From the Fall 1999 Watchdog Report
Be Mislead by Deceptive Business/Charity Marketing
The names and logos of nonprofit organizations are
showing up more frequently in advertisements and packaging for a
plethora of products from ice cream bars to nicotine patches. A
1997 study conducted jointly by Roper Starch Worldwide and Cone
Communications reveals why 76% of consumers would likely
switch from their current brand to one associated with a charity,
if the price and quality of both products were equal. On the plus
side these commercial/nonprofit arrangements can result in significant
new revenue and visibility for a charity; but on the minus side
consumers can be misled and a charitys image can be seriously
AIP recently participated in a public hearing on business/charity
marketing partnerships convened by 16 state attorney general offices,
which in April released the report, Whats in a Nonprofits
Name? Public Trust, Profit and the Potential for Public Deception.
At this hearing, AIP expressed its strong concern that business/charity
marketing is too often vague and misleading and that charities must
be careful to avoid being exploited by business interests.
Imagine that you are in the cereal aisle at the supermarket
and you are trying to decide which type to buy. If one of the many
varieties displayed the logo of the American Cancer Society on its
box, would you think that this cereal was healthier than any other
variety and would reduce your familys cancer risk? According
to a study commissioned by the Society, 44.5% and 60.4%, respectively,
agreed or agreed strongly with these statements.
Other studies have shown that consumers jump to false
conclusions about commercial products that are promoted with a nonprofits
name or logo. Many people wrongly assume that whenever a charitys
name is used to market a product, the charity is endorsing the product
and the product is superior to those of competitors. Consumers may
not be aware that charities often enter into exclusive licensing
partnerships with companies. Such a charitys logo may then
appear on a product not because the charity has undertaken research
to demonstrate that the product is superior, but because the company
has paid a licensing fee to the charity for the right to use the
charitys name or logo in its marketing. AIP believes that
it is hypocritical for charities that have policies not to endorse
specific products to allow corporate marketers to give consumers
the impression the charity is making such an endorsement through
general licensing arrangements.
In December of last year, SmithKline Beecham Consumer
Healthcare, L.P. (SKB), which had entered into a licensing agreement
to use the American Cancer Society, Incs (ACS) name and logo
to promote the sale of nicotine patches and gum, agreed to a $12.5
million settlement with 12 state Attorneys General. The settlement
arose in part because of the way SKB marketed these products, which
the A.G.s felt had the tendency and capacity to mislead, deceive
and confuse consumers. According to the A.G.s, the advertisements,
which included the name and logo of the ACS and the line Partners
in Helping You Quit, gave the impression that the ACS endorsed
these products. Contrary to the perception that the A.G.s and many
consumers got from these ads, the ACS had not endorsed these products
and has a policy against endorsing specific commercial products.
The ACS did not conduct any clinical research that demonstrated
that SKBs nicotine patch was any more effective than any other
nicotine patch, and no study shows that one patch is more effective
than any other, according to the A.G.s. As part of the settlement,
SKB agreed in the future to disclose clearly and conspicuously
in its ads when it has entered into an exclusive licensing agreement
with a charity for the use of its name or logo, and that the charity
has not endorsed the advertised product. The ACS, which was to be
paid $1 million during the first year of its agreement with SKB,
has adopted new policies to guard against inappropriate uses
of its name and logo and to discontinue exclusive marketing
arrangements in the future, according to the A.G.s.
AIP believes that the public counts of nonprofit health
groups for unbiased information on medicines and medical treatments,
and questions whether it is ever appropriate for a health charity
to participate in marketing that allows a business to use its name
to market a medical treatment that it does not endorse without clearly
disclosing this fact. AIP applauds the American Cancer Societys
new policies and encourages other charities to adopt similar ones.
Businesses like getting the extra sales and improved
image from the use of a charitys name. Charities like the
extra revenue and visibility. But charities should think long and
hard about whether it is worth the extra revenue and visibility
to be so closely identified with the interests of a for-profit company.
Businesses represent products and may be willing to change a blue
product to green if it will result in more sales. Charities represent
missions and those that stray from their mission in pursuit of short-term
licensing fees may eventually lose their credibility with the public.
More and more corporate marketers are claiming that
they will contribute to a charity each time a particular product
is purchased. This is referred to as cause-oriented marketing. Consumers
that wish to take into account the degree to which a product marketer
is helping a charity when making a purchasing decision may first
wish to answers to the following questions:
- What portion of the purchase price will the charity
- Is the amount a charity receives dependent on
a companys profits or net income of the promotion? No profits
may mean no contributions to the charity.
- When will the charity receive its portion of the
- Has the cause-orientated marketing promotion expired?
If yes, the charity will not receive additional benefits from
- What is the maximum that the business will donate
to the charity and has this amount already been reached? If the
maximum has already been reached then your purchase will not benefit
- Is there a minimum amount that must be raised
before a charity can receive its share of the purchase price?
If the minimum is not reached then the charity will not benefit.
Warning this information can be difficult
to obtain from product marketers, who most likely are not set up
to address the concerns of donors.
Participating companies and nonprofits claim that
the purpose of cause-oriented marketing is not only to sell products
but also foster public education and awareness. In addition to the
concerns raised above, AIP hopes charities will not inflate the
amount they report spending on program services by counting corporate
marketing costs as donated public education services. AIP believes
doing so would be improper, and will exclude such amounts in its
independent calculation of program service expense ratios.
AIPs recommendation for consumers/donors
buy the best product at the best price regardless of the advertising.
If you save money on your purchase, donate the savings to the charity
of your choice and give yourself, rather than a corporate marketer,
the tax deduction. Only let cause-oriented marketing influence your
purchasing decision if you have reason to believe there are significant
overall benefits and the relationship between charity and seller
is clearly and completely disclosed.