7 billion this year on sponsoring causes - more than double their spending a decade ago, according to IEG Sponsorship Report. And, increasingly, retailers are trying to connect with shoppers by aligning their brands with charities.
“It’s been proven that working with a charity enhances your favorability,” said Joe Waters, who writes the Selfish Giving blog and is the author of “Cause Marketing for Dummies.”
“While most marketing gives you visibility, cause marketing gives you favorability that gives you a competitive edge that goes beyond product and price,” Waters said.
Not all products with charity tie-ins are created equal. Some deliver no money to charity at all - they’re just for awareness. Consumers can check this, before they buy, on the product’s website or by reading the tiny print on the product’s packaging.
Others yield a percentage of the purchase price or a fixed amount to a specific charity. For instance, when you mail in or enter a code from a pink lid on a Yoplait yogurt container (or several other General Mills Inc products), between now and June 30, 2013, 10 cents will be donated to Susan G. Komen for the Cure.
For those shopping online, there are pass-through sites where a charity get money every time a consumer makes a purchase. For sites like iGive.com, GoodShop.com, We-Care.com, the Social Good Network, the user picks the charity, which could be as small as their local school, and donations are not regarded as tax deductible.
The donated percentage of the purchase price varies from 1 percent to 25 percent. Major retailers, such as Nordstrom Inc and Lands’ End are at 2 percent on iGive.com. So, a $250 purchase from one of those retailers would result in a $5 donation to a charity. Magazine and newspaper subscriptions tend to have the highest returns, sometimes in excess of 20 percent.
We-Care.com, one of the largest sites, offers access to 2,600 merchants and has about 1,000 charity beneficiaries.
“Consumers want to help, and buying something that has a donation built in is easy and makes them feel good,” Waters said.
We-Care said it raised more than $500,000 in the 2011 holiday shopping season. Its top recipient is the American Society for the Prevention of Cruelty to Animals.
“Our relationship with We-Care has been a particularly successful one, with a contribution of over $2 million to the ASPCA over the last two years,” said Jim Echikson, senior director of corporate partnerships for the ASPCA. That’s not a large percentage of the more than $100 million a year the ASPCA raises, but the contributions are noticed.
Follow us @ReutersMoney or here. Additional reporting by Katie Kingsbury.; Editing by Linda Stern, Beth Pinsker Gladstone and Nick Zieminski