Oct 12, 2006

Linking Retail to Philanthropy May Still Keep Global Fund in the Red

by Laura Starita

There’s a long history of retail campaigns linked to charity. Most of these efforts are short-lived and their success for charities and for retailers is unclear.

Currently, the most visible retail-charity link is the pink ribbon campaign for breast cancer. But a recent Wall Street Journal article on the pink ribbon campaign points out a common problem with such initiatives: complete opacity for the donor. There are no standards for how much of a product sale needs to go to a breast cancer charity for that product to bear the pink ribbon. Some retailers donate a majority of the sale, some only pennies. In addition, there are multiple charities involved with the campaign, all with different agendas. Some are concerned with research, some with awareness, some with supporting the families of breast cancer victims and some with providing poor women with free screening and treatment. Buyers of the products need to do some serious research to find out how much they’re supporting the cause.

An effort to link philanthropy and retail in a new way is launching in the United States this fall. Product (Red) is an effort to raise funds for treating AIDS in Africa. While it shares a lack of standards with the pink ribbon campaign, it does have important differences. Rather than slapping a (Red) logo onto existing products, it will be a brand itself. Various retailers - Gap, Converse, Motorola - will create (Red)-branded products. According to co-founder Bobby Shriver, the campaign is designed to be profitable for retailers, not simply a way to donate to AIDS.

“Gap in the beginning couldn’t understand how they were going to make money,” Mr. Shriver said. “They wanted to do a T-shirt and give us all the money. But, we want them to make money. We don’t want anyone to be thinking, ‘I’m not making money on this thing,’ because then we failed. We want people buying houses in the Hamptons based on this because, if that happens, this thing is sustainable.”

(Red) also seems to be going further than the pink campaign to help the recipient communities. For example, Gap is producing some of its (Red) products in Lesotho; Motorola is doing the same in Nigeria.

The outstanding question is whether the (Red) brand will drive additional sales to the participating retailers. If it just means those customers buy one product rather than another, the novelty will soon wear off and the campaign will quickly fade. That will do nothing but keep the Global Fund in the red, instead of creating a steady stream of cash, which is all anyone wants from a retail venture.

Wall Street Journal: How to Tell if a Pink-Ribbon Product Really Helps Breast-Cancer Efforts

New York Times: Want to Help Treat AIDS in Africa? Buy a Cellphone