How 'virtuous' are these gifts?

Shopping has become virtuous, especially during Christmas.
New York Times News Service, Today Online 14 Dec 07;

Buy a "Better World" scarf at American Eagle Outfitters and US$10 ($14.50) of the US$19.95 price will go to one of three charities. Buy or lease a BMW this month and participating dealers say they will give US$25 to the Make-A-Wish Foundation.

Consumers can benefit many charities with their purchases. Or can they?

Increasingly, non-profit experts are questioning one of the fastest-growing sectors of giving — the practice of building a donation into the purchase of everything from fine jewellery to feminine products.

They point out that such giving is unregulated and, in most cases, unaccountable — and no one knows who is claiming a tax deduction for it.

"It is virtuousness as a marketing gimmick run amok," said Ms Lucy Bernholz, founder and president of Blueprint Research and Design, a consulting firm for non-profit organisations, who has coined the term "embedded giving" to describe the phenomenon. "The potential for it to be a scam is huge."

Many charities and their corporate partners are unwilling to discuss the specifics of their programmes, declining to answer questions about how much is raised and even where the money goes.

Sometimes, charities do not know they are supposed to be receiving donations. Mr John Donoghue, senior vice-president of the World Wildlife Fund (WWF), was disconcerted to learn his organisation was among the charities named as beneficiaries of items purchased from Barneys New York's "Have a Green Holiday" catalogue.

"Unfortunately, just like Barneys shoppers, we're in the dark as to how or if Barneys and the manufacturers will fulfill their commitment to donate a portion of the proceeds from these products to the WWF," Mr Donoghue said.

The start of embedded giving can be traced to the early '80s, when American Express raised money for restoring the Statue of Liberty and Ellis Island by donating one penny for every purchase charged to its credit cards, raising US$1.7 million.

Experts say companies and charities have embraced it wholeheartedly ever since. Many charities believe embedded giving makes it easier for people to donate because the transactions occur as they go about their daily business. Some worry this could eat into more direct contributions.

Mr Donoghue said the benefits could reach beyond money. "For us to have 100,000 cool girls walking around wearing panda-branded T-shirts that have appeared in a circular that goes to 50 million people and is paid for by a corporate partner has a communications benefit we could never afford on our own," he said.