Transparency is critical when donating proceeds to charity

Goodwill and kindness are in the plenitude during the holidays, and many stores ask customers to donate to nonprofits in need.

In the news
Goodwill and kindness are in the plenitude during the holidays, and many stores ask customers to donate to nonprofits in need.

According to The New York Times, with the increasing attention on CSR and green organizations, charity shopping has exploded onto the market. Corporations are aligning themselves with nonprofits to polish their image and sell more products to the philanthropic-minded consumer.

But the practice of rolling out products intended to give back to charities has bred skepticism from nonprofits and the general public. Concerned parties are wary of false promises. Many of these programs do not reveal information to the public, such as where the money is going, how much was raised, and how it is being used. In some cases, the charities themselves are unaware that they are being listed as beneficiaries.

Why does it matter?
A big issue is that very few of the companies provide the customer with relevant information about the donation, according to Tim Ogden, chief knowledge officer at philanthropy firm Geneva Global. Ogden says the most common phrase you see is "a portion of the proceeds will go to," but, he says, "that doesn't tell you how much, when, exactly which charity, and to do what with."

Communications efforts need to be transparent about such donation programs, providing details on which charities, how big a portion is being donated, and the charity's spending reports. Ogden notes that all of this information could easily fit on a retailer's Web site.

"There is a huge relationship-building opportunity there that is being neglected," he says.

Though many of the corporations launch these programs with good intentions, they will end up putting themselves in a spot that will cause an erosion of trust - if the transparency is not there.

Five facts:
1. Lucy Bernholz, founder and president of Blueprint Research & Design, a consulting firm for philanthropic institutions, coined the term "embedded giving" for financial transactions with philanthropy built-in.

2. The World Wildlife Fund was unaware it was listed as a beneficiary of items bought from Barneys' "Have a Green Holiday" catalog, the NYT article reports.

3. lists 15 search engines, such as Everyclick, GoodSearch, SearchKindly, and Clicks4Cancer, which donate a portion of their ad revenues to charities.

4. Nonprofit (Product) RED works with seven companies, including Apple and Gap, to raise money for Global Fund to Fight Aids. It has raised $51.7 million since last year. Figures are available on the Web.

5. According to the Nonprofit Reporter, last year, Americans donated $295 billion to charity, but at the same time, 30% of charities failed to provide information to the Better Business Bureau's Wise Giving Alliance, which evaluates charities.

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