It’s Hard To Give Away Money- Charity Advisors Multiply

I’ve been meaning to blog this for a while–

Last week, the Wall Street Journal printed an article, “Paying Money To Donate Money (sub required),” which explores the emergence of charity advisors:

Now that donors have more charities to choose from, as well as more financial instruments with which to give away their dollars, wealthy philanthropists are increasingly hiring outside advisers to help. Those advisers can identify causes, vet charities and measure donors’ bang for the buck.

Here are a list of some of the consultants mentioned in the article:

Donor consulting is a growing business. Rockefeller Philanthropy Advisors in New York says its staff grew to 32 employees in 2006, from 15 when it was founded in 2002; it advised on $137 million in grants last year, up from $30 million in 2002. Geneva Global in Wayne, Pa., which focuses on initiatives in impoverished countries, helped clients give out $23.2 million in grants last year, up from $600,000 five years earlier. Atlanta-based Calvin Edwards & Co. has grown to 12 employees from one in 2001, while Arabella Philanthropic Investment Advisors, founded two years ago in Washington, D.C., is expanding to a new office in Chicago this week because of growing demand.

If you read the article, the charity advisory business begins to make a lot of sense, especially since many of the corporations and individual donors don’t have the time or the expertise to make informed decisions. I think it would also make a lot of sense to develop college or bschool extracurricular activities to provide charity advisory services. Students would gain valuable experience and donors could tap a large base of smart students interested in social enterprise.

Revisiting RED Campaign- It Only Raised $11 Million Last Year

Remember my post titled “Corporations Exploiting The Concept Of Socially Responsible Business“?

Here’s the latest article on that topic, from Marketingvox, an online media blog. The article discusses how surprisingly little the entire campaign has raised.

With the goal of fighting AIDS in Africa, the Product RED charity effort from the Global Fund has reportedly raised $11.3 million in contributions in the year that it launched – a surprisingly low figure given the number of brands and exposure it yielded from a multi-channel blitz, and especially in comparison with the $6.6. billion that the Global Fund has committed to 460 programs in 136 countries

I still believe that socially responsible business models can work, but news like this doesn’t shed good light on the practice. It would be great if we could get some more detail into the numbers here.

EDIT: Here’s another widely disseminated article on the RED campaign:

“There is a broadening concern that business is taking on the patina of philanthropy and crowding out philanthropic activity and even substituting for it,” he said. “It benefits the for-profit partners much more than the charitable causes.”

How The Technology World Is Changing Philanthropy

Douglas McGray writes an interesting article in West (the new Sunday mag for the LA Times) about how Omidyar and Skoll, the founders of Ebay, are changing the face of philanthropy.

Since EBay went public in 1998, Omidyar, now worth about $8 billion, and Skoll, worth about $5 billion, have become two of the nation’s leading philanthropists. And they have done so in ways that seem likely to shape their generation’s philanthropic legacy—first poking at the firewall between the nonprofit and business worlds, then punching through and building a network of investments that cross back and forth.

The article documents the transformation of philanthropy in the United States and details how the technology boom is not only increasing charitable contributions, but also incorporating more ROI-driven methods to improve the way resources are allocated. It’s a great read– check it out for yourself.

Corporations Exploiting The Concept Of Socially Responsible Business?

Gap Red

I’m sure you’ve all seen the ads for Gap’s Product Red Campaign. Through this campaign,

Gap, Apple, American Express and other companies offer products under the Red brand and give part of the profits to the Global Fund to Fight AIDS, Tuberculosis and Malaria.

The campaign uses a model similar to that used by Ethos Water. Its bottles are available for sale at all Starbucks. A bottle costs $2, and Starbucks contributes $0.05 from each bottle sold to help people in the third world get access to potable water.

Despite the similarities, The Red campaign has been lambasted by bloggers such as Richard Kim, a blogger at The Nation, and Michael Medved, a movie critic, who called the campaign a:

“scam” because, he wrote, it is merely an excuse for companies “to jack up their prices on ordinary merchandise to ridiculous levels, and not all the difference in price is actually going to the charity.”

This brings up a serious debate– does it really matter that companies use socially responsible “campaigns” as a dishonest attempt to increase their bottom lines? It does matter, and I think all this controversy can easily be avoided if the businesses simply gave consumers information about how much of each sale was going to charity. I think socially responsible business models still work and they shouldn’t be criticized just because Bobby Shriver made some bad comments.

Weekend Links: Spamming for Good

This weekend’s featured article, Spamming for Good comes from the Sept 1st issue of Fast Company.

The article is about Mani Sivasubramanian, a Chennai-based pediatric heart surgeon who donates up to 50% of his profits from his spam email business to the Children’s Heart Foundation, which he founded himself in 2003.

Last year, he took home about $25,000 from his “email marketing” and donated about $10,000 to his foundation. This money helped fund 13 surgeries.

As a victim of spam, it was hard for me to get past the “email marketing”, even though a portion of the revenues go to save children’s lives. However, what is remarkable is that the marketing response rates increases by 4-6 times when the emails stipulate that the proceeds go to the foundation.

For most of his email pitches, Sivasubramanian gets a response of %5 to 10%. But when offers stipulate that proceeds go to the foundation, his response jumps to between 30% and 40%.

That increase in performance gives me a better feeling about the whole thing– when 30% to 40% of the people are responding to the offers, it sounds useful or relevant (even if its just for the charity aspect).

Subscription is required to read the article now, so you can either pick up the September issue at your local newstand or wait until Fast Company makes it publicly available in a few weeks.