Announcements

Good cause, or just a good time?

Star Tribune, April 15, 2010

By Jean Hopfensperger

Brian Muthyala joined nearly 10,000 runners in downtown Minneapolis last year for the “Turkey Day 5 K,” assuming most of his $25 registration fee would go to a food bank advertised with the Life Time Fitness event.

Instead, the food bank got about $10,000.

“There were a ton of sponsors and volunteers, so it seemed like a lot more than $10,000 should go to the charity,” said Muthyala, a medical resident at the University of Minnesota.

Muthyala’s surprise points to the growing confusion about “cause marketing,” a collaboration between a for-profit company and a nonprofit agency to promote a cause or charity. Think Yoplait and the Susan G. Komen Foundation’s breast cancer research.

The arrangement has exploded in recent years, attracting the attention of watchdogs such as the Minnesota Charities Review Council.

Local charities and the Better Business Bureau agree that the deals can be mutually beneficial. But they warn consumers to investigate the details behind the donations, especially with the burst of charity runs and walks this spring.

“We’re concerned not about the idea of cause-related marketing, but that people understand it,” said Barb Grieman, vice president of the Better Business Bureau of Minnesota and North Dakota.

A win for non- and for-profits

Corporations such as Life Time Fitness say it’s a win-win situation. Second Harvest Heartland food bank wound up with $10,000, donated food and exposure to 10,000 runners, said Cheryl Anderson, administrator of the Life Time Fitness Foundation, which awarded the grant.

Life Time, meanwhile, generated community good will and may have attracted runners motivated chiefly by charity. There are charitable components to all of the company’s fitness events, Anderson said.

“It shows we’re involved in our community,” she said. “It shows that we want to give back.”

The company only cleared about $30,000 from the event, Anderson said, because 80 percent of the registration fees were spent on police, Minneapolis Park Board fees, advertising and other logistics.

Most events like this are good, said the Better Business Bureau’s Grieman. “But some are just money-making ventures.”

Every fall, for example, hundreds of products carry pink ribbons, part of a breast cancer awareness campaign. But there’s no requirement that any donations be made to breast cancer prevention — just that the campaign causes “awareness,” Grieman said.

Determining the exact donation made to a charity soon will be easier for consumers. Starting this month, the Minnesota Charities Review Council will require the charities it evaluates to provide this information to Minnesotans who inquire about it.

A $1.5 billion trend

Over the past decade, the value of cause marketing contracts has nearly doubled, from $769 million in 2000 to $1.5 billion last year, according to surveys by IEG Sponsorship Consulting, a Chicago-based company that is a leading provider of analysis on sponsorships.

The concept has been around for at least 20 years, said IEG vice president Dan Kowitz. But it has exploded in the past five years, reflecting the public’s growing interest in aligning its spending with its values.

That’s particularly true with the under-30 generation, studies have shown.

Last year’s recession sparked even more interest, said Kowitz. Many workers who had donated directly to charities no longer could afford it, so participating in charity promotions let them fill that void, he said. Companies took note of the public desire to pitch in.

Now everything from running shoes to bottled water includes pitches for charities. This month, for example, the American Refugee Committee of Minneapolis teamed up with Malt-O-Meal Company and Whole Foods Market to support Haiti relief efforts through the month of April.

On Sunday, the Bloomington-based Cornerstone Advocacy Services for battered women is holding a “Walk a Mile in Her Shoes” at the Mall of America, sponsored by Verizon Wireless.

With growth comes scrutiny. The National Association of State Charity Officials examined cause marketing several years ago. The organization has been concerned that consumers may be deceived into thinking more of their money is going to a cause than actually is.

“Cause marketing is — and has been — something that has been on our radar,” said Eric Carriker president of the National Association of State Charity Officials.

Likewise, the Minnesota Charities Review Council is curious about money raised in this generous state.

“It would be great to get this tied down more,” said Rich Cowles, executive director. “There just hasn’t been anyone overseeing this whole thing. ... Maybe it’s something we should do.”

Meanwhile, charities such as Second Harvest Heartland say the arrangement has worked well for them. But they’re not monitoring donations for each event either.

“We don’t monitor heavily how they administer it,” said Joan Wadkins, marketing director at the food bank. “It’s not a contractual relationship. The implied contract is whatever they raise, they’ll turn over. It’s about the goodwill and honesty of the organization.”

Grieman of the Better Business Bureau encourages charities and businesses to create specific, “transparent” financial arrangements.

“And we want consumers to put a little thought into this before they make a purchase,” Grieman said.