Monday, November 8

Shifting Responsibility: Purpose-Driven Brands Over Government

Corporate GivingA new study by Edelman shows a significant shift in public expectation as it relates to philanthropy. People are less interested in the government tackling social issues and are more interested in purpose-driven companies becoming better corporate citizens.

Specifically, 87 percent of Americans believe business needs to place equal weight on society's interests as well as business interests. Eighty percent feel corporations are in a uniquely powerful position to make a positive impact for good causes. And nearly two-thirds would like corporations to integrate philanthropy into their daily operations (beyond giving money).

"Cause-related marketing, as we know it, is dead," said Carol Cone, managing director, brand & corporate citizenship, Edelman. "Americans are seeking deeper involvement in social issues and expect brands and companies to provide various means of engagement. We call this the rise of the 'citizen consumer.'"

Is There Really A Rise Of The Citizen Consumer?

Some parts of the study bear this out. Consumers' expectation of government to do the most for good causes has declined dramatically since 2009, while their expectation of "people like me" has jumped. Only 30 percent of U.S. consumers now believe that the government should be doing the most to support good causes, down 11 points from 2009.

There is a reason for this. More than ever before, consumers have come to realize that when government tackles social causes, it must seek funding, which eventually is charged back to the consumer in the form of debt or taxes. As a philanthropic pillar, government is one of the least effective components for social good, because the return on taxpayer investments is diminished compared to corporate grants, individual donations, and direct support.

For example, the amount of one taxpayer dollar is significantly diminished (as much as 80 percent) by the time it reaches a participant when compared to a direct one dollar donation (only about 20 percent, depending on the nonprofit). In addition, people want to be directly involved in giving, with 3 percent believing that "people like me" should be doing the most, up 8 percent from last year. They want the companies who they identify with to do good too.

Where the study falls short is in placing too much emphasis on a study that suggests 47 percent of Americans rank purpose as significantly more important than design/innovation or brand loyalty as a purchase trigger when quality and price are the same. The reason is that if quality and price are the same, then there is no innovation.

The reality is that Americans want two things from companies. They want innovative products and services that do no harm. And they want companies, especially those with hefty profit margins, to do more good.

What they don't want are companies that employ cause marketing as smokescreens, notably the concept of greenwashing. What they do want, which most cannot articulate, are companies that follow a Marc Benioff model. He believes the best charity models include investing one percent of a company's profits into grants and donations, one percent of its time into volunteer efforts, and one percent of its time into equity (e.g., foundations).

The model makes sense. When companies invest in the communities in which they operate, they strengthen the community in which they operate, which eventually leads to more prospects willing to purchase their products (assuming the products have value). Even more importantly, as the study points out, people want to work with companies to get the job done (much more than they want the government involved).

Additional Highlights From The Edleman 2010 Good Purpose Study.

• 79 percent of Americans find it acceptable for brands to support good causes and make money at the same time.
• 75 percent of Americans believe that projects that protect and sustain the environment can help grow the economy.
• 67 percent of Americans support legislation requiring environmental standards even if it negatively impacts profits.
• 62 percent of Americans would pay slightly more for a product (like a beverage) if that money went to good causes.
• 34 percent of Americans would prefer to receive a donation to a good cause as a gift than a friend-picked gift.

The takeaway on this last set of numbers is very telling. People are basically saying that they want companies to become more involved and will reward those companies for doing so. However, if companies do not become involved, then the public is willing to force legislation that will require them to do so.

This study might suggest something else too. As long as companies are not abusing their support of good causes, customers want to know they are involved. While it used to be some strategic philanthropic thinking was to hide donations (rather than boasting), consumers really want companies to speak up and help set an example. Now that's something to think about.
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