2013-12-02

Co.Exist

Companies: Stop Crowdsourcing Your Charity

More and more corporate initiatives are giving consumers a chance to help direct where a company gives. But this just makes consumers less likely to give and companies less likely to make an impact.

H&M recently announced they are asking their customers to decide where the company should spend their charitable donations (around $80 million annually) through crowdsourcing. This falls on the heels of other "customers choose" initiatives over the past couple of years, like Pepsi Refresh and Target Gives. Great idea, you say? Think again.

What if we told you that choice in charitable and cause marketing initiatives aren’t a good thing, but rather a signal that companies aren’t serious about social impact? And worse, that it demotivates consumers, leads to regret, and lowers perceived value?

A Wise Choice?

With increasing attention being focused on cause marketing and charitable initiatives, companies often turn to choice as a means of engagement. They do so in the belief that offering choice will increase consumers’ perception of being able to help a cause they’re passionate about, which in turn will increase their participation. And since 92% of global consumers say they would purchase products from companies with a social or environmental benefit (according to a recent Cone Communications Echo Research survey), companies believe that offering choice makes them more appealing to a wider audience of consumers who care about social issues.

This positive view of choice also leads companies to believe that when customers help choose where their philanthropic dollars go, it will help to increase their brand image and consumer loyalty.

Here are four reasons why this may be wishful thinking.

1. Choice reduces impact

It may seem counter intuitive, but when a company offers a wide variety of "charitable choice" it signals to customers that they have a low commitment to making a real social impact. Research suggests consumers prefer companies that have made a long-term commitment to a focused issue. According to the Cone survey, only 39% of consumers support companies that offer cause marketing with choice of cause compared to 61% of consumers who support companies that make a long-term commitment to a focused issue over time.

Consumers rightly perceive that companies who make a long-term commitment to a single cause are the only ones that can have a real impact. Combine this reality with the limited resources companies generally have to support charitable activity and it makes it difficult to argue why money should be spread thin.

2. Choice causes paralysis

Having too many options actually leads people to stall and avoid choosing. Think of your own experience when ordering from a restaurant with a large menu. How often have you found it exasperating trying to decide? This is because individuals find it difficult to process large amounts of extraneous information. Studies have shown that consumers are more likely to buy when faced with a smaller range of choices than when faced with a large range of choices.

And yet companies are increasingly offering a wider range of choices for their charitable initiatives. For example, Working Assets, a San-Francisco-based telecommunications service provider, offers consumers the ability to choose from a selection of 40 causes that can receive support. Cause marketing campaigns only have a few seconds to engage consumers, and offering more choices may make consumers disengage and move on to something else.

3. Choice leads to more regret

Perhaps the most surprising reason is that choice can lead to regret and second-guessing, ruining people's experience of charitable campaigns. While people typically say they prefer choice when making decisions, they do not realize that having no choice in a decision is often more satisfying than having choice. A Harvard study (PDF) found that even though photography students believed that an opportunity to change their minds about which prints to keep would not influence their liking of the prints, students that had a choice on which prints to keep liked their prints less than students that had no choice.

The students with choice tended to second guess themselves and regret the choices they made, leaving them less satisfied. Offering choice can also force consumers to second guess their decisions, causing regret, and lower satisfaction. For example, buyers of a watch made by Mirza Minds called 1face are asked to choose between helping starving children or providing treatment for AIDS. Which is more worthy? And does the consumer want to make such a choice? Or does it lower their participation rate in the campaign creating the opposite effect?

4. Choice lowers perceived value

Cause marketers should also be aware of the fact that the success of charitable marketing campaigns is greatly influenced by the perceived fit between the company and the cause. Research shows that products with a donation to a high-fit charity are perceived as having a higher value than the same product with the same amount of donation to a low-fit charity. High company-cause fit becomes more difficult to achieve the more cause choices that are offered, leading to low cause-company fit. Therefore, consumers may perceive (consciously or not) cause marketing campaigns with choice as a lower value proposition and as a result be less likely to contribute.

Less Is More

Companies and consumers want to find meaningful mutually beneficial ways to create social impact. But doing so can only happen if companies resist the temptation to crowd source and crowdfund the decision and instead, establish the type of social impact they want to create in the world. It is our belief consumers will reward such an approach, creating a win-win for all.

[Image via Shutterstock]

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7 Comments

  • Paul Dunn

    Great discussion that needs to be had. Thank you to everyone involved.

    Interestingly, we've found a way of getting consumers to choose in a fascinating way and in a place you might never imagine: the dentist!

    In B1G1: Business for Good now we have dentists who firstly get their teams to select different projects (no more than 5) from the B1G1 list (see www.b1g1.com). The project range is vast — from protecting Orang Utans to getting water to children.

    And of course, this step really gets the team involved in choosing projects that they feel great about (of course, the dentists may want to suggest that the projects should all be around health, for example)

    So the client (some dentists prefer to say 'patient') makes their choice and then, on checkout and payment they get a brilliantly crafted and highly personalised Gratitude Certificate. It talks about how the dental firm has been thrilled to impact their lives AND that together with the client, they've been able to impact people they don't even know (i.e. the beneficiaries of the giving).

    The connection established here is huge. Some dentists — dentists who simply found B1G1: Business for Good as a better way to give — are seeing as much as a 300% increase in referral rates.

    So yes, the point of the article is highly, highly important to get. But there are other ways to do what needs to be done — and to do it with Impact, with Habit and with Connection.

  • Marybeth McKenzie

    Interesting article!
    Underscores the real importance of companies embracing an authentic social mission as part of business strategy that articulates what the organization uniquely stands for- galvanizing and engaging employees and consumers - and support change.

  • West Seattle Blog

    THANK YOU. Actually, I have been griping about this trend for a couple of years for other reasons - it's a cynical bid by companies to get consumers to do their marketing for them, in the guise of soliciting votes for who should get what is a relatively tiny grant from a relatively big company. Even worse, the hopeful contenders - schools, nonprofits - wind up wasting precious time, resources, and energy begging for votes that in the end likely won't get them anything, while they might have spent that time and energy writing grant proposals, soliciting direct donations, etc. If companies want to donate - JUST MAKE YOUR DECISION AND DO IT. We are a tiny company but that's what we do ... we donate thousands each year to community causes, events, organizations, schools, etc., without making anyone demean themselves by begging for it. Corporations with a conscience should stop this detestable practice now. - Tracy @ WSB

  • Anthony Reardon

    Insightful article. I might offer many of these positions if asked outright. For an apparently well formulated argument, I think this article deserves some deeper scrutiny.

    Principally, any charitable act done indiscriminately would seem lacking of the kind of meaningful association called for by the given causes. You're supposed to give for a reason. Such organizations appeal to a deeper sentiment, and depend on evoking that response to further their cause. So if your company is supporting causes without really caring, you might be undermining them in the bigger picture.

    On the other hand, I guess you could say a generalized intention to give back and do good may advance causes by providing a more generous atmosphere, and maybe the lack of emotional/cognitive overhead beyond that could influence more participation. I think you could speculate on what approach makes a better difference based on either matrix of reasoning, so it makes me question the bias of the data and conclusions.

    Cause marketing doesn't sound right to me. What if say the data reflects cause marketing is inferior in terms of generating profits and brand equity than other tactics? If you are looking at it in terms of return on investment or following it with the condition it helps a company with it's bottom line, you're manipulating the system and the sympathetic nature of people. Today's consumers are more sophisticated and don't want to have their intelligence insulted. If you don't have an actual commitment to support a cause, people can pick up on the lack of genuineness and authenticity that brands deserve when they give based on their core values. So the intention is just as important as the appearance, but I am not so sure intention has to be such a direct relation to whether or not it is a specific cause chosen by a company or by their consumers.

    Consider the liberating and empowering attributes of choice. What if, say, individuals have specific causes they want to support? How about the significance of just being made aware of or reiterating the need for support of various causes- the kind of exposure they might not otherwise get, and more get attention when options are presented. By the same logic an individual might regret choosing one particular cause, a person might regret a purchase they make anyway goes to support a cause they feel undermines the priority of another.

    People might give more if they feel more involved in the process individually and collectively. You could say you've got one company giving a certain dollar amount, and how much attention does that get- how inspiring is that to people? You show a large crowd of people getting behind some cause, each contributing a small part toward the same total, and then you are suggesting something important is happening, and look what we can do when we all come together.

    Companies need to really get behind what they are doing when it comes to supporting charitable causes, and put the marketing/ profitability in a secondary context. I think you can have a default cause- perhaps featuring a different one each month for instance- but you could also provide the option to choose from others you want to support. I also think you need to look at how supporting causes is an important part of how consumers brand themselves in their own social identities and spheres of influence.

    You should have a way to let people show they contributed to supporting specific causes- could be colors like red, pink, yellow, etc, or even more explicit material and online references. They may not have put the money up, but they did choose to cooperate with your company to make a specific difference about something that matters to them & want to promote awareness about, and in that sense they can be behind the brand that is behind the cause.

    Perhaps crowdsourcing might be an effective way to go about this- make consumers more likely to give and companies more likely to make an impact.

    Best, Anthony

  • Christopher Vincent

    Gentlemen, great article. I think it addresses many of the same points raised in Barry Schwartz's TED Talk "The paradox of choice". From a customer-centric standpoint, I think a lack of choice is the best option.

    In his book "Drive", Dan Pink mentions a UBC/Harvard study by Elizabeth Dunn that addresses corporate charitable giving. The researchers suggest that "companies can improve their employees' well-being by shifting some of their budget for charitable giving so that individual employees are given sums to donate, leaving them happier even as the charities of their choice benefit".

    How do you feel a company should handle its charitable giving internally?

  • Phillip

    Thanks Christopher. Appreciate the feedback and comments. Our belief is that employee engagement and giving in cause is a great way to increase employees' sense of pride and loyalty to the company and can in return help the company's bottom line. That said, we think it is better if employees are rallied around an issue and set of stated goals/impacts the company is trying to achieve. This is not to say individual giving doesn't or can't have its place but we believe like we stated in the article that the employee side of the equation should likely mirror the consumer side. It will only add up to more impact.

  • DaveCause

    Brilliantly researched and reasoned Mr. Haid. There are examples of campaigns that leverage curated consumer choices effectively (e.g. campaigns linked to DonorsChoose.org that enable people to choose the classroom project they would like to support or campaigns that leverage healthy competition to drive participation, but reward all participating charities such as Subaru's Share The Love.) In general, however, I agree that companies that just let the people decide are missing big opportunities